In July 2018, the trade war between the United States and China went live. The war of words which saw threats, posturing, and “nudges” to impose tariffs on goods traded between the United States and China became a reality.
Since its inception, the digital realm has been an economic “wild west.” Laws and regulations written in the “brick and mortar” world often do not apply or are, for all practical purposes, unenforceable in the digital counterpart.
The lack of international consensus on taxing the digital economy is creating a vacuum of uncertainty. So, what’s coming up on the horizon and how can your business deal with the implications?
Thailand may soon join several countries in taxing digital services and products that are provided by foreign e-commerce operators. In July 2018, the Thai Cabinet approved of a draft law that, if enacted, will see Thailand imposing value added tax (“VAT”) on foreign operators that provide services and content through the internet or electronic media to Thai consumers.
In the final part of this article, we continue our examination of how customs rules for free trade agreements (“FTAs”) should be modernised to meet the needs of a digital economy.
The growth of the digital economy has broken down traditional commercial and geographical boundaries. Goods and services are being delivered and consumed across borders in ways that were unforeseen and at a pace that was unprecedented just decades ago.
The government’s recent high-profile solicitation of China’s leading e-commerce operator, Alibaba, to collaborate in developing the nation’s digital economy made front page news. Equally newsworthy were the government’s current attempts to revise existing tax laws to ensure that digital transactions are subject to VAT, and that capital gains from disposal of digital assets are subject to withholding tax.
In part 1, we discussed the origins of the CPTPP and Thailand’s existing trade relationships with other members. Of the 11 countries already signed on, Thailand already has free trade deals with 9 of them. The remaining countries – Canada and Mexico – are highly significant players on the world stage.
On 30 March 2018, the Bangkok Post reported Deputy Prime Minister Somkid Jatusripitak expressing his support for Thailand in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Also known as the TPP-11, this amended version of the TPP has been the version under consideration since the United States announced its plans to stay out of the deal.