Value Added Tax (VAT)

Value Added Tax (VAT) was introduced in Thailand in 1992 and replaced the Business Tax (BT). VAT is an indirect tax applied to the value added at each stage of production and distribution.

Taxpayers

VAT taxpayers include:

Any individuals or legal entities that regularly supply goods or provide services in Thailand;
Provided that their annual turnover exceeds 1,800,000 baht.

A service is considered provided in Thailand if:

It is performed within Thailand, regardless of where it is used; or
It is performed outside Thailand but used within Thailand.

Imports are also subject to VAT regardless of the importer’s registration status. VAT is collected by Customs Department officers at the time of importation.

Certain activities are exempt from VAT but are subject to Special Business Tax (SBT).

Taxable Objects

Goods subject to VAT include:

All types of property (tangible and intangible) intended for sale, personal use, or other purposes;
All goods imported into Thailand;
All services provided for the benefit of individuals or legal entities.

Tax Rate

The standard VAT rate is 7%.

A 0% rate applies to:

Exported goods;
Services provided in Thailand but fully used outside Thailand;
International transportation by sea or air;
Supplies under foreign government-funded programs;
Sales to the UN, embassies, and consulates;
Trade within customs warehouses and Export Processing Zones (EPZ).

Tax Base

General Goods and Services

The VAT base is the total value of the supply, including:

Money, property, services, or other income expressed in monetary terms;
Excise taxes (if applicable).

VAT itself is excluded from the base, and discounts or surcharges are not included unless specified in the invoice.

Imports

Tax base = C.I.F. value + import duty + excise tax + other charges

Exports

Tax base = F.O.B. value + excise tax (if any) + other taxes and charges

Time of Supply (Tax Point)

Sale of Goods

Based on the earliest of:

Delivery/receipt;
Transfer of ownership;
Payment;
Invoice issuance.

Installment Sales

Payment due date;
Actual payment;
Invoice date.

Consignment

Delivery to consignee;
Transfer of ownership;
Payment;
Invoice issuance.

Imports

Based on the earliest of:

Payment of duty;
Receipt/appointment of guarantor;
Bill of lading.

Exports

Based on the earliest of:

Payment of export duty;
Shipment/export of goods;
Bill of lading.

Services

General rule:

Payment;
Invoice;
Receipt of service.

Service contracts:

Payment;
Invoice;
Receipt of service.

Imported services:

Payment.

VAT Calculation

Formula:

Output Tax – Input Tax = VAT payable

Output Tax — VAT collected from customers
Input Tax — VAT paid to suppliers for goods/services used in business

VAT Refunds

If Input Tax exceeds Output Tax, the taxpayer may:

Claim a refund (cash or carry forward to future periods);
Claim a refund under the 0% rate;
Carry forward unused input tax for up to 6 months;
Apply for a refund within 3 years from the filing date.

Some amounts are non-refundable (e.g., VAT on entertainment expenses), but they may be deductible for corporate income tax purposes.

Registration

VAT taxpayers must:

Submit form VAT 01 before starting business or within 30 days after exceeding the 1,800,000 baht threshold;
Apply at the Area Revenue Office (Bangkok) or local office (other provinces);
If there are branches, registration is filed at the head office location.

Filing and Payment

VAT returns are filed monthly using form VAT 30;
Deadline: no later than the 15th day of the following month;
If there are branches, each must file separately.

Services received in Thailand but paid abroad are also subject to VAT — form VAT 36 must be filed, and the tax is paid on behalf of the foreign supplier.