Southeast Asian nations poised to tax e-commerce

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A number of countries in Southeast Asia are poised to introduce taxes on goods bought online, many of which are currently exempt. Governments say they are missing out on large amounts of revenue as more and more people are shopping online.

In Thailand, there are different rules for different sectors. Thai websites and traditional bricks and mortar stores have different sales taxes, and customers therefore pay differently depending on how they shop.

That’s not a level playing field, says the Thai government, which wants to introduce new e-commerce laws that make everyone pay the same amount, no matter how they shop.

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“In theory it should actually increase prices which is bad for consumers, but what we are seeing at the moment is creating a squeeze on Thai businesses – so it means profits generated are being held outside Thailand, and there’s no economic benefit to the country,” said Paul Gambles, managing partner of MBMG, a Thai investment company.

It estimates the country is losing up to a hundred million dollars a year in tax revenue.

“In the short term it’s bad for consumers, but in the long-term it’s a very important step for the country,” Gambles added.

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Thailand is not the only country that wants to bring in new e-commerce laws. Singapore and Malaysia are also considering similar laws to protect domestic e-businesses, while Indonesia has already introduced taxes on online goods.

“This is about local business, this is about all the mom and pop shops everywhere in the country,” said Pawoot Pongvitayapanu, president of Thai E-Commerce Association.

It is also part of global moves to clamp down on big companies who are avoiding taxes by registering their businesses in countries with low tax rates or tax concessions.

Economists say it is a case of legislation catching up with technology that should result in greater transparency and fairness for all.