Thailand runs a digital-services deficit of over US$6 billion a year, yet collects no tax on digital services
Thailand suffers more than US$6 billion annual deficit in digital-services trade with the US but chooses not to tax digital services from US platforms
Thailand has recorded a large trade surplus in goods with the United States, but paradoxically is suffering a massive deficit in the digital-services sector — estimated at more than 2 hundred billion baht a year (about US$6 billion) — because it permits foreign online services to operate without being subject to digital-services tax.
In tangible-goods exports to the US Thailand enjoys a surplus, yet in the realm of “digital services” – subscriptions to foreign platforms such as Apple iCloud, Google, YouTube, Netflix, Spotify, Facebook and advertising on those platforms, Thai consumers and advertisers spend large sums overseas. E-commerce and social-media-based ad spending are among the major outflows. E-commerce specialist Pawoot Pongvitayapanu estimates the digital-services deficit at as much as 200 billion baht annually and rising.
Taxing digital services is technically and politically challenging. The host company must identify which country the transaction originates from (for instance via user-IP address); if the platform is unregistered in Thailand and offers services cross-border, enforcement is difficult. On top of that, the US exerts pressure on countries not to impose digital-services taxes that uniquely target US tech firms.
Recently, under a framework agreement with the United States, Malaysia, Cambodia and Thailand reportedly committed not to impose a tax on US-based digital-services providers, and to refrain from discriminating against them in e-commerce, social media, streaming, cloud-hosting and other online services.
By contrast, in Europe the approach is different: European jurisdictions have adopted digital-services-tax laws and antitrust regulation aimed at large tech players such as Amazon, Apple, Meta (Facebook’s parent) and Google. For example, the European Commission fined Meta €797.72 million for competition-law violations.
The deeper objective of the US trade strategy: while the US adopts protectionist tariffs for physical goods (e.g., raising duties on imports from Asia), it simultaneously seeks an open global regime for “digital commerce” (e-commerce, social media, cloud services, streaming) — in effect opening the digital-services trade rather than closing it. Professor Anupam Chander of Georgetown University in Washington explains that the US aims to preserve its surplus in services trade while reducing its goods-trade deficit.
Last year, global cross-border digitally-delivered services (DDS) exports hit US$4.77 trillion — nearly a 10 % growth from 2023 and more than twice the growth rate of total goods and services trade. The digital-services trade segment remains the fastest-growing part of global trade, with a total market size approximated at US$33 trillion in the year under review.
