Digital Services Tax in ASEAN: Country Comparison 2024

Here's a quick overview of Digital Services Tax (DST) across ASEAN countries in 2024:

Country	DST Status	Tax Rate	Key Features
Brunei	No DST	N/A	Low tax system, no VAT
Cambodia	VAT on digital services	10%	Applies to B2C and B2B
Indonesia	VAT + Income Tax	11% VAT	Covers foreign digital companies
Laos	VAT on digital services	Not specified	Includes B2B and B2C sales
Malaysia	Service Tax on Digital Services	8%	Covers many digital services
Myanmar	No specific DST	N/A	New e-commerce rules may apply
Philippines	Proposed DST (Bill 4122)	12% VAT	Covers online ads, subscriptions
Singapore	GST on digital services	9%	Uses Overseas Vendor Registration
Thailand	VAT on digital services	7%	Applies to foreign companies
Vietnam	VAT + Corporate Income Tax	1-5% VAT, 0.1-10% CIT	Covers B2B and B2C sales

DST in ASEAN aims to tax digital services from foreign companies, level the playing field for local businesses, and increase tax revenue. Implementation and enforcement challenges remain as countries adapt to the digital economy.

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1. Brunei

Current DST Status

As of 2024, Brunei has not put in place a Digital Services Tax (DST). The country keeps its simple tax system with low rates and many exceptions.

Key Features

Brunei's tax system is different from other ASEAN countries:

• No VAT
• No personal income tax
• Low company tax rate of 18.5%
• No tax on dividends, interest, royalties, and technical service fees for local companies

Tax Rates and Thresholds

While Brunei doesn't have a DST, here's a look at its current tax structure:

Tax Type	Local Companies	Foreign Companies
Company Tax	18.5%	18.5%
Dividends	0%	0%
Interest	0%	2.5%
Royalties	0%	10%
Technical Service Fees	0%	10%

Collection Mechanisms

Even without a DST, Brunei's high internet use (95% in 2019) puts it in a good spot for possible future digital taxes:

• Highest internet use in ASEAN
• 3 times more internet users than Myanmar
• 79% more internet users from 2010 to 2017

This high internet use could help Brunei collect taxes easily if it decides to start a DST later.

2. Cambodia

Current DST Status

As of 2024, Cambodia has a VAT system for online transactions, including digital services from non-resident companies.

Key Features

• Non-resident online providers must register for VAT if they meet income requirements
• 10% VAT on online sales
• Applies to both B2C and B2B transactions

Implementation Timeline

Date	Event
April 8, 2021	Sub-Decree No. 65 issued
September 8, 2021	Prakas No. 542 issued
April 1, 2022	Regulations took effect

Tax Rates and Thresholds

Item	Details
VAT Rate	10%
Registration Threshold	Annual turnover of KHR 250 million (about USD 62,500) or KHR 60 million (about USD 15,000) in any 3 months in a row
Filing Frequency	Monthly

Collection Mechanisms

1. B2C Transactions:

• Non-resident online companies collect 10% VAT from customers
• File monthly VAT returns using form NR-VAT01
• Pay collected VAT to the General Department of Taxation (GDT)

2. B2B Transactions:

• Uses a reverse charge system
• Resident businesses buying digital goods or services from non-resident companies must collect and pay 10% VAT to the tax office

Not following these rules can lead to fines up to 5 million riel (about USD 1,234) or jail time between one month to one year.

3. Indonesia

Current DST Status

As of 2024, Indonesia taxes digital goods and services through:

• VAT on digital items sold to Indonesian consumers
• Income tax on foreign digital companies with a big presence in Indonesia
• Electronic Transaction Tax (ETT) for some direct sales

Key Points

• VAT applies to digital goods and services from foreign companies
• Foreign digital companies with many Indonesian users or sales must pay income tax
• ETT is used when tax treaties prevent normal income tax

Timeline

Date	Event
March 31, 2020	New tax rules introduced
July 1, 2020	Digital VAT starts
April 1, 2022	VAT increases to 11%
January 1, 2025	VAT planned to increase to 12%

