How the Thailand VAT Rate Affects Your Business Operations

Résumé : The Thailand VAT rate is 7% and becomes relevant once a business must register for VAT, which is required when turnover exceeds THB 1.8 million. After registration, companies must charge VAT, issue proper tax invoices, file monthly returns, and keep clear records under Thai Revenue Department rules.

VAT affects your pricing, cash flow, and profit margins. Errors such as late registration, incorrect invoices, or poor documentation can lead to penalties and audits. For foreign investors, VAT in Thailand is more complex, especially with cross-border services and refund claims, so good planning and accurate bookkeeping are important.

Introduction

Whether you are setting up a new company or already operating, it is important to understand your VAT obligations, including when VAT registration is required and when VAT must be charged on invoices.

Although VAT is paid by the end customer, businesses are responsible for registering correctly, issuing compliant tax invoices, and filing returns on time. However, not all businesses are not subject to Thailand VAT registration and not all transactions are subject to VAT.

Mistakes such as registering late, filing incorrectly, or applying VAT to the wrong transactions can quickly lead to penalties, cash flow strain, and unwanted attention from the Thai Revenue Department. For foreign-owned and growing businesses, VAT compliance is often more challenging, particularly where cross-border transactions, strict documentation rules, and coordination with corporate income tax and withholding tax are involved.

At VB & Partners, we support businesses across Thailand with VAT registration, monthly filings, bookkeeping, and tax coordination. Below, we explain how the Thailand VAT rate impacts real business operations and what this means for pricing, cash flow, compliance, and long-term planning.

What Is VAT and How It Works

Value Added Tax, commonly referred to as VAT, is a consumption tax applied to the sale of goods and services in Thailand. The current standard VAT rate is 7%, and it applies to most taxable transactions.

Although VAT is designed to be paid by the end consumer, businesses are responsible for charging VAT on sales (output VAT), paying VAT on purchases (input VAT), and remitting the net amount to the Thai Revenue Department.

Certain transactions are exempt or zero-rated, including specific financial services, exports, healthcare, and education. Correctly identifying which transactions are taxable, exempt, or zero-rated is essential. Misclassification can result in penalties, delayed VAT refunds, or audit issues.

Businesses with annual taxable turnover exceeding 1.8 million THB are required to register for VAT. Smaller businesses may choose voluntary registration, often to recover input VAT on expenses or to meet commercial requirements.

VB & Partners assists businesses in determining VAT applicability and ensuring correct registration from the outset.

Thailand VAT Registration Requirements for Businesses

VAT registration is an important consideration for any business operating in Thailand. Once the 1.8 million THB turnover threshold is exceeded, VAT registration becomes mandatory for both Thai and foreign-owned entities carrying out taxable activities. Once a business exceeds either the monthly or annual VAT revenue threshold, it must apply for VAT registration within 30 days. 

VAT registration is also a mandatory requirement for companies who wish to hire foreigners and support their Work Permits.

Some businesses may also choose to register voluntarily before reaching the threshold, particularly if they need to issue VAT invoices or expect to incur significant VAT on expenses. The decision to voluntarily register for VAT should be carefully assessed, as registration requires VAT reporting and monthly filing obligations.

Once a company has registered for VAT they will be issued with a VAT registration number that must appear on all tax invoices, receipts, and accounting records. Failure to register on time or comply after registration may result in fines, surcharges, interest, and increased audit risk.

Once registered, the company will also receive a VAT registration certificate (P.P.20). This certificate confirms the business has been legally registered for VAT from the date listed on the certificate. The VAT registration certificate must be clearly displayed in the place of business.

VB & Partners supports clients throughout the VAT registration process to ensure accuracy, timeliness, and compliance.

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Obligation d’enregistrement à la TVA en Thaïlande : quand et comment procéder

Comment s’enregistrer à la TVA ?

