Tax Collection from Foreign Companies Providing Electronic Services

Abstract

        Nowadays, businesses providing electronic services such as search engines, social media platforms, and online marketplaces are immensely popular among consumers, and they generate extremely high income. The form of services is driven by information technology. Although the service provider and the service receiver are in different countries, the services can still be provided without sending out staff or appointing representatives to work onsite. Considering this form of operation together with tax laws regarding corporate income tax collected from foreign companies or having sources of funds in Thailand, it turns out that foreign electronic service providers do not have to pay tax in the country. Meanwhile, foreign trading companies, who sell their products to buyers in Thailand or foreign companies who receive other compensation including for copyright infringement, have to pay tax in Thailand. Especially, if Thailand’s companies conduct electronic service businesses for service receivers both in Thailand and other countries, they are required to pay both value added tax and income tax. Moreover, they may have to pay tax for other countries if there is service provision for receivers in those countries. Such matters create higher cost in business competition in Thailand which also suppresses the potential to compete in the global market. Therefore, tax collection from foreign electronic companies could be a method to make the system of taxing foreign companies more fair.