eCommerce tax

A number of Asian countries are in the process of introducing eCommerce taxes, reports the Financial Times, but what do retailers really need to know?

According to a new report, Singapore, Thailand and Malaysia are either considering taxing eCommerce imports, or are already in the process.

Steven Sieker, head of Baker McKenzie’s Asia Pacific tax practice group, said:

“Currently companies are subject to different eCommerce tax regimes, in some cases none, across the Asean region…The region’s diverse and uncertain legal environment remains a major challenge for many local and foreign companies”

In Singapore, the business community is urging the Government to impose a tax on eCommerce to “level the playing field” after a KPMG report that suggested — as an alternative to a GST hike — that the Government impose a tax on eCommerce and digital services, in line with the global movement.

“Given that the value of online spending is set to increase as consumers make a sweeping shift from brick and mortar shopping to online buying, the taxation of e-commerce and digital services makes for far better math,” said KPMG.

Malaysia has similar plans, says customs department director-general Subromaniam Tholasy.

“We are amending a few of the tax laws, especially with regard to the GST, to collect taxes from foreign companies that offer digital services in Malaysia”

Meanwhile in Thailand, eCommerce tax is still a hot topic of debate. Speaking on a panel at the Thailand E-Commerce Week 2017, Thai E-Commerce Association deputy director-general Patricia Mongkhonvanit emphasized the need to foster a fair and equal playing field. She said:

“The Revenue Department will emphasize fair competition among traditional and online businesses. We will not issue any special law for e-commerce or endorse any tax rate for online business, as we need to treat everyone equally"

This tax issue is not new, however, and many companies are already paying import duty and taxes when goods are above the threshold. The larger issue is around services or downloads – because there is no physical exchange, it is difficult for authorities to receive any duty or tax.


eShopWorld Insight:

Retailers need to ask their global eCommerce provider if they are already paying southeast Asian eCommerce taxes. If they are not yet doing so, retailers can charge taxes on their sales and remit them to the corresponding country’s authorities, or better yet, have a physical presence in the country.

Another way to improve revenue for physical goods would be to change the import threshold however this doesn’t address the issue of taxes on services or downloads, meaning the amount of work to be done by the authorities far outweighs the revenue generated.