L’enregistrement à la TVA en Thaïlande est souvent plus complexe qu’il n’y paraît. L’un des points essentiels à prendre en compte est que toutes les adresses d’entreprise ne sont pas éligibles à l’enregistrement à la TVA. Le ministère du Revenu exige que l’entreprise dispose d’un bureau physique approprié. À ce titre, les bureaux virtuels, les appartements en copropriété et les espaces de coworking ne sont généralement pas acceptés. 

Dans le cadre de la procédure, les agents peuvent demander des photos du bureau affichant clairement le nom de l’entreprise et, dans certains cas, procéder à une inspection sur place afin de vérifier l’emplacement et l’existence réelle de l’activité.

Avant de signer un contrat de location, il est fortement recommandé de vérifier que le propriétaire accepte expressément l’utilisation des locaux pour un enregistrement à la TVA. Cette précaution est essentielle, le ministère du Revenu exigeant une lettre de consentement originale du propriétaire et, lorsque le bureau est situé dans un immeuble géré, une lettre supplémentaire émanant de l’entité juridique responsable de l’immeuble. 

Outre ces confirmations écrites, l’administration fiscale requiert généralement plusieurs documents, notamment une copie du contrat de location, un plan d’affaires et un plan de situation du bureau. Le plan d’affaires doit être préparé avec soin, car en cas de doute sur la légitimité de l’activité, les agents peuvent demander des explications complémentaires ou procéder à un examen approfondi. Un dossier bien structuré permet de réduire significativement le risque de contrôles supplémentaires.

Applicants will also be required to complete the VAT Registration form P.P. 01 to be submitted with the supporting documents.

Dans la pratique, la préparation de l’ensemble des documents peut prendre jusqu’à trois semaines, l’obtention des lettres de consentement et des pièces justificatives nécessitant souvent le paiement de frais de traitement et une coordination avec plusieurs parties. Une fois la demande déposée, le département des recettes fiscales met généralement environ deux semaines supplémentaires pour examiner le dossier et délivrer le certificat d’enregistrement à la TVA.

How VAT Affects Pricing and Cash Flow

Even when a business is not required to register, VAT in Thailand should still be considered, as voluntary registration may create opportunities to optimise tax liabilities, such as recovering input VAT and claiming allowable deductions. 

Thailand VAT registration affects how prices are presented to customers, whether the Thailand VAT rate must be added to invoices, and how quickly input VAT can be recovered through Thailand VAT reporting.

For some businesses, VAT registration can improve cash flow management by allowing VAT credits on expenses, while for others it may create additional work load due to filing and payment timelines. 

To assess whether your current VAT position supports your wider financial strategy, VB & Partners can review your Thailand VAT compliance in the context of pricing, cash flow, and operational planning.

How the VAT Rate Affects Business Operations

Because VAT has an effect on both pricing decisions and cash flow timing, it is important to understand the impact of VAT on your business.

Type d’activité commerciale

Toutes les entreprises ne sont pas tenues de s’enregistrer à la TVA. Lorsque les biens ou services fournis sont exonérés de TVA, ou lorsque l’entreprise est soumise à la taxe professionnelle spécifique (SBT), l’enregistrement à la TVA peut ne pas être requis. 

This can keep pricing simpler and more competitive, particularly for customers who cannot reclaim VAT, while also reducing work load due to not having to deal with the VAT filing obligations.

The downside is that VAT-exempt and SBT businesses generally cannot recover input VAT on expenses. This means VAT paid on rent, professional fees, or operating costs becomes an additional cost, which can reduce margins and affect overall cash flow.

Crédibilité

VAT registration can help to improve a company’s credibility and market reputation. Being VAT registered shows that a business operates formally, complies with tax regulations, and maintains transparent accounting practices. 

However, a company without VAT registration may appear small or even raise doubts about whether it fully declares its revenue. If a company is considered as avoiding paying revenue etc, it can create reputation risks when dealing with corporate or international clients. Many larger partners and government entities prefer to work with VAT-registered companies, as it suggests reliability, proper accounting and long-term business stability.

