Bangkok Post, Thailand, Tax Column.

Byline: Stuart Cioccarelli

Jan. 2--Proposed changes in the treatment of certain services for tax purposes in the new economy bear close watching, following the recent release of draft changes in the Model Tax Convention by the Organisation for Economic Co-operation and Development (OECD).

The technical advisory group that drafted the proposals reached practical conclusions that maintain the principle of neutrality between similar online and physical transactions.

Another key area it considered was the difference between the supply of "know-how" (giving rise to royalties) and the supply of "services" (giving rise to business profits). The revised draft, if approved, could have significant consequences for multinationals.

Background: Technical service fees paid by a Thai entity to a foreign entity are generally subject to Thai withholding tax at 15 percent . However, a service provider, if resident for tax purposes in a country ...