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EY
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Lake Rajada Office Complex 193/136-137 New Rajadapisek Road Klongtoey, Bangkok 10110
Thailand
Indirect tax contacts
Yupa Wichitkraisorn +66 (2) 264-9090, Ext. 55003 yupa.wichitkraisorn@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
Local name
Value-added tax (VAT)
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
Thresholds
Monthly
Registration Annual revenue of 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
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 tax able 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.
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 Thai tax authori ties. 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.
For e-commerce business, the sale of goods via an online platform by the VAT operator is considered as a general sale of goods, where the VAT liability is triggered upon the delivery of goods, receipt of payment, transfer of ownership or issuance of tax invoice, whichever happens earlier.
For nonresident providers of electronically supplied services for business-to-business (B2B) sup plies, the business customer in Thailand would be expected to self-assess for VAT for purchases of digital services provided by an overseas business (by way of the reverse-charge mechanism). The customer will need to lodge a separate self-assessment return together with the remittance of the VAT payable by the seventh day for paper filing or the 15th day for e-filing of the follow ing month that the payment is made. The customer (who is VAT registered) is entitled to include the self-assessed VAT remitted as its input tax in computing VAT. The customer is entitled to treat it as input tax in the tax month that the VAT remittance form was filed with receipt obtained from the revenue department, provided that the service payments are related to the taxable business and not prohibited under Thai tax law.
For nonresident providers of electronically supplied services for business-to-consumer (B2C) supplies, new VAT rules were enacted on 9 February 2021. The Revenue Code Amendment Act No. 53 (B.E. 2564) was published in the Royal Gazette with the main objective of enacting the new law regarding the collection of VAT on electronic services rendered by e-business operators
in foreign countries to non-VAT registrants in Thailand. The key principles of the new VAT rules are:
• Nonresident e-business operators that provide electronic services to non-VAT operators in Thailand are required to register with the Thai Revenue Department to pay Thai VAT and to file VAT returns
• In cases where nonresident e-business operators provide electronic services via an electronic platform operated by another party delivering a continuous service process, from offering the service to payment and to delivery, the platform operator is obliged to pay the VAT on behalf of the foreign e-business operators that use the platform, assuming the duties and responsibilities of the foreign e-business operators
• Under the new rules, “electronic services” are defined as services, including intangible assets, that are automatically transmitted via the internet or other electronic network and that could not be rendered without such technology (e.g., digital music, software programs.), while “elec tronic platform” is defined as any channel used by numerous operators to provide electronic services to their service recipients. Examples of “electronic services” covered by the new rules include online games, mobile application services and online advertising services
• The VAT registration threshold for foreign e-business operators will be the same as for local operators, i.e., THB1.8 million (or approx. USD55,000) per annum
• For VAT computation purposes, foreign e-business operators are not allowed to claim any input tax
• Nonresident suppliers may apply for VAT registration via the Thai tax administration’s website (http://www.rd.go.th)
The above new VAT law is effective from 1 September 2021. Imported goods are considered as the physical goods that could be delivered to the customer without the usage of the electronic net work. Thus, the above new VAT law regarding e-services does not apply to imported goods. There are no other specific e-commerce rules for imported goods in Thailand.
Online marketplaces and platforms. Under the new VAT law (as outlined above), foreign busi nesses who provide electronic services to non-VAT registrants in Thailand, for use of the services in Thailand, will be required to register and pay VAT to the Thai revenue department, if annual service income from non-VAT registered customers exceeds THB1.8 million (approx. USD55,000).
According to this new VAT law, non-Thai e-platform operators who act as intermediaries for multiple non-Thai e-service providers are also required to register for Thai VAT, but only if they: (i) Offer a complete suite of e-services, from presentation to delivery to payment collection (ii) Receive payment for e-services (iii) Deliver the e-services on behalf of nonresident e-service providers
If any of these three criteria are not met, an e-platform operator is not required to register as such for VAT purposes. This means that, for example, some online gaming platforms do not need to register, as they may either not collect payment nor deliver services to the end users and therefore do not meet criteria (ii) or (iii), respectively. However, digital platform operators who do not meet all these criteria still need to consider whether they should register as non-Thai e-service provid ers.