Tax Rates and Limits

Item	Details
VAT Rate	11%
Sales Limit for Tax	Over 600 million IDR ($40,300) per year or 50 million IDR per month
User Limit for Tax	Over 12,000 Indonesian users in a year or 1,000 in a month

How Taxes Are Collected

1. VAT:
   • Foreign digital companies or local online markets collect VAT
   • They charge 11% VAT on digital goods and services
   • They send this money to the government
2. Income Tax / ETT:
   • Big foreign digital companies pay income tax
   • If they can't pay income tax due to treaties, they pay ETT instead
   • The government will set exact rates later

As of March 31, 2022, 103 companies, including Amazon, Google, and Netflix, collect VAT in Indonesia.

4. Laos

Current DST Status

As of July 11, 2024, Laos has put in place VAT rules for foreign companies that sell digital goods and services to people in Laos. This includes both business-to-business (B2B) and business-to-consumer (B2C) sales.

Key Points

• VAT applies to foreign sellers of digital goods, services, and platforms
• Covers B2B and B2C sales
• Online marketplaces must collect and pay VAT
• Foreign sellers can sign up and pay VAT through an online system

Timeline

Date	Event
February 2022	VAT rules first introduced
October 1, 2023	Foreign sellers must sign up for VAT
March 1, 2024	DTax system opens for sign-ups
May 2024	Everyone must use the new DTax system
August 1, 2024	New VAT rules start working

VAT Details

Item	Details
Sign-up Limit	LAK 400 million per year (about €31,000 or $34,000)
VAT Rate	Not specified in the available information

How VAT Works

1. Foreign sellers must sign up for VAT in Laos
2. Sellers check if the buyer lives in Laos or uses the service there
3. Online marketplaces collect and pay VAT for sales they handle
4. Foreign sellers can pay tax in EUR, USD, or Lao currency
5. Sellers can use these clues to know if VAT applies:
   • Buyer's billing address
   • Bank or credit card address used for payment
   • IP address of the device used
   • Country code of the buyer's phone number

The Lao Tax Department plans to make an easy online sign-up system for foreign digital sellers to pay VAT.

5. Malaysia

Current DST Status

Malaysia started taxing digital services from foreign companies on January 1, 2020. This tax is called the Malaysian Service Tax on Digital Services (SToDS).

Key Features

• Applies to sales to both businesses and consumers
• Covers many digital services, like online games, software, ad platforms, and internet phone services
• About 300 foreign companies have signed up to pay this tax

When It Started

Date	What Happened
January 1, 2020	SToDS began
March 1, 2024	Tax rate went up from 6% to 8%

Tax Rates and Limits

Item	Details
Current tax rate	8%
Who must pay	Companies making more than RM500,000 (about $107,500) per year from digital services in Malaysia

How It Works

• Foreign companies must sign up with Malaysia's Customs Department
• They must file tax forms every three months
• Online marketplaces must collect and pay tax for sales they help with
• For services paid before March 1, 2024, but given after, the old 6% rate applies

This tax helps Malaysia treat local and foreign digital companies more equally.

6. Myanmar

Current DST Status

As of July 11, 2024, Myanmar doesn't have a specific Digital Services Tax (DST). However, the country has taken steps to manage e-commerce and update tax laws, which might affect digital services.

Key Points

Myanmar's approach to taxing digital services includes:

• New e-commerce rules
• Rules apply to all e-commerce businesses
• Possible fines for not following rules

Important Dates

Date	Event
September 5, 2023	E-commerce rules start
April 1, 2023	New tax law begins

Taxes That Might Apply

Myanmar's 2023 tax law sets rates for these taxes, which could affect digital services:

• Special Goods Tax
• Income Tax
• Commercial Tax

The law also says some goods and services don't have to pay these taxes. But it doesn't say exactly how this works for digital services.

How It Works

There's no special way to collect DST, but e-commerce businesses in Myanmar must follow the new rules. These rules probably say how to report and pay taxes, but we don't have all the details.

