New Taxes On Digital In Asia

Asian governments move to extract revenue from e-commerce.

In response to the rapid growth of digital business and globalization, several countries in the Association of South East Asian Nations are reforming their tax codes to extract revenue from foreign e-commerce and e-service platforms, including online shopping, online streaming media, smartphone applications and social media.

In January, Malaysia introduced a 6% digital service tax (DST) for foreign tech companies. That same month, Singapore modified its goods and services tax (GST) to levy foreign digital service providers at 7% via its Overseas Vendor Registration regime. Other nations have followed suit, with Thailand’s tax authority issuing legislation in June to apply a 7% value-added tax on foreign digital service providers. Vietnam’s July tax law reform mandates tax registration and payments for foreign e-commerce and e-service providers without permanent presence in Vietnam.

These e-commerce tax reforms are a step in curbing tax avoidance, proponents argue, and in creating a fair market for domestic companies in accordance with the Organization for Economic Cooperation and Development principle that “taxation should seek to be neutral and equitable between forms of electronic commerce and between conventional and electronic forms of commerce.”