Not every nonresident e-service provider and e-platform operator will be affected. Some e-ser vices are excluded from this new e-service VAT rule, including telecommunications or live teach ing services and sales of e-books or e-magazines. The examples given by the tax authorities are not exhaustive, however, and certain online service providers will need to seek specific advice to ensure they are excluded.
At the time of preparing this chapter, the Thai Revenue Department announced that for crossborder VAT on electronic services in Thailand, they are considering online payments as one of the defined e-services under the new VAT rules.
Moreover, only those with income of more than THB1.8 million annually (approx. USD55,000) from providing e-services to non-VAT registrant customers in Thailand will be required to register for VAT, file monthly VAT returns and pay VAT. And unlike Thai-based operators, nonresident operators are neither required to issue a tax invoice to Thai customers nor keep an input tax report.
Registration procedures. VAT registration must be made within 30 days after revenue exceeds THB1.8 million or before the commencement of business. An overseas trader is eligible to reg ister for VAT only if it will do business in Thailand for at least one year or at least three months if engaged in a government project funded by a foreign loan or foreign aid.
The application for VAT registration can be submitted in hard copy to the respective area revenue office or online via the revenue department’s website. The application package must include the corporation documents, office rental agreement, etc.
For a hard copy submission, the registration application and required supporting documents must be submitted to the area revenue office where the business is located. In the case where the tax able person has several branches, the registration application must be submitted to the revenue office where the head office is located. If all required documents are fully submitted, the VAT registration should be approved on the same day.
For an online VAT registration, the applicant, who already has a tax identification number, can submit its application via the website of the revenue department (www.rd.go.th) 24-hours a day. The supporting documents are not required to be uploaded via the website at the time of registra tion, but the tax official will visit the applicant’s registered office to inspect all supporting documents prior to approving the VAT registration. The result of the registration application will be sent by email to the applicant within 15 days of the submission date.
Deregistration. A business that ceases operations must cancel its VAT registration by deregister ing with the tax authorities within 15 days after the date of ceasing operations. Failure to do so subjects the taxable person to a fine not exceeding THB5,000.
Changes to VAT registration details. The changes to VAT registration (such as increase or decrease of branch, relocation, transfer or acquire of business, etc.) are required to be notified to the tax authorities within 15 days before or after such change, as the case may be.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero-rate.
The VAT rates are:
• Standard rate: 7%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services, unless a specific measure provides for the zero-rate or an exemption.
On 24 August 2021, the Thai Cabinet approved the extension of the reduced VAT rate of 7% for another two years to sustain the economic stability of the country. The 7% VAT rate will, there fore, continue to be applied for sales of goods, provisions of services and imports of goods from 1 October 2021 until 30 September 2023.
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 ware house 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 pes ticides 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 indus trial 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
The tax point for the supply of services is the receipt of the payment unless one of the following events occurs earlier:
• Issuance of the tax invoice
• In the case of services provided without charge, the use of the services by the service provider or the other recipient persons
Deposits and prepayments. The time of supply rule for deposits and prepayments (for both goods and services) is the time of receipt of the payment.
Continuous supplies of services. There are no special time of supply rules in Thailand for supplies of continuous supplies of services. As such, the general time of supply rules apply (as outlined above).
Goods sent on approval for sale or return. There are no special time of supply rules in Thailand for supplies of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).
Reverse-charge services. The tax point for supplies of reverse-charge services is by the seventh day of the following month that the payment is made. 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.
Leased assets. The tax point for the supply of leased assets will be triggered upon receipt of rental fee or issuance of tax invoice, whichever happens earlier.
Imported goods. For the importation of goods from a seller located outside of Thailand or cus toms-free zone area, the importer must pay the VAT due to the customs authority, which collects the VAT on behalf of the Thai tax authority at the time of importation.
The tax point for the import of goods is the time of importation, which is the time of customs clearance.
The tax point for the export of goods is the time of payment of export duty or, if the goods are exempt from customs, the date on which the goods clear customs.
F. Recovery of VAT by taxable persons
A taxable person may recover input tax, which is VAT charged on goods and services supplied to it for business purposes. A taxable person generally recovers input tax by deducting it from output tax, which is VAT charged on supplies made.
Input tax includes VAT charged on goods and services supplied in Thailand, VAT paid on imports of goods into Thailand and VAT self-assessed on reverse-charge services.
