VAT was introduced into Thailand in 1992 at 10% - since reduced to 7%. It is similar to the European Union’s VAT system, requiring re-calculation and payments to the tax authorities at each transaction point in the onward sales chain.
Should you register for VAT in Thailand
For foreign companies making taxable supplies in Thailand, there may be a statutory obligation to register for VAT. Once registered, non-resident traders must comply with local filing rules (see Thailand VAT Compliance section below).
Typical situations requiring a VAT registration in Thailand include:
- Where goods are delivered within Thailand;
- If the foreign trader imports, installs or assembles goods in Thailand;
- Export of goods from Thailand; and
- Supply of services where the place of supply is Thailand.
Thailand registration threshold
There is an annual VAT registration threshold of THB 1.8 million per annum. It is not compulsory to register if your annual sales turnover is below this amount; however it is possible to apply for a voluntary registration.
Thailand fiscal representative
A foreign company 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 they 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.
The foreign company is required to use a registered office address in Thailand. In addition, the temporary non-resident shall be deemed as having a permanent establishment in Thailand; however, the temporary non-resident shall be deemed as having a permanent establishment in Thailand. Therefore, it will be regarded as also being liable for corporate income tax on its activities in Thailand. This will require the submission of CT returns.
Thai VAT rates
The standard VAT rate in Thailand is 7%. This has been reduced from 10% for a limited period until 30th September 2010. This has since been extended futher several times.
There is also a zero rate on certain services including: export sales; international transports services; goods sold within customs free zones; and other. Certain supplies are exempt from VAT including: textbooks; healthcare services; property rental; and other.