Value added tax
17 November 2018
Most persons that sell goods or provide commercial or professional services in Thailand will have to register with the Revenue Department to pay VAT. Suppliers with a sales turnover not exceeding Baht 1,800,000 per annum are exempt from VAT. Foreign businesses may also be exempt from VAT registration if they only carry on business in Thailand temporarily.
The law provides that certain sales, services and imports are exempt from VAT, such as the sale or import of unprocessed agricultural products, the sale or import of books, transport services and rental of real estate. A trader engaged in exempt transactions need not collect VAT, but at the same time cannot claim a refund of VAT paid to suppliers. The trader can however claim a corporate income tax deduction for the VAT suffered.
Taxable supplies attract VAT at either the standard rate of 7% or 0%. Imports are subject to 7% VAT which will be collected at the time of import by the Customs Department.
Transactions that are zero rated include exported goods, services performed in Thailand used in a foreign country and services of international transportation by air and sea. Under the zero rate, a supplier may obtain an input credit for VAT incurred on purchases.
VAT registrants shall add VAT to the price of their goods and services and collect the VAT from their customers or clients. A VAT registrant must prepare and issue a tax invoice in the prescribed format for every sale or service provided that is subject to VAT. Businesses that sell goods or provide services to a large number of customers shall have the right to issue an abbreviated tax invoice instead. VAT registrants that wish to claim a credit for the VAT on their purchases must receive a full tax invoice to support their claim.
Each month the VAT liability is calculated by taking the difference between the VAT on sales and the VAT on purchases that are allowed as a credit under the law. In the case where a credit balance arises, the taxpayer may carry forward the VAT credit to the following month or request a refund from the Revenue Department, which will most likely result in an audit.
A person that pays for services from a foreign supplier to use in Thailand shall be liable to remit the VAT on the services to the Revenue Department.
Specific Business Tax
Businesses that are not subject to VAT may be subject to specific business tax (“SBT”) instead. SBT is levied on the gross receipts of the business.