Input tax should be recovered within the month it was incurred. However, if the input tax is not recovered in the month it was incurred, it can be recovered via the monthly VAT returns within six months following the month it was incurred. In addition, the cash refund can be requested within three years as from the date of the issuance of the tax invoice.
For the input tax to be recoverable within a period of six months, the taxable person is allowed to claim and use such input tax as a tax credit in the VAT computation within six months as from the following month that the tax invoice was issued.
However, if such input tax is not recovered within six months, the taxable person is not entitled to use such input tax as the tax credit for VAT computation. However, the taxable person is still able to request for the VAT cash refund within three years after the tax invoice was issued.
Please note that the time the invoice is issued and the time the VAT was incurred is the same date. This is because under Thai VAT rules, when the tax liability for the sale of goods/provision of services is triggered (e.g., the delivery of goods, receipt of payment, issuance of the tax invoice, etc.), the taxable person is required to issue the tax invoice to the customer immediately when the tax liability is triggered. However, the input tax from such transaction will be incurred at the issuance date of the tax invoice. Hence, the two scenarios are the same scenario.
Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepreneur). In addition, input tax may not be recovered for some items of business expenditure as prescribed under the Thai VAT law.
Examples of items for which input tax is nondeductible
• Entertainment expenses or similar expenses
• Passenger cars (except for car sales or rental business)
• Goods or services relating to passenger cars such as gasoline and repairs (except for car sales or rental business)
• Construction of buildings sold or used for a non-VAT business within three years after comple tion
In addition, the following input tax is not recoverable:
• Input tax arising from certain types of business activities that are not subject to VAT
• Input tax shown on an abbreviated tax invoice or a tax invoice that bears signs of correction or alteration of the particulars required by law
• Input tax not substantiated by a tax invoice
• Input tax recorded in an incomplete tax invoice
• Input tax shown on a tax invoice issued by a person not authorized to do so
Examples of items for which input tax is deductible (if related to a taxable business use)
Generally, input tax that is attributable on expenses related to the taxable business activities is deductible for VAT computation:
• Input tax on purchase of raw materials
• Input tax on purchase of capital assets
• Input tax on purchase of goods for resale
• Input tax on royalty payment
• Input tax on sale and marketing expenses
• Import VAT paid to customs department for import of goods into Thailand
• Self-assessed VAT paid to revenue department on reverse-charge mechanism
Partial exemption. A taxable person who carries on both taxable and nontaxable activities is required to apportion the input tax attributable on common expenses (i.e., expenses incurred for the benefit of both taxable and nontaxable activities) in accordance with the proportion of the revenues of each category of business.
The apportionment basis must comply with the rules, procedure and conditions as prescribed under Thai VAT laws.
Approval from the tax authorities is not required to use the partial exemption standard method in Thailand. Special methods are not allowed in Thailand.
Capital goods. Input tax on the purchase of the capital goods that are used in taxable business activities, can be fully claimed. Normal input tax rules apply.
Refunds. The VAT refund can be made within three years from the last day of filing date.
The request for a VAT refund shall be filed in the form prescribed by the Revenue Department at the area revenue office where the place of the business is located. In case the taxable person has several places of business, the request of the VAT refund must be filed at each place of busi ness, unless the taxable person has approval for joint filing from the Revenue Department.
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 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 informa tion as prescribed under the Thai VAT law.
Electronic invoicing. Electronic invoicing is allowed in Thailand, but not mandatory. A normal taxable person can only issue electronic tax invoices if it is approved by the revenue department. Basically, the taxable person must have a good internal control system and reliable process to prove that the e-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 authority. 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 authority.
Simplified VAT invoices. A taxable person who carries on a retail business is entitled to issue simplified tax invoices if such business meets the following conditions:
• The sale is made directly to customer without intention of resale
• The service is provided in small transaction to a large number of persons
Self-billing. Self-billing is not allowed in Thailand.
Proof of exports. An export of goods may be eligible for the zero rate of VAT if the goods are physically exported and if the export is supported by evidence confirming the departure of the goods from Thailand. The evidence required includes the following documents:
• Customs documentation
• Original invoice
Foreign currency invoices. Tax invoices must be issued in local Thai currency, Thai baht (THB). However, tax invoices can be issued in a foreign currency if approval has been obtained from the Revenue Department. The exchange rate applied must be presented on the tax invoice.