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7. Philippines

Current DST Status

As of July 11, 2024, the Philippines is working on a Digital Services Tax (DST) through Bill 4122. This bill requires non-resident digital service providers (DSPs) to collect and pay Value Added Tax (VAT) on digital services sold to Philippine consumers.

Key Features

• 12% VAT on digital services used in the Philippines
• Applies to both local and foreign digital service providers
• Covers online ads, digital ad space, subscriptions, and other electronic services
• B2B transactions use a different system
• Some services are not taxed, like education and government subscriptions

Implementation Timeline

Date	Event
February 6, 2024	Senate looks at Bill No. 2528
2024-2028	Expected to bring in P83.8 billion

Tax Rates and Limits

Item	Details
VAT Rate	12%
Must Register If	Sales over P3 million in past 12 months or expected in next 12 months

How Taxes Are Collected

1. VAT-registered customers:
   • Keep and pay VAT to the Bureau of Internal Revenue (BIR) within 10 days after each month
2. Non-VAT-registered customers:
   • Foreign DSPs pay VAT on digital services used in the Philippines
3. Online marketplaces:
   • Foreign DSPs that are online marketplaces must pay VAT for sales by foreign sellers using their platform

The BIR will set up an easy online system for foreign digital service providers to register.

8. Singapore

Current DST Status

Singapore taxes digital services from overseas companies through its Goods and Services Tax (GST). This tax, called the Overseas Vendor Registration (OVR) regime, started on January 1, 2020.

Key Points

• Applies to foreign companies selling digital services to Singapore customers
• Covers e-books, streaming, software, and online ads
• Uses a reverse charge system for business-to-business (B2B) sales
• Aims to make things fair for local and foreign sellers

Important Dates

Date	Event
January 1, 2020	OVR regime begins
January 1, 2023	GST goes up to 8%
January 1, 2024	GST goes up to 9%

Tax Rates and Limits

Item	Details
GST Rate	9% (in 2024)
Total Sales Limit	S$1 million (US$738,000)
Singapore Sales Limit	S$100,000 (US$73,800)

How It Works

1. Foreign digital service companies must sign up for GST if they reach both sales limits.
2. These companies charge GST to customers in Singapore who aren't GST-registered.
3. For B2B sales, the customer handles the GST.
4. Companies must check if they need to sign up for GST based on their sales.

The Inland Revenue Authority of Singapore (IRAS) set up this system to make taxes fair. They expect to get about SGD$90 million more in taxes each year because of it.

9. Thailand

Current DST Status

Thailand started taxing digital services from foreign companies on September 1, 2021. This tax is part of Thailand's Value Added Tax (VAT) system.

Key Points

• Applies to foreign companies selling digital services to Thai customers
• Includes online platforms that help sell digital services
• Aims to make taxes fair for local and foreign businesses

When It Started

Date	What Happened
September 1, 2021	VAT on digital services began

Tax Rates and Limits

Item	Details
VAT Rate	7%
Must Register If	Yearly sales over THB 1.8 million (about USD 60,000)

How It Works

1. Foreign companies must sign up for VAT if they sell enough
2. They can sign up online
3. They must file VAT forms every month
4. Online platforms must collect and pay VAT for sales they help with

The Thai tax office made a guide to help foreign companies understand these new rules. This tax is expected to bring in more money for Thailand and help local digital businesses compete.

10. Vietnam

Current DST Status

Vietnam taxes foreign e-commerce and digital service providers without local offices. This started on January 1, 2022, based on Law No. 38/2019/QH14 and Circular No. 80/2021/TT-BTC.

Key Features

• Applies to foreign companies selling digital services to Vietnamese customers
• Covers both business-to-business (B2B) and business-to-consumer (B2C) sales
• Includes VAT and Corporate Income Tax (CIT)
• Foreign companies must sign up and pay taxes online

Important Dates

Date	Event
July 1, 2020	Law No. 38/2019/QH14 starts
January 1, 2022	Circular No. 80/2021/TT-BTC begins

Tax Rates

Tax Type	Rate
VAT	1% - 5%
CIT	0.1% - 10%

Rates change based on the type of service.

