The Thai government wants to ensure that small local businesses are able to compete against larger foreign rivals. Source: Shutterstock

Thailand to impose ‘e-commerce tax’ to protect local business

THAILAND seems intent on ensuring that the country does not follow the trends set by the United States and China, with the Asian country’s Revenue Department gearing up to amend a tax law to include e-commerce so that Thai e-commerce operators and small business owners are able to compete on a level playing field against foreign cross-border online enterprises.

The Thai E-Commerce Association has played a major part in the proposed tax amendments, with the organization urging the government to create and implement regulations that would foster fair competition among local and foreign businesses.

Apart from this, the e-commerce organization is also calling on the government to apply anti-dumping laws to firms operating online, according to a report from The Nation.

By doing so, the e-commerce organization is attempting to avoid a situation where the country’s online market gets dominated by one major online player.

Speaking on a panel at the Thailand E-Commerce Week 2017, the association’s deputy director-general Patricia Mongkhonvanit emphasized the need to foster a fair and equal playing field for the nation’s local online entrepreneurs and foreign enterprises servicing Thailand.

“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,” Mongkhonvanit said, according to a Bangkok Post report.

If the association’s initiatives bear fruit, Thailand would be able to avoid the fate that ultimately befell China and the United States, countries where e-commerce is dominated by one huge player and very little else. China’s e-commerce, after all, has become synonymous with Alibaba, and the United States’ online retail sphere is dominated by  

According to association president Pawoot Pongvitayapanu, the economic benefits of embracing foreign e-commerce operators like Alibaba and are limited for the short-term.

Small businesses might be able to fend off competition from foreign players, though the tax’s effectiveness is in question. Source: Shutterstock

In the long run, neglecting local online operators would ultimately result in a few dominant enterprises taking the market for themselves. Pongvitayapanu, for one, is especially wary of Chinese e-commerce operators that are operating in the country.

“In the long run, it will create dominant players, similar to the US retail market dominated by Chinese players will dominate in every aspect of logistics, payment, and retail,” Pongvitayapanu said.

Apart from cautioning the government against the threat of foreign e-commerce operators, Pongvitayapanu also provided some advice for owners of local online businesses.

According to the executive, it would be best for local Thailand-based enterprises to find niches and verticals where they could compete against bigger foreign players in a horizontal e-marketplace. Such a strategy, after all, has been done by other countries such as Japan and Indonesia, to great effect.

For now, however, the ball is exclusively in the Thailand Revenue Department’s court.