Worldwide VAT, GST and Sales Tax Guide
Bangkok GMT +7
EY
33rd Floor
Lake Rajada Office Complex 193/136-137 New Rajadapisek Road Klongtoey, Bangkok 10110
Thailand
Indirect tax contacts
Kasem Kiatsayrikul
+66 (2) 264-9090, Ext. 77033 kasem.kiatsayrikul@th.ey.com
William Chea +66 (2) 264-9090, Ext. 77056 william.chea@th.ey.com
Thitima Tangprasert +66 (2) 264-9090, Ext. 77035 thitima.tangprasert@th.ey.com
A. At a glance
Name of the tax
Value-added tax (VAT)
Local name phaa sǐi muun lá khâa phôem
Date introduced 1 January 1992
Trading bloc membership Association of Southeast Asian Nations (ASEAN)
Administered by Thai Revenue Department (http://www.rd.go.th)
VAT rates
Standard 7%
Other
Zero-rated (0%) and exempt
VAT number format Tax identification number (TIN)
VAT return periods Monthly
Thresholds
Registration
THB1.8 million
Recovery of VAT by No non-established businesses
B. Scope of the tax
VAT applies to the following transactions:
• The supply of goods or services consumed in Thailand by a taxable person
• The importation of goods or services into Thailand
• The export of goods or services out of Thailand
Effective use and enjoyment. To avoid instances of non-taxation or double taxation, jurisdictions can apply “use and enjoyment” rules that allow a service that is “used and enjoyed” in the jurisdiction to be taxed or prevent a service that is “used and enjoyed” outside the jurisdiction from being taxed. If a service is taxed in the jurisdiction under the “use and enjoyment” provisions, a non-established supplier of the service may be required to register for VAT in every jurisdiction where it has customers that are not taxable persons. In Thailand, no services are subject to the “use and enjoyment” provisions.
Transfer of a going concern. Transfer of going concern rules do not apply in Thailand. As such, VAT applies to all sales of a business or part of a business capable of separate operation, including assets. However, the transfer of business in Thailand could be exempted from VAT, provided that such transfer of business is qualified for the entire business transfer scheme (EBT) or partial business transfer scheme (PBT).
Transactions between related parties. For both related parties’ and non-related parties’ sale and service transactions, the value of the goods or the services must not be lower than the market price or without consideration unless there is a justifiable ground for such value. Otherwise, the tax authorities are empowered to uplift the selling/service price to be at the market value as of the transaction date.
C. Who is liable
A taxable person is any entity or person that falls into any of the following categories:
• A seller of goods in the course of a business or profession in Thailand
• A provider of services in the course of a business or profession in Thailand
• An importer of goods and services
• Any person deemed by the law to be a trader, such as a local agent of an overseas corporation that sells goods or provides services in Thailand
Exemption from registration. A small business operator can be exempted from VAT registration if its taxable revenue per annum does not meet the VAT registration threshold.
Voluntary registration and small businesses. A business may register for VAT voluntarily if its taxable turnover is below the VAT registration threshold (annual revenue of THB1.8 million). A business may also register for VAT voluntarily in advance of making taxable supplies.
Group registration. Group VAT registration is not allowed in Thailand.
Fixed establishment. In Thailand, there is no legal definition of a fixed establishment for VAT purposes.
Non-established businesses. To register for VAT in Thailand, the non-established business must be engaged in VAT taxable activities in Thailand via a local agent or representative and have a fixed place of business in Thailand.
A non-established business cannot register for VAT simply to claim input tax if it does not have any activities that generate income in Thailand.
Tax representatives. Tax representatives are not required in Thailand.
Reverse charge. If an overseas service provider or supplier of goods temporarily carries on a business in Thailand but is not registered for VAT in Thailand or if such person provides services overseas for use in Thailand to a payer of service fees in Thailand, the customer for the goods or services in Thailand must self-assess the VAT due and remit it to the tax authorities. Payment must be made by the seventh day of the month following the month of the payment of the income. If the customer for the goods or services is registered for VAT in Thailand, it may recover the VAT paid by crediting it against the output tax.
Domestic reverse charge. There are no domestic reverse charges in Thailand.
Digital economy. For local business operators in Thailand, the VAT operator who provides the digital services in Thailand is liable to charge VAT on the chargeable services fee. It is considered as a general provision of services where the VAT liability will be triggered upon the receipt of the fee payment unless the tax invoice is issued earlier.
At the time of preparing this chapter, the 7% VAT rate will be applied for sales of goods, provisions of services and imports of goods until 30 September 2025.
