Data centers granted VAT exemption in Thailand

Data center have been granted VAT exemption in Thailand.

The Thai cabinet has granted data centers a tax (VAT) exemption in principle in the draft Royal Decree. While an exemption has been granted in principle, the Thai VAT rate is still levied at 7 percent currently.

Announced by Arkhom Termpittayapaisith, Minister of Finance, the Royal Decree hopes that the lowered tax rates will encourage hyperscale data center investments in the country.

In August this year, Google announced that it would be developing a Google Cloud region in Thailand. The company will likely be eligible for the tax exemption.

Lavaron Sangsnit, director-general of the Revenue Department, said that the Revenue Department of the Ministry of Finance has ‘recognized the importance of the data center industry and data hosting service which are growing rapidly.’

According to the Royal Decree, VAT will be exempt under the following services and circumstances:

• Services for servers or related equipment for storing, processing, and connecting electronic data via the Internet; or
• Disaster recovery sites, connection with Internet service providers or cloud service providers, and systems management and securities services as supporting services of the services in item (a).
• The registrant applying for the VAT exemption must also be a data center business operator with qualifications and must comply with all rules, procedures, and conditions prescribed by the Director-General of the Revenue Department.
• The application must be filed within five years after the decree is effective.

This tax exemption shortly follows another by the Thai government to enforce VAT exemption for government-approved transactions of cryptocurrency, including for digital currency issued by the Bank of Thailand, until the end of 2023. This ruling came a few years after Thailand implemented the digital asset legislation in 2018, an Emergency Decree with “The goal to encourage technological innovation that drives the economy and society towards sustainable development and to provide a variety of fund-raising instruments for competent businesses.” Data Center Dynamics