In pursuit of the lost tax revenue

By The Nation

 

 

The Revenue Department has moved to begin harnessing the government’s share of income from booming e-commerce
 

The National Legislative Assembly last Tuesday approved Revenue Department amendments requiring banks and other financial institutions to report money transfers above Bt2 million per recipient per year to authorities.

 

This will lead to a potential new tax liability for many online retailers, especially small-scale ones, because they have been avoiding taxes in recent years due to the department’s lack of a database on electronic payments for online sales of goods and services.

 

According to the department, there will be more scrutiny on online vendors as well as other businesses when the number of money transfers reach 400 or more per recipient per year.

 

The amendments follow a rapid rise in e-commerce, mobile commerce and social commerce in Thailand over the past several years, resulting in the potential loss of tax revenues payable by online retailers.

 

Based on statistics from Eshopworld, there are currently 12.1 million e-commerce users in the country, with an additional 1.8 million people forecast to be shopping online by 2021.

 

That year the number of online shoppers in Thailand will reach an estimated 24.5 per cent of the total population. Thailand’s total e-commerce revenues covering all product categories are forecast to reach US$5.3 billion in 2021, with electronics and fashion products the top two categories in online sales.

 

In addition, the high penetration in Thailand of social-media platforms such as Facebook has led to a significant increase in social commerce, which currently accounts for about half of the online sales of goods and services.

 

These figures clearly support the Revenue Department’s case for tighter rules and regulations to levy taxes on the fast-growing online marketplaces, especially in view of the stagnant or even declining tax revenues from other sources that have faced competition from online vendors.

 

However, the bigger issues facing the Revenue Department appear to go beyond the latest amendments, largely because the country’s digital economy has been expanding rapidly while multiple traditional businesses and industries face disruption.

 

Online advertising revenues, for example, have increased sharply, and yet they cannot be taxed properly because most of the revenues are booked overseas, outside the tax authority’s jurisdiction. The same is true for other Internet-based platform services whose payment gateways are outside the country.

 

These are among the new challenges for the tax authorities. They will need to plug new loopholes resulting from the digital economy’s phenomenal growth.

 

And the shift will likely occur at an even faster speed in the next few years as Thailand adopts the fifth-generation (5G) cellular network. The National Broadcasting and Telecom Commission has said it plans to hold an auction for 5G spectrum soon and expects the service to be available in 2020.

 

Last Tuesday’s approval of the Revenue Code’s amendments therefore serves as the beginning of legal alterations designed to empower authorities to catch up with changes in technology as far as tax collection is concerned.

 

After tightening the rules on small online vendors, the Revenue Department is expected to move further to rein in the bigger operators in the digital economy, whose business models are unlike those of traditional enterprises. Again, the tax authority needs more innovation to stay relevant.

 

Source: http://www.nationmultimedia.com/detail/opinion/30359973

 

-- © Copyright The Nation 2018-12-07

I have great sympathy for nation states (all of them) struggling to deal with this issue; taxation has traditionally been based on territoriality/physical jurisdiction and how can one tax activity that is cyber and/or ethereal? I do not have a good answer.

 

I think Thailand is going to have more trouble with this issue than most because while Thailand is superficially a country/society based on the 'Rule of Law', the reality is that Thailand is a country/society based on the 'Rule of Whoever is Currently in Power'. A society that is based on the 'Rule of Law' applies that law to all, more or less equally (countries ARE made up of human beings...). A country based on the 'Rule of Whoever is Currently in Power' will have great difficulty applying 'Law' to cyberspace unless it is automatic and uniformly done. And, applying law 'Uniformly' (pun intended) is rather difficult in Thailand.

 

Or, put another way, does anyone think the Thai military will allow their finances to be monitored fairly? And by people outside their direct control? Does anyone think that a low-level Thai bureaucrat is going to call on a General to explain all his transactions? Does anyone in Thailand think the monitoring of bank accounts WON'T be used to monitor and persecute political enemies? 

 

Based on all our experiences, does anyone believe that Thailand will apply rules of taxation fairly, across the board, and without relevance to a person's social or economic status?

 

My own view is that soon countries everywhere are going to reach a definite deflection point where they will need to decide if they are going to be rule of law or not, and if they can still interact with countries that don't function the same way. Until now, few countries have had to choose as it was possible to do both and it didn't really matter too much. Now? In the near future? It is getting a lot harder. A LOT harder.