Claiming Input VAT

Lorsque votre clientèle est principalement composée d’entreprises assujetties à la TVA (B2B), l’enregistrement à la TVA permet à vos clients de récupérer la taxe, ce qui contribue à maintenir des prix compétitifs. En revanche, si votre activité s’adresse principalement à des consommateurs finaux non assujettis à la TVA (B2C), l’application d’une TVA de 7 % peut entraîner une hausse des prix et réduire votre compétitivité, sauf si vous choisissez d’absorber ce coût.

Thailand VAT Reporting Requirements

Thailand VAT registration requires regular filings, issuing proper invoices, and proper bookkeeping.

Businesses must issue properly formatted VAT tax invoices that include mandatory details such as the VAT rate, tax amount, supplier information, and tax identification number, and must retain these records for audit and reporting purposes.

Before registering, it is important to assess whether your internal accounting team has the knowledge and experience to manage these requirements accurately, or whether external accounting support will be needed to handle VAT filings, reporting deadlines, and ongoing compliance.

Impact sur la trésorerie

If your business makes large upfront purchases, registering for VAT can allow you to reclaim input VAT and improve cash flow. This is particularly relevant for capital intensive businesses like manufacturers, exporters, or companies with significant startup costs.

VAT Compliance and Monthly Reporting

VAT-registered businesses in Thailand are required to submit monthly VAT returns by the 15th day of the following month. The Thai Revenue Department encourages the use of its electronic filing system, and businesses that file through e-Filing benefit from an extended deadline, with the PP30 return due by the 23rd day of the following month.

Each filing must accurately report taxable sales, purchases, input VAT credits, and the resulting VAT payable or refundable for the period.

Proper documentation is important to help make sure the VAT filing process goes smoothly. Tax invoices and receipts must satisfy Thai Revenue Department requirements, and incomplete or incorrect records can lead to delayed refunds, rejected VAT claims, audits, or penalties. 

VAT-registered businesses are required to maintain specific records, including issued and received tax invoices, goods and raw material reports, output and input tax reports, and VAT calculation worksheets. 

These records must be retained for a minimum period of five years. Electronic storage is permitted, provided it meets the Revenue Department’s technical and record integrity requirements. All VAT records should be maintained in Thai, with appropriate translations kept on file where documents are issued in another language.

VAT Invoices

VAT registered companies are required to issue VAT invoices. Each invoice must clearly display the seller’s VAT registration number, invoice date, customer details, taxable amount, VAT amount, and the total payable. 

The words “Tax Invoice” must be prominently shown, along with the seller’s name, address, and tax identification number, the customer’s name and address, a unique invoice number, and a clear description of the goods or services supplied. VAT must be shown separately from the value of the goods or services.

Tax invoices must be issued at the time of supply or upon receipt of payment, whichever occurs first. Where invoices are issued in a foreign currency, the amounts must also be shown in Thai Baht, with the exchange rate used clearly stated. 

VB & Partners provides end-to-end VAT compliance services, including bookkeeping, invoice review, and monthly VAT filings.

Special Considerations for Foreign Investors

For foreign investors, VAT in Thailand requires careful attention to when transactions may qualify for VAT exemption or the 0% VAT rate. While both can reduce VAT exposure, they apply in different situations and come with distinct compliance requirements. Understanding the difference between exempt supplies and zero-rated transactions is essential before relying on either treatment.

VAT Refunds and Audit Risk

When a business model consistently generates significant input VAT that cannot be fully offset against monthly output VAT, the only way to recover the excess is to apply for a VAT refund from the Revenue Department. In practice, VAT refund claims almost automatically trigger a tax audit, and refunds are rarely processed quickly, especially when the amount is material. The review will cover VAT filings, accounting records, invoices, contracts, and the overall consistency of the bookkeeping.