Supplies to nontaxable persons. There are no special invoicing rules for supplies to nontaxable person in Thailand. As such, full VAT invoices are required.
Records. A taxable person must keep and maintain the records, tax invoices, copies of tax invoices and the supporting documents at the place of business (unless the approval from the Revenue Department is obtained otherwise).
Record retention period. All records must be kept for at least five years.
Electronic archiving. The storage of VAT documents in an electronic format it is not mandatory in Thailand, but it is allowed. The taxable person must obtain the approval from the tax authority prior to the electronic storage of VAT documents.
I. Returns and payment
Periodic returns. VAT returns (PP30 Form) are submitted monthly and can be filed both in hard copy through the respective area revenue office (deadline by the 15th day of the following month) or online via the revenue department’s website (deadline by the 23rd day of the following month).
Periodic payments. A supplier of goods and services must collect VAT from the purchaser of the goods or the recipient of a service and remit it to the Thai tax authority by the 15th day for paper filing or the 23rd day for e-filing of the month following the event that the tax point is triggered (for example, the time of delivery, receipt of payment or issuance of an invoice; see Section E). The VAT can be paid to the Revenue Department in a form of cash or check for paper filing and online payment for e-filing.
Electronic filing. Electronic filing is allowed in Thailand, but not mandatory. Taxable persons can file their electronically monthly VAT returns via the website of the Revenue Department with online tax payment, provided that it obtains the approval from the Thai Revenue Department. An additional eight days of deadline can apply. The VAT can be paid to the Revenue Department via electronic banking.
Payments on account. Payments on account are not required in Thailand.
Special schemes. No special schemes are available in Thailand.
Annual returns. Annual returns are not required in Thailand.
Supplementary filings. Reverse-charge services filing. A separate return is required to report VAT on reverse-charge services. So, where a Thai service recipient accounts for VAT via the reversecharge mechanism, it is required to remit a filing summarizing such supplies, to the Thai tax authority by the seventh day of the month following the month in which the payment is made.
E-tax invoices filing. Taxable persons who issue electronic tax invoices are required to electronically submit the information of the e-tax invoices within 15 days of the following month.
Correcting errors in previous returns. If the declaration in the submitted VAT returns is incorrect, the taxable person can voluntarily submit the supplement VAT return to correct the previous declaration to the revenue office. The tax shortfall, penalty (at reduced rate) and monthly sur charge might apply as the case may be.
Digital tax administration. There are no transactional reporting requirements in Thailand.
J. Penalties
Penalties for late registration. Penalties are imposed for failure to register for VAT. The penalty is 200% of the VAT payable each month during the period of the failure to register for VAT.
Penalties for late payment and filings. A penalty of 100% of the tax shortfall is assessed for the late payment of VAT, plus a monthly surcharge of 1.5% of the tax shortfall (capped at 100% of the tax shortfall). However, if a taxable person does not receive a notice of call for examination, the penalty may be reduced to the following:
• 2% if the payment is made within 15 days after the due date
• 5% if the payment is made after 15 days but not later than 30 days after the due date
• 10% if the payment is made after 30 days but not later than 60 days after the due date
• 20% if the payment is made more than 60 days from the due date
Penalties for errors. A taxable person who issues a tax invoice, a simplified tax invoice, a debit note or a credit note containing incomplete particulars shall be subject to the fine not exceeding THB2,000.
Failure to notify the tax authority of a change in the taxable person’s VAT registration status by the prescribed deadlines subjects it to a fine not exceeding THB2,000 to THB5,000.
Penalties for fraud. A penalty is imposed for the use of a false tax invoice in computing tax. The penalty is 200% of the VAT payable under the original tax invoice.
In addition, a VAT registrant who intentionally makes use of a false tax invoice for the purpose for tax crediting shall be liable for a fine from THB2,000 to THB200,000 and three months to seven years imprisonment.
Personal liability for company officers. The managing director, director or person acting in a rep resentative 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 wrongdo ing of the juristic person.
Statute of limitations. The statute of limitations in Thailand is two to five years. The tax authori ties 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.