What is Vat in Thailand, how does it work?
When do we have to have this?
VAT is value added tax, a Thai company needs to register for VAT within 30 days of their turnover reaching 1,800,000 THB.
VAT is a tax on the sale of goods or the provision of services and the current rate is 7%. If you provide services to a company outside of Thailand, usually you don’t need to charge VAT. Purchasing services from companies outside Thailand is usually subject to VAT. However the rules are complicated so before making any decisions regarding this you should consult with your accountant.
Companies registered for VAT must submit VAT returns and pay any VAT which is due to the local government office by the 15th of each month.
VAT on income must be paid by the 15th of the following month, there are also strict invoicing rules surrounding VAT so if you have been running a company without VAT then you will need to change the way you do your invoicing.
The first thing you need to change is your invoice numbers. When you first register for VAT, you need to start your invoice numbers again from 001.
Secondly, you must issue a tax invoice instead of a regular invoice and the payment must be made within the month that the invoice is issued.
These rules can cause considerable headaches for small businesses with long payment terms as payments can often run into the following month.
In this case it may be advisable to issue a regular invoice to your customers and when payment is received issue a tax invoice/receipt.
Each case is different and you should seek advice from your accountant for any situation regarding VAT.
Having a company which is VAT registered also enables you to claim back VAT on any goods or services which you have to pay VAT on. Your accountant will usually do this on your behalf.
VAT in Thailand is complicated and getting it wrong can result in fines which can cripple a small or medium sized business. Always seek professional advice and make sure that you use a well recommended company or accountant.