If accounting records are incomplete, inconsistent, or improperly maintained, this significantly increases the risk of delays, reassessments, or the Revenue Department identifying unrelated tax issues during the audit. For this reason, VAT refunds are one of the most sensitive areas of Thai tax compliance.

Where a business model is expected to generate high VAT credits on an ongoing basis, it is generally recommended to plan VAT refunds from the beginning of operations, rather than allowing a large balance to accumulate over time. In practice, claiming refunds regularly at an early stage, when transaction volumes are still manageable, tends to reduce audit complexity and risk, compared to submitting a large refund claim after several years of accumulated credits.

In all cases, businesses with recurring VAT refund positions should ensure that bookkeeping and VAT reporting are handled conservatively and accurately from day one, as VAT refunds are closely linked to audit exposure.

Transactions à taux zéro

Certaines transactions en Thaïlande sont soumises à un taux de TVA de 0 %. Les catégories suivantes sont éligibles au taux zéro :

1. Exportation de biens de Thaïlande
2. Services effectués en Thaïlande, mais utilisés à l'étranger. 
3. Transport international par avion ou bateau
4. Biens et services fournis aux agences gouvernementales dans le cadre de programmes d'aide à l'étranger
5. Biens et services fournis aux Nations Unies et aux organisations internationales reconnues par des traités.

Le département du revenue utilise les critères suivants pour déterminer si un service peut bénéficier du taux zéro de TVA :

• Le service doit être effectué en Thaïlande
• Le service doit être utilisé entièrement en dehors de la Thaïlande
• Le service ne doit pas avoir de lien direct avec des biens ou des propriétés en Thaïlande

Les autorités fiscales thaïlandaises adoptent une interprétation stricte de l’application de la TVA, exigeant que les services rendus en Thaïlande à des bénéficiaires étrangers soient intégralement utilisés hors du territoire pour pouvoir bénéficier du taux de TVA à 0 %. Il est impératif de conserver des justificatifs complets afin d’assurer la conformité en cas de contrôle ou d’audit.

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VAT Registration & Thailand Value Added Tax: 0% Rate

VAT Exemptions

Outre les transactions détaxées, certains biens et services sont entièrement exonérés de TVA. Les exemptions les plus courantes sont les suivantes :

• La vente et l'importation de produits spécifiques
• Services professionnels tels que les services médicaux, d'audit et juridiques réglementés
• Services fournis par les organisations gouvernementales thaïlandaises
• Les services de transport terrestre
• Services éducatifs fournis par des écoles reconnues
• Services culturels, tels que ceux offerts par les bibliothèques et les musées
• Loyers de biens immobiliers tels que les biens immobiliers
• Les services religieux et caritatifs
• Achat et importation de pierres précieuses brutes (par exemple, saphirs, rubis) par des entreprises autorisées à fabriquer des bijoux pour l'exportation, à condition que l'entreprise soit enregistrée à la TVA et que les pierres soient utilisées exclusivement pour la production destinée à l'exportation.

VB & Partners supports foreign-owned businesses by integrating VAT into their wider financial planning, helping reduce risk and make ongoing compliance more manageable.

Nos réflexions

Based on our experience advising businesses across Thailand, VAT is frequently underestimated as an operational risk. While the Thailand VAT rate itself is straightforward, challenges arise from incorrect application, weak documentation, and poor integration with accounting systems.

Businesses that treat VAT as an opportunity, rather than a monthly filing exercise, are better positioned to maintain cash flow stability, protect margins, and scale with confidence.

Our view is that proactive VAT planning, supported by accurate bookkeeping and professional oversight, transforms VAT from a source of risk into a manageable and predictable component of business operations.

If you would like to review your VAT position or require support with registration, reporting, or strategic planning, VB & Partners is available to provide clear, practical guidance tailored to your business.

Clause de non-responsabilité

Veuillez noter que cet article est fourni à titre d'information uniquement et ne constitue pas un conseil juridique ou fiscal.