Value Added Tax (VAT)

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.

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:

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:

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.

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

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:

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.

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.

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.

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.

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.

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.