In Brief
On 25 August 2020, the Cabinet approved to maintain the reduced VAT rate of 7 per cent for an additional 12 months period of time to 30 September 2021 as proposed by the Ministry of Finance.
The 7 per cent reduced VAT rate is inclusive of local tax and will be applicable to the VAT liabilities incurring from the sale of goods or the provision of services and import transactions.
Key Takeaways
A. Taxable Person
Any person or entity who regularly supplies goods or provides services in Thailand and has an annual turnover exceeding 1.8 million baht is subject to VAT in Thailand. Service is deemed to be provided in Thailand if the service is performed in Thailand regardless where it is utilized or if it is performed elsewhere and utilized in Thailand.
An importer is also subject to VAT in Thailand no matter whether one is a registered person or not. VAT will be collected by the Customs Department at the time goods are imported. Under VAT, taxable goods mean all types of property, tangible or intangible, whether they are available for sales, for own use, or for any other purposes.
B. Exemptions
| No. | Activities |
|---|---|
| 1. | Small entrepreneur whose annual turnover is less than 1.8 million baht |
| 2. | Sales and import of unprocessed agricultural products and related goods such as fertilizers, animal feeds, persticides, etc. |
| 3. | Sales and import of newspapers, magazaines, and textbooks |
| 4. | Certain basic services such as:
|
| 5. | Professional services: Medical and auditing services, lawyer services in court and other similar professional services that have laws regulating such professions. |
| 5. | Professional services: Medical and auditing services, lawyer services in court and other similar professional services that have laws regulating such professions. |
| 6. | Income from business, commerce, agriculture, industry, transport or any other activity not specified earlier. |
| 7. | Cultural services such as amateur sports, services of libraries, museums, zoos. |
| 8. | Services in the nature of employment of labour, research and technical services and services of public entertainers. |
| 9. | Goods exempted from import duties under the Industrial Estate law imported into an Export Processing Zones (EPZs) and under Chapter 4 of the Customs Tariff Act. |
| 10. | Imported goods that are kept under the supervision of the Customs Department which will be re-exported and be entitled to a refund for import duties. |
| 11. | Other services such as religious and charitable services, services of government agencies and local authorities. |
C. VAT Registration
Any person or entity who is liable to VAT in Thailand must register to be VAT registered person or entity (Application form Phorphor.01 and Phorphor.01.1) before the operation of business or within 30 days after its income reaches the threshold. The registration application must be submitted to Area Revenue Offices if the business is situated in Bangkok or to the Area Revenue Branch Offices if it is situated elsewhere.
Should taxpayer have several branches, registration application must be submitted to the Revenue Office where the headquarters is situated. After registered VAT, the Revenue Department will issue VAT registration certificate (Phorphor. 20). Taxpayers have to display VAT registration certificates at their premises.
D. Tax Return and Payment
VAT taxable period is a calendar month. VAT return therefore must be filed on a monthly basis. VAT return (Application form Phorphor. 30) together with tax payment, if any, must be submitted to Area Revenue Branch Office within 15 days of the following month. Services utilized in Thailand supplied by service providers in other countries are also subject to VAT in Thailand. In such a case, service recipient in Thailand is obliged to file VAT return (Application form Phorphor. 36) and pay tax, if any, on behalf of the service providers.
In the case where supply of goods or services is also subject to Excise tax, VAT return and tax payment, if any, must be submitted to the Excise Department together with Excise tax return and tax payment within 15 days of the following month. In case of imported goods, VAT return and tax payment must be submitted to the Customs Department at the point of import.
Should you have any further inquiries or require any assistance, please let us know.
Yours sincerely,
Somphob Rodboon
Managing Partner
Somphob.R@ilawasia.com
ILAWASIA Co., Ltd.
