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Home › Accounting services › Value added tax (VAT)

Learn more about Value Added Tax (VAT)

In accounting, VAT must also be taken into consideration. Indeed, any person or entity supplying goods or services must register for VAT if their annual turnover exceeds 1.8 million baht. The registration takes place within 30 days after the threshold is exceeded with the tax authorities via the form PP 01. As soon as the company is registered for VAT, it is obliged to make two monthly declarations. Firstly, it must declare the different amounts of VAT collected and disbursed during the month in order to calculate the VAT payable. The declaration is made by means of the form PP 30. The taxpayer must also pay VAT on behalf of its foreign service providers who are not registered in the Thai system. In this case, as soon as the Thai company uses a service from foreign suppliers, it must submit a 7% VAT return on their behalf via form PP 36.

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Who should pay the Value Added Tax?

Any company established of goods or services in Thailand with annual turnover exceeding 1.8 million Baht is subject to value added tax in Thailand. Tax registration is mandatory within 30 days from the date the turnover exceeds 1.8 million Baht.

Which activities are exempt from VAT?

Certain activities are exempt from Value Added Tax. Below is the non-exhaustive list of goods and services exempt from payment of Value Added Tax:

How to register for VAT?

Value Added Tax registration is compulsory for any person or entity liable for Value Added Tax in Thailand via a form entitled VAT PP 01 either before the start of the operation of the company or within 30 days of the reaching the income threshold. The application for registration must be submitted to the Area Revenue Offices if the company is located in Bangkok or to the Area Revenue Branch Offices if the company is located elsewhere. In case the taxpayer has more than one branch, the registration application should be submitted to the Revenue Office instead of the registered office of the company.

The documents to be communicated to register the company for VAT are as follows:

➤ Two copies of the housing registers and the identity card of the owner of the building with signature in the event of rental of the premises
➤ Two copies of the housing registers where the company is located with the signature of the owner of the building
➤ Two copies of the housing registers and the identity card of the director of the company with signature
➤ Photograph of the company headquarters
➤ Two copies of the business plan with signature
➤ Two copies of the rental agreement in case of rental of premises

How is VAT calculated?

The tax base for Value Added Tax is the total value received or receivable from the supply of goods or services. Value refers to any amount of money, property, consideration, service charge or any other benefit that can be assessed in monetary terms.

The Value Added Tax payable for a company is equal to the difference between the Value Added Tax collected and the Value Added Tax paid. The VAT collected is the amount of Value Added Tax collected by this company through the sale of its goods or provision of services. The disbursed (deductible) VAT is the amount of Value Added Tax paid by this company for its purchases. This amount is then deductible from the VAT collected.

What is the current VAT tax rate?

The current rate of Value Added Tax in Thailand is 7%.

How to pay VAT?

VAT is a monthly tax that must be paid by the taxpayer every month.

The Value Added Tax declaration is made by submitting two monthly forms:

➤ Form PP 30 at the latest within 15 days of the following month allowing to declare the amount of VAT collected as well as the amount of Value Added Tax paid. The difference between the two allows to know the amount of VAT payable to the Thai tax authorities. If the amount of Value Added Tax paid is greater than the amount of Value Added Tax collected, it is possible to obtain a refund or a tax credit.
➤ Form PP 36 at the latest within 7 days of the following month for companies which use services from abroad. This is because services used in Thailand provided by service providers from third countries are also subject to Value Added Tax in Thailand. It is up to the recipient of the service in Thailand to complete the form and pay the tax on behalf of the service providers.

Returns as well as payment of VAT must be submitted to the Area Revenue Branch Office.

If a company has several branches or establishments, each establishment must in principle make its own VAT return. However, it is possible to integrate Value Added Tax returns and payment within a single entity, provided the approval of the General Manager of the Revenue Department is obtained.

When can VAT be refunded?

As soon as the amount of VAT disbursed is greater than the amount of VAT collected, the taxpayer can request reimbursement of the difference, whether in cash or in the form of a tax credit. In practice, companies generally tend to get a tax credit carried over to subsequent months. The Value Added Tax paid can be credited and deducted from the Value Added Tax collected only in the six months following the declaration.

What are the penalties for late payment?

In the event of failure or late declaration of Value Added Tax, the taxpayer is subject to payment of a fine equal to double the amount of tax due, increased by a penalty of 1.5% interest on the unpaid amount. If the taxpayer has an amount of VAT disbursed greater than the amount of VAT collected, he then has a right to a refund of Value Added Tax or a tax credit that can be carried forward to the following month.

Do I have to pay when exporting goods out of Thailand?

In the event that your Thai company exports goods overseas, you benefit from a 0% Value Added Tax rate for the sale of your goods overseas. It is important to keep the supporting documents for the sale of your goods outside Thailand in order to benefit from the Value Added Tax exemption. You still have to register for VAT as soon as your turnover exceeds the expected threshold. This registration will allow you to obtain a refund of the disbursed Value Added Tax paid on your various purchases.

Do I have to pay when importing goods into Thailand?

In case of importation of goods by your Thai company, you must pay the import price of the good including VAT to the seller. You should register for Value Added Tax and declare the value of imported goods with paid Value Added Tax. You will then be able to obtain a refund of the disbursed VAT qualified as deductible Value Added Tax on all the goods you have imported.

Is there a specific tax on certain goods?

The excise tax is a selective tax levied on certain specific goods such as petroleum products, tobacco, alcoholic beverages, beer, soft drinks, crystal glasses, perfumes and cosmetics. The tax is imposed at a fixed rate or varies according to the value of the property. All goods subject to excise tax remain subject to Value Added Tax. This is an additional tax.

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