| Letter No. | : | Kor Khor 0702/5435: |
| Date | : | 29 August 2008 |
| Subject | : | Value Added Tax for income from service rendered in the Kingdom when the service is used abroad |
| Law Provision | : | Section 77/2 of the Revenue Code |
| Settlement | : |
Sor. company registered under Thai law and has no branch overseas. The company's objective is to provide service of sale-purchase, install, assemble and write computer software (IT). The company is promoted by the Board of Investment - in category of Digital Content with specific condition to design digital content, develop and improve software, test software and digital content. The company has developed digital content through web application, the website which has more complex management system than generic website. Presently, the company has created 4 websites with target group from gamers from Europe and America who playing game through web application. These gamers visit the website to look for information and methods of using various applications to enhance convenient playing. The websites that generate income are 1. www.killerguides.com - service is hosted in data center in USA 2. www.strategyfreaks.com - service is hosted in data center in Hong Kong, The two websites provide service for oversea members and users can assign to service from oversea only. The service is hosted in data center abroad and the company has no service representative for customer overseas. Total income is therefore, the income of the company in Thailand. The company own copy right in manual, formula or method of playing games pertaining on its website and such copy right is not transferred to customer whatsoever. The company only gives permission to customers for advice, manual and formulas. while the company keep control by locking and encrypting, what not allows users to use or install such information in more than 3 computers. The company understand that the income is from service provision not from sale of intangible products and the service is provided within the Kingdom and rendering abroad. The income of the company thereof is then classified in 7% VAT or 0% VAT? |
| Conclusion | : |
The company is a Thai juristic person and has no oversea branch. The company creates www.killetguides.com and www.strategyfreaks.com - the website that facilitate convenience of playing game such as advice, formula, manual or method of playing on- line game through web application . The service is hosted in data center in USA and Hong Kong and has no service representative for customer overseas. The target group is gamers in Europe and America. Both websites provide service for customers worldwide. After become membership, user will receive user name and password from the company. The member will receive advice, manual, formula, or method of playing game online. To use the service, member have to inform IP Address (Internet Protocol Address) to identify the Internet access point for service fee calculation. Hence, the membership and service fee received is the service fee provided abroad, but rendered within the Kingdom. The company is liable for value added tax pursuant to Section 77/2, paragraph three of the Revenue Code. |
| Box No. | : | 71/36122 |