Examples of goods and services taxable at 0%
• Export of goods to foreign countries and customs free zone in Thailand
• Export of services, i.e., services performed in Thailand must be used in a foreign country, such as R&D that results in services used in foreign country. If the services are partially used in Thailand, the part of the services used in Thailand (if can be segregated) is subject to VAT at a rate of 7%
• International transport services by aircraft or seagoing vessels
• Sale of goods and provision of services to United Nations Organization, an embassy, legation, consulate-general or consulate
• Sale of goods and provision of service between bonded warehouse and the other bonded warehouse between the supplier who carries on the business in free zone
The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Sale of agriculture products, animals and animal products (except canned foods)
• Sales of fertilizers, drugs or chemicals for caring for plants or animals and insecticides or pesticides for plants or animals
• Sales of ground fishmeal and animal feeds
• Sales of newspapers, periodicals and textbooks
• Rendering of services in the fields of medicine, auditing or litigation
• Hospital services
• Domestic transportation of all types and international transportation by land
• Leasing of immovable property
• Business subject to specific business tax (SBT)
Option to tax for exempt supplies. Operators of the following VAT exempted businesses are entitled to register for VAT:
• Sale of goods not for export or provision of services as follows:
– Sale of agricultural products
– Sale of animals
– Sale fertilizers
– Sale of fish meals, animal feeds
– Sale of drugs and chemical products for plants and animals
– Sale of newspapers, magazines or textbooks
• Provision of domestic transport by aircraft
• Export of goods as the trader in the export processing zone under the laws governing industrial estate of Thailand
• Provision of the service of transporting fuel oils through pipes in Thailand
• Business with the value of tax base not exceeding the value of the tax base for a small business fixed by Royal Decree
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.”
The tax point for the supply of goods is the time of delivery unless one of the following events occurs earlier:
• Ownership transfer
• Receipt of the payment
• Issuance of the tax invoice
Pre-registration costs. Input tax incurred on pre-registration costs in Thailand is not recoverable.
Bad debts. The taxable person carrying on the business of selling goods or provision of services who has issued a tax invoice and has included an output tax in the VAT computation is entitled to deduct the output tax computing from a portion of bad debts from an output tax in the tax month that the bad debts were written off, if it meets the following conditions:
• Debt must arise from the sale of goods or the provision of service to nontaxable person
• The full tax invoice for such sale of goods or provision of service is issued
• The legal prescription of the bad debt is not expired and there is substantial evidence to file a lawsuit
• The legal procedure prescribed under Thai VAT laws has been complied
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Thailand.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses that are not registered for VAT in Thailand is not recoverable.
H. Invoicing
VAT invoices. A Thai taxable person is required to issue a tax invoice for all taxable supplies made, including exports. A tax invoice is necessary to support a claim for input tax deduction or a refund.
Credit notes. A tax credit note may be used to reduce the VAT charged and reclaimed on a supply. The credit note must reflect the reasons for its issuance as allowed by the VAT law. The credit note must be cross-referenced to the original tax invoice and must contain the required information as prescribed under the Thai VAT law.
Electronic invoicing. Electronic invoicing is allowed in Thailand, but not mandatory.
Scope of electronic invoicing. For B2B, B2C and business-to-government (B2G) supplies, electronic invoicing is allowed but not mandatory in Thailand. There is no threshold beyond which taxable persons are required to adopt electronic invoicing in Thailand. The requirements related to electronic invoicing are the same as those for paper invoicing.
Upon the approval of the tax authorities, an authorized taxable person can issue such electronic tax invoices to all sale and service transactions including B2G, B2B and B2C. A normal taxable person can only issue electronic tax invoices if it is approved by the tax authorities. Basically, the taxable person must have a good internal control system and reliable process to prove that the electronic tax invoices will contain the same accurate details when they are created and have the electronic certificate from the registered service provider and one digital signature.
The electronic tax invoice could be maintained in an electronic copy for the inspection of the tax authorities. Without the approval to issue electronic tax invoices, the taxable person is liable to issue the tax invoice in hard copy and deliver such tax invoice to its customers when the VAT is triggered and maintain the copy of the tax invoice in hard copy for the inspection of the tax authorities.
Electronic tax invoices should include the same information/particulars as traditional paper tax invoices required by Thai VAT laws, and the electronic signature (under the electronic certificate issued by the certification authority) must be affixed in such tax invoices each time before sending to the customer. Importantly, the electronic certificate used for generating such electronic signature must still be valid and cannot be expired at the time of creation such electronic signature.
Personal liability for company officers. The managing director, director or person acting in a representative capacity of such juristic person shall be liable to the penalty as prescribed for such false action, except where they can prove that they have no consent or no part in such wrongdoing of the juristic person.
Statute of limitations. The statute of limitations in Thailand is two to five years. The tax authorities can make an assessment for two years as from the last day of the period for VAT return filing, which could be extended to five years. Nevertheless, for some certain noncompliance cases for which the assessment periods have not been prescribed in the Revenue Code, the assessment period could be extended to 10 years.
The period of the assessment could be extended to five years in cases where it appears to the tax authority that the taxable person might have incorrectly remitted the VAT or not completely filed tax returns. In addition, in case of non-filing the VAT returns [either PP30 or reverse-chargemechanism (PP36)], the statute of limitations is 10 years starting from the due date of filing.
A taxable person can voluntarily make the declaration of the noncompliance at any time before receiving the assessment letter issued by the tax authority.