How It Works

1. Foreign companies sign up and pay directly
2. Vietnamese businesses hold back taxes for B2B sales
3. Banks and payment companies hold back taxes for B2C sales
4. Online marketplaces must report sales

Foreign companies can pay taxes by:

1. Signing up on the tax office website
2. Filling out form 01/NCCNN
3. Reporting taxes every three months
4. Paying in foreign currency

If foreign companies don't pay, local banks must hold back and pay the taxes for them.

Strengths and Weaknesses

Different ASEAN countries have taken various approaches to Digital Services Tax (DST). Let's look at what works well and what doesn't:

What Works Well

Strength	Description
More Tax Money	Countries like the Philippines tax many digital services, which can bring in more money
Stopping Tax Dodging	Vietnam and Indonesia use both sales and income taxes to make sure big companies pay their fair share
Helping Local Companies	DST can make things more equal between local and big foreign digital companies
New Money for Governments	As online business grows, DST gives countries a new way to make money

What Doesn't Work Well

Weakness	Description
Hard to Enforce	Countries like Malaysia find it tough to decide what counts as a digital service, making it hard to collect taxes
Different Rules	Each ASEAN country has its own DST rules, which can be confusing for companies working in many countries
Paying Taxes Twice	Some countries haven't made it clear how DST works with other tax agreements, so companies might pay taxes twice
Slowing Down Online Business	There are worries that DST might make it harder for online businesses to grow or enter new markets

Comparing Strengths and Weaknesses

Aspect	What Works Well	What Doesn't Work Well
Who Pays	More services taxed in some countries	Different countries tax different things
Money for Government	New way to get money	Might slow down online business growth
Local vs Foreign Companies	Makes things more fair for local companies	Might stop foreign companies from coming in
Making It Work	Catches big companies avoiding tax	Hard to decide what to tax
Working Together	-	Different rules in each country make things hard

As ASEAN countries keep working on their DST rules, they need to fix the problems while keeping the good parts. This will help make a fair and good way to tax online businesses in the area.

Summary

ASEAN countries are changing how they tax digital services. Here's a look at what some countries are doing:

Country	Tax Rate	Yearly Sales Limit	Start Date
Singapore	9% (2024)	S$1 million	Jan 1, 2020
Malaysia	6%	RM500,000	Jan 1, 2020
Indonesia	10%	None set	Jul 1, 2020
Thailand	7%	None set	Sep 1, 2021
Vietnam	Regular VAT	Not yet decided	Jan 1, 2022
Cambodia	10%	None set	Sep 8, 2021

Most countries tax these digital services:

• Online software
• Apps and games
• E-books, movies, and music
• Search engines and social media
• Website hosting
• Online ads
• Internet calls
• Online classes

Key points:

1. Singapore and Malaysia started early in 2020.
2. Sales limits for taxes differ between countries.
3. Indonesia asks foreign online sellers to open local offices.
4. Countries want to make taxes fair for local and foreign companies.
5. It's hard to decide what to tax and make sure foreign companies pay.

As online business grows, ASEAN countries will likely keep changing their tax rules. They want to get more money from taxes while helping online businesses grow and compete fairly.

FAQs

What is the global digital services tax?

The global digital services tax (DST) is a tax that many countries use to get money from big online companies. Instead of changing old tax rules, countries use DSTs to tax these companies based on how much money they make from digital services in each country.

Here are the main things to know about DST:

Aspect	Description
Who it affects	Mainly big tech companies from other countries
What it taxes	Money made from digital services, not profits
Why countries use it	To make taxes fair for local and foreign online companies
Tax rates	Usually between 2% and 10% of money made
Services taxed	Often includes online ads, helping buyers and sellers meet online, and selling data

Many countries, including some in ASEAN like Singapore, Malaysia, and Indonesia, now use DST. They do this to keep up with online business and make sure everyone pays their fair share of taxes.

Common services taxed by DST:

• Online advertising
• Websites that connect buyers and sellers
• Selling user data

DST helps countries get money from big tech companies that work in their country but may not have an office there. It's a way for governments to keep up with how business is changing in the internet age.

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