Thailand VAT compliance

Value added tax (VAT) was introduced in Thailand in 1992, replacing Business Tax (BT). As in other countries with VAT systems, VAT in Thailand is an indirect tax imposed on the value added to goods at each stage of production and distribution.

The standard rate has reduced from 10% to its current 7%. There is also a zero rate on certain services including export sales, international transport services, and goods sold within customs-free zones.

Exemptions include basic groceries, educational services, textbooks, healthcare services, rental properties, the sale of real estate, services provided by Thai governmental organisations, land transportation, libraries, museums, medical and auditing services, and religious and charitable services.

Businesses that are exempt from VAT could be subject to Specific Business Tax (SBT).

VAT is administered by the Revenue Department of Thailand. Apart from exemptions, taxable goods refer to all types of property whether they are tangible or intangible, and whether they are for sale or own use. A service is any activity conducted for the benefit of a person or an entity.

A taxable person subject to VAT in Thailand is defined as any person or entity supplying goods or services in the country with a turnover exceeding THB 1.8 million per annum.

Importers are subject to VAT in Thailand regardless of whether they’re a registered person or not. The Thai Customs Department collects VAT at the time goods are imported.

Taxable persons must register for VAT in Thailand before commencing operations, or within 30 days of breaching the income threshold of THB 1.8 million per annum. It isn’t mandatory for businesses to register for VAT if their annual sales turnover is below this threshold, but registration can be applied on a voluntary basis.

Applications for VAT registration must be submitted to the Thai Area Revenue Offices if the business is based in Bangkok. Businesses based elsewhere in Thailand must submit their applications to the Area Revenue Branch Offices.

There is no threshold for overseas businesses making taxable supplies in Thailand. Non-resident businesses must register for VAT if saleable goods are delivered within Thailand, if imports are installed and/or assembled in Thailand, or if they export goods from Thailand.

VAT-registered businesses must issue tax invoices for transactions. These can be used to claim input tax credit.

Invoices must detail the nature and value of the goods or services in question, the amount of VAT due, the name, address, and tax identification number of the supplier, and the date of issuance.

A taxable period in Thailand is a calendar month. VAT returns must be filed on a monthly basis, and be submitted to the Area Revenue Branch Office within 15 days of the following month.

If a taxable person has multiple places of business, a VAT return must be filed for each place and separate payments must be made unless prescribed by the director general of the Thai Revenue Department.

If the supply of goods and services is also subject to excise tax, a VAT return must be submitted to the Thai Excise Department with an excise tax return (and any payments) within 15 days of the following month.

VAT returns for imported goods must be submitted to the Thai Customs Department at the point of import.

As in other countries with VAT systems, output tax in Thailand is collected by businesses from their customers. Input tax is charged by another taxable person on any purchase of goods or provision of services. The VAT liability is the output tax minus the input tax.

If the input tax exceeds the output tax, the taxable person can claim a VAT refund. Refunds can be paid in either cash or tax credits. VAT refunds will always be available for zero-rated VAT situations. Certain input taxes, such as tax related to entertaining expenses, are not creditable under VAT.

Any unused input tax can be credited against future output within the following six months.

Non-resident businesses selling digital products or services into Thailand to customers who are not VAT registered must register for VAT if their income exceeds THB 1.8 million per annum. The non-resident business must also file VAT returns and pay VAT (without deducting input tax). This must be done via the Thai Revenue Department’s online system.

Non-resident businesses selling digital products or services are not required to issue tax invoices or prepare input tax reports.

The Thai Revenue Department imposes fines if businesses submit their VAT returns late. These fines are THB 300 within the first seven days and THB 500 after the first seven days.

Penalties can also be issued of up to 200% of due taxes.

A non-resident business may register for a temporary VAT number, under Section 82/3 of the Revenue Code, without the requirement to form a local company, provided the VAT registration remains open for 12 months and not more than three years. However, the non-resident business must appoint a VAT fiscal representative.

The representative and company are jointly liable for the reporting and payment of VAT to the Thai authorities. In addition, the agent is responsible for all communications between the company and the Thai tax authorities.