The Revenue Department has set a withholding tax rate for online purchases in a range with a maximum of 15%, a change from a flat rate of 5% proposed previously.

The e-business tax will have several rates depending on the type of business, said Prasong Poontaneat, director-general of the Revenue Department. Different tax rates for varying types of online transactions will be clearly stated in the draft bill, he said.

The department will apply Revenue Code Section 70, which permits it to impose a withholding tax on revenue incurred in Thailand for operators that do not have a presence in the country, including online transactions.

The department recently said the draft bill will require financial institutions, which now act as intermediaries for money transfers, to withhold tax for online purchases and advertising fees on social media networks, sending it to the Revenue Department. The draft bill will authorise the department to tax online transactions, advertising fees on social media and sites such as Facebook, Line and Google, as well as activity by ride-sharing services such as Uber.

Mr Prasong said the e-business tax will create a level playing field in the online world as several online companies based in other countries earn revenue from Thailand and are not subject to taxes.

He recently estimated the value of online purchases at trillions of baht, while online advertising is valued at around 10 billion baht.

The department will require consumers who transfer money through banking networks to fill out a form on whether it is for commercial payment purposes, said Mr Prasong. The withholding tax will be remitted to the department for commercial payments, while the forms will be sent to the tax-collecting agency to check income tax payment records of the recipients.

He said Uber is not a transport service provider -- such entities are exempt from consumption tax -- but is a business that charges fees for a management system and is thus subject to value-added tax. The department estimated Uber earns 2 billion baht a year, and Mr Prasong said the company has never paid tax to the Thai government.