Challenges of Anti–Tax Avoidance Measures for Thailand in the Context of the Digital Economy

Abstract

The emergence of the digital economy—all the economic activities driven by digital technologies, including e-commerce, data, advertising, digital services, and the platform economy—has demonstrated that traditional measures to thwart tax avoidance under existing rules are inadequate to address complex, unpredictable types and methods of tax avoidance, thus increasing the risk that multinational enterprises will avoid tax. The growth of the digital economy has exacerbated the problem of tax avoidance, resulting in significant lost tax revenue for governments and impacting their ability to finance public services. This has led the Organization for Economic Co-operation and Development to devise measures to prevent the erosion of the international tax base, specifically the Global Anti-Base Erosion Rules under Pillar II. Consequently, Thailand faces several significant challenges. The present study found that in the context of the digital economy, the country can appropriately pursue anti-avoidance measures by relying on its courts’ use and interpretation of various anti-avoidance doctrines, such as the principle of “abuse of law,” which represents a highly flexible general measure. As for specific measures, Thailand should accelerate the issuance of regulations to support and clarify the Royal Decree on Additional Taxes and either quickly enact specific legislation to collect direct tax on income from digital service provision or amend Section 76 bis or Section 70 of the Thai Revenue Code to collect income tax from multinational tech companies. The final step involves hastening the implementation of measures to ensure transparency and accountability in the domestic and international exchange of tax information by adopting blockchain technology.