For digital business leaders, a nation's tax rate is considered less important than consistency in taxation policies and their enforcement, says a consultant.
Companies that compete digitally argue that discriminating against them would disadvantage their own opportunities for expansion as well as a country's ability to nurture technology-based growth, Robert Koepp, the Hong Kong-based director of the Economist Corporate Network, said at a Nov 23 event held by the Economist Group.
Tax treaties and agreements can also help countries mitigate geopolitical risks and give these companies a greater degree of stability, Mr Koepp said.
Hosuk Lee-Makiyama, director of the European Center for International Political Economy, called it a "myth" that multinational tech companies pay less tax than local companies, adding that companies pay most of their tax in their home market.
If Thailand changes tax laws to force multinational exporters to pay more tax in Thailand, there is a risk that Thai textile exporters would have to pay their corporate tax in export markets instead of in Thailand.
"As a net exporter, Thailand would lose out," Mr Lee-Makiyama said.
Kitipong Urapeepatanapong, chairman and partner of Baker & McKenzie Bangkok, said that while tax rates and incentives can be powerful in attracting foreign investment, "the discussion should focus on how authorities can provide a clear policy and ensure that both traditional and digital companies pay a fair amount of tax in the country that has attributable income".
Thailand has distinct advantages among Asian countries in terms of its digital economy.
Recent analysis by the Economist Intelligence Unit found the country had a higher internet penetration rate than the average level in Asean, plus good transport infrastructure and a relatively large population within a single land mass (considered more favourable than the geographic conditions of economies like Indonesia and the Philippines).
But Thailand still has to overcome the relatively underdeveloped stage of its e-commerce industry.
"Foreign investor sentiment is already dampened by concerns for political and policy stability, and until taxation policies are seen as transparent, consistent and fairly applied to the digital sector, Thailand's digital competitiveness will likely be hampered," Mr Koepp said.
