The Revenue Department of Thailand regulates and monitors taxes in Thailand. An individual or a juridical person must handle and pay a variety of taxes. These Tax Regulations are very stringent, but there are few flexibility as well. VAT Exemption in Thailand is one of such relaxations. The Royal Thai Government keeps on upgrading it to preserve a healthy business ecosystem across the kingdom.
Is your firm located in Thailand with a gross monthly turnover of 300,000THB or yearly income of 1,800,000THB? If yes, then Konrad Legal recommends that you must register under the Thai Value Added Tax system. You may be eligible for exemptions as well if you or your business satisfies few criteria.
Before we know about the VAT Exemptions in Thailand, let us brief you on the VAT Registration and Returns Process.
VAT Registration
Any person or company liable to VAT in Thailand must register with the Thai Revenue Department. They must register as a VAT registered person or company using Form VAT 01. By this, they will receive a tax identification number. They will get so before starting business, providing services, selling goods, or within 30 days of reaching the threshold income.
The VAT registrant must submit the registration application to the Area Revenue Offices. Every location in Thailand has respective Area Revenue Offices as per their zones. A business can have multiple branches. In that case, they have to submit the application to the Area Revenue Branch Office of the main office.
VAT Registration is mandatory if you want to recruit a foreigner. It is because your VAT Registration Certificate is one of the key documents for your would-be foreign employee. It is necessary for them to obtain their Non-immigrant Visa and Work Permit.
VAT Returns
VAT returns must be filed on a monthly basis with the Revenue Department. Konrad Legal Company Limited provides this monthly service through its Accounting and Auditing department. Additionally, we also calculate the amount of Value Added Tax due. The monthly payment is the amount of VAT collected minus the amount of VAT paid to others by the company.
By the 15th of the next month, Value Added Tax returns must be filed with the Revenue Department. Once a business holds VAT Registration, it must file a monthly return. This is mandatory even if it has no revenue for the month.
Reports & Fines
Our accountants generate two reports before filing the monthly Value Added Tax return:
- Output VAT, and
- Input VAT.
If the amount of output VAT exceeds the amount of input VAT, the company must pay the difference to the Revenue Department. This signifies that the amount of VAT received from customers exceeds the amount of Value Added Tax paid to suppliers by the company. If the output VAT is less than the input VAT, the company can deduct the output VAT payable the following month.
However, it is also possible to request a VAT refund, whose difference is applied to the next payment. If you fail to submit a report or file it late, you will face penalty. The fine is equal to double the amount of the tax owed plus a penalty of 1.5% interest on the amount due.
VAT Exemption in Thailand
According to the Revenue Department’s website, there are still exemptions to the VAT system.
Following business activities are eligible for VAT Exemption in Thailand:
- A small entrepreneur whose annual turnover is less than 1.8 million baht would not need to pay tax to the revenue office.
- Sales and import of unprocessed agricultural products and related goods such as fertilizers, animal feeds, pesticides, etc.
- Sales and import of newspapers, magazines, and textbooks.
Certain basic services eligible for VAT Exemption in Thailand are:
- Transportation: domestic and international transportation by way of land
- Healthcare services provided by the government and private hospitals as well as clinics
- Educational services provided by the government and private schools and other recognized educational institutions
- Professional services: Medical and auditing services, lawyer services in court, and other similar professional services that have laws regulating such professions
- Income from a business, commerce, agriculture, industry, transport, or any other activity not specified earlier.
- Cultural services such as amateur sports, services of libraries, museums, zoos
- Services in the nature of employment of labor, research and technical services and services of public entertainers
- Goods exempted from import duties under the Industrial Estate law imported into Export Processing Zones (EPZs) and under Chapter 4 of the Customs Tariff Act
- Imported goods that are kept under the supervision of the Customs Department will be re-exported and be entitled to a refund for import duties
- Other services such as religious and charitable services, services of government agencies, and local authorities.
The Bottomline
Konrad Legal’s lawyers have significant knowledge of Thailand’s Value Added Tax (VAT) rules as well as expertise providing tax services to Thai firms. We’ve dealt with tax issues for companies of all scales and liabilities. Our service costs are economical with a promising presence in our clientele.
We provide tax services, tax credit, excise tax, corporate income tax, special business tax, indirect tax, tax invoices, and tax liability consultations in Thailand, and we would be pleased to help you if you require other services. Please do not hesitate to contact us if you require extra information on any of our Taxation services. Email us at [email protected].
