What is Value Added Tax (VAT)?
VAT is an indirect tax which is calculated on the sale of goods or services in Thailand at the general rate of 7%. However, there are exceptions to this when even levels of 0% may apply; for example, sales or services to state-owned entities or the Thai government. There are also exemptions for smaller companies, medical and educational services, transportation and many more.
Registration requires submission of the VAT 01 form before commencing the business process OR withing 30 days after the income exceeds 1.8m THB per annum - the threshold.
The invoice must contain the following:
- The words “tax invoice” in a prominent place
- The name, address and taxpayer identification number of the VAT registrant issuing the tax invoice
- The name and address of the purchaser of the goods or service
- Serial number of tax invoice
- Description, type, category, quantity and value of goods or services
- The amount of VAT calculated on the value of goods or services clearly separated from the value of goods or services
- The date of issuance
- Tax identification number of the purchaser of the goods or services
- The wording “Head Office” or “Branch No. …” which is the seller’s place of business from which such tax invoice, debit or credit note is issued
- The wording “Head Office” or “Branch No. ….” which is the purchaser’s place of business to which such goods or services are sold or provided
Invoices which are raised in currencies other than THB require that the presentation of both currencies are on the face of the invoice and must indicate the exchange rate used. It is the amount in Thai Baht which is reported to the Revenue Department.
Provision of Services
Generally, an invoice is issued to request for payment of the service and then a tax invoice is issued on receipt of payment, which is the tax point for VAT purposes.
Imports & Exports
The export of both goods and services rendered in Thailand but wholly consumed overseas have a VAT rate of 0%.
When importing goods, VAT is due and payable to the Customs Department during the import process.
When payments are made overseas for services provided, this would be regarded as an import of services and VAT would apply on a reverse charge basis. Accordingly the recipient of the service would be required to make a voluntary payment to the Revenue Department along with the filing of VAT return form PP 36.