 

If you are a Rule of Law based society, it is getting more and more difficult to deal with a Rule of Whoever is Currently in Power-based country; see the on-going dispute between the US and China for an example.

 

Interesting times...

 

Due to the corrupt activity of much of Thailand's govt officials there has never been a proper effort to tax people on their real income, only on their monthly pay. That's resulted in army, police and uniformed officials with huge houses, several cars and hidden bank balances. Only because ordinary civilians are getting to amass wealth in the same way do we suddenly see a need for reform. An effective and proper taxation authority will never happen if its going to catch the ruling elite. Forget it.

The human element will need to be taken out of issues such as taxation....when the system is totally computerised....only then will tax revenue receipts improve.

The entire population must be treated equally......but of course, it will never happen.

They could start with the cigarette sellers plying their untaxed goods on the streets of Pattaya selling cartons at half the price

31 minutes ago, a977 said:

They could start with the cigarette sellers plying their untaxed goods on the streets of Pattaya selling cartons at half the price

You must be a non smoker....Thoes cheap cigarette would be to expensive if they were free....They taste like they were made from sawdust and cow dung...

1 minute ago, fforest1 said:

You must be a non smoker....Thoes cheap cigarette would be to expensive if they were free....They taste like they were made from sawdust and cow dung...

Actually they come from Indonesia, so somebody in IMMIGRATION getting a big kick back. Enough said

The Government needs Billions of THB,so they can give it away

in populist schemes,just to make sure they have the best chance

to win the next elections,whenever it happens.

 

regards worgeordie

It categorically states it will go after the small retailers first and then (maybe) the larger operations. I guess the same as Amazon et al - will pay little to no tax.

It is becoming the same world over , get the small guys because we can and then appear to grapple with the larger guys but never win because they have the power and expensive lawyers.

Same old story that small independent retailers are pursued for corporation tax. At the same time private/international schools have a special provision to be exempt from tax despite many of them being for profit firms owned by shareholders& large foreign companies in some cases

3 hours ago, Lungstib said:

Due to the corrupt activity of much of Thailand's govt officials there has never been a proper effort to tax people on their real income, only on their monthly pay. That's resulted in army, police and uniformed officials with huge houses, several cars and hidden bank balances. Only because ordinary civilians are getting to amass wealth in the same way do we suddenly see a need for reform. An effective and proper taxation authority will never happen if its going to catch the ruling elite. Forget it.

Agree,guess who owns the biggest hotel in my small town,a Police man!

4 hours ago, fforest1 said:

You must be a non smoker....Thoes cheap cigarette would be to expensive if they were free....They taste like they were made from sawdust and cow dung...

More cow dung than sawdust, and I don't smoke

Meanwhile, they can't even get the university hisos to declare their net worth, good luck with all the rest. People just look at the privileged and say 'what about them' Unless everyone is aboard and equal there will never be any respect to any law, why do think the lady holding the scales of justice is blindfolded?

I hear there are many unpaid traffic tickets,in the west traffic tickets are a great source of income for the government.

Just wait until the Thai government really get a tast of that!!

2 minutes ago, jvs said:

I hear there are many unpaid traffic tickets,in the west traffic tickets are a great source of income for the government.

Just wait until the Thai government really get a tast of that!!

Millions are made on speed cams back in Canada and one city had to return 13 million in fines due to bad camera calibration lol.  

Ah taxes. The equivalent of protection money for mafia by governments. I'd rather pay by subscription to the best supplier. Sod nations.

Edited December 7, 20187 yr by DrTuner
Typo

Hmmm. maybe they should not have bought submarines which they didn't need and whose only role is to bolster the self-esteem of some emotionally inadequate uniforms that want to be perceived as root'n-toot'n-sixgun-shoot'n cowboys.

 

After all, one of the purchase decision justifications was 'if we don't have submarines, then our neighbours won't be in awe of us'.

 

Here's the news sunshine, Thailand's neighbours haven't been in awe of Thailand for a long time, especially not since that clown-show Prayuth and his merry men seized power at the point of a gun.

 

A cat can't be a dog and in Thailand, anyone in so-called authority can't be honest. Seems to be a law of nature.

 

Edited December 7, 20187 yr by HalfLight