VAT Registration in Thailand and When to Register

TL;DR VAT Registration in Thailand is required for most businesses because the country’s 7% VAT applies to a wide range of goods, services, and imports. Companies must register within 30 days once their annual revenue exceeds THB 1.8 million, or if they employ foreign staff. Voluntary registration is also available and can be advantageous for B2B businesses or those with significant input costs, as it allows input VAT recovery, though it does increase compliance obligations. Monthly VAT filings are compulsory, and non-compliance can lead to penalties or criminal liability. Foreign digital service providers must also comply with VAT rules when supplying services to Thai consumers.

Introduction

Value Added Tax (VAT) is a key aspect of Thailand’s tax system, applied at a standard rate of 7%. It is charged on the sale of goods and services within the country, as well as on the importation of goods. 

For businesses, understanding when and whether to register for VAT is an important decision. This post will explore the main considerations for businesses such as whether to register immediately after setting up a company, delay registration, or avoid it altogether.

What are the VAT Rates in Thailand?

In Thailand, the Value Added Tax (VAT) system has a current rate of 7%, which applies to the majority of goods and services. This rate has been maintained since September 1997, following a temporary reduction from the statutory rate of 10% intended to encourage consumer spending and support economic growth.

The current reduced rate is set to remain in effect until at least September 30, 2026, as per the latest Royal Decree.

When do you Need to Register for VAT in Thailand?

For any business operating, or planning to operate in Thailand, understanding when VAT in Thailand registration becomes mandatory is essential. VAT applies to the sale of goods and services within the country, and the obligation to register is triggered by the company’s “taxable turnover,” which refers to the total gross income generated from these taxable activities.

Businesses in Thailand are required to register for VAT once their annual taxable turnover exceeds THB 1.8 million. Registration is also required if the company employs foreign nationals, regardless of income.

The 30-Day Registration Deadline

Once a business exceeds either the monthly or annual VAT revenue threshold, it must apply for VAT registration within 30 days. 

For newly registered companies, VAT registration in Thailand can be done either before starting operations or within 30 days of reaching the income threshold.

Read more:

Thailand Value Added Tax 2025: 0% Rate & VAT Registration

Voluntary VAT Registration in Thailand: The Advantages and Disadvantages

In Thailand, businesses can opt to register for VAT voluntarily, even if their annual revenue falls below the THB 1.8 million threshold. This is often a strategic move, to be able to claim input tax credits to help lower the company’s overall tax burden.

Advantages of Voluntary VAT Registration in Thailand

One of the main advantages of VAT registration is the ability to reclaim input VAT. Reclaiming Input VAT  means businesses can recover the VAT paid on eligible purchases and expenses. 

Being able to reclaim input VAT is especially helpful for businesses with high setup or operating costs, such as those in manufacturing, wholesale, or export. Without VAT registration, input VAT becomes an unrecoverable expense, directly impacting profit margins. For example, B2B companies, charging VAT typically doesn’t affect pricing competitiveness, since most clients are also VAT-registered and can claim the VAT back themselves.

Voluntary registration also helps avoid the risk of late registration penalties. By registering before reaching the mandatory threshold, businesses can stay ahead of compliance obligations and avoid fines. 

Being VAT-registered also requires stricter record keeping and accounting practices, which can lead to better financial oversight and planning. However, this extra work is worth the effort as voluntary VAT registration in Thailand can also strengthen a company’s credibility and professional reputation in Thailand. It shows that the business operates formally, complies with tax regulations, and maintains transparent accounting practices.

Disadvantages of Voluntary VAT Registration in Thailand

While voluntary VAT registration in Thailand can offer financial benefits, it also comes with important downsides that businesses should consider. 

One of the biggest challenges is the added administrative burden. Registered businesses must calculate output VAT accurately, retain proper VAT invoices, and file monthly VAT returns (Form P.P. 30) by the 15th if submitting on paper or by the 23rd if filing online, even in months with no sales. 

For smaller businesses or those with limited taxable turnover, this extra workload and expense may actually cost more than the reclaimable VAT. 

Another key consideration is the potential impact on pricing. If a business sells primarily to final consumers or non-VAT registered entities, adding 7% VAT to its prices can make prices less competitive.

VAT registration can also expose businesses to greater scrutiny from the Revenue Department. VAT registered companies are more likely to face audits, reviews, and compliance checks. Any errors, oversights, or incorrect filings can lead to penalties. This added risk is an important factor to consider, especially for smaller businesses without dedicated accounting teams..

What are the Rules for International Service Providers?

Thailand has updated its tax rules to keep up with the growing use of digital services, introducing specific VAT requirements for non-resident electronic service providers.

If a foreign electronic platform or digital service provider or platform earns more than THB 1.8 million in a calendar year (for individuals) or accounting period (for companies) from customers in Thailand who are not VAT-registered, they are required to register for VAT. 

An electronic platform refers to any digital channel, such as a website, mobile app, or online marketplace, that facilitates the offering, payment, and delivery of services between providers and customers.

These rules apply to digital services delivered from abroad, for example:

• Providing or supporting a business or personal presence on an electronic network
• Support services performed, via electronic means, for arranging and facilitating
• Digital products such as mobile applications
• Software programs; 
• Digital images, videos, and financial data; 
• Digital music, films, and games;  

However, services involving live teaching or human-led professional consulting are generally excluded. Platforms acting as intermediaries by offering, receiving payment for, and delivering services are also subject to the same requirements.

VAT registration in Thailand must be completed within 30 days of crossing the threshold. These rules ensure that digital services used by Thai users contribute fairly to the local tax base, even if the provider has no physical presence in Thailand.

How to Register For VAT?

Registering for VAT in Thailand is often more complex than it first appears. One of the most important points to consider is that not every registered company address is suitable for VAT registration in Thailand. The Revenue Department requires businesses to have a proper physical office, this means that a virtual office, condominium unit or co-working address is generally not  accepted. 

As part of the application process, officers may request photos of the office showing the company name and, in some cases, even request an on-site inspection to confirm the business location.

It is recommended that before agreeing to leasing an office to make sure that your landlord agrees to let you use the premises for VAT registration. This is important because the Revenue Department requires an original letter of consent from the property owner and, if the office is located in a managed building, an additional letter from the building’s juristic person. 

As well as the written confirmation from the landlord/juristic office the Revenue Department required the following documents,  a copy of the lease agreement, a business plan, and a map highlighting the location of the office. Preparing the business plan properly is important because if the Officers doubt the legitimacy of your business, they may have lots of follow up questions and requests. A properly prepared business plan may help to reduce the risk of additional scrutiny.

In practice, preparing all documents can take up to three weeks, as obtaining consent letters and supporting documents often involves processing fees and coordination with multiple parties. Once submitted, the Revenue Department typically takes another two weeks to review the application and issue the VAT registration certificate.

What are the Penalties for Late or Non-Registration?

Failing to comply with Thailand’s VAT regulations can lead to serious legal and financial consequences, with penalties that range from fines to imprisonment.

Penalties for Failing to Register for VAT

If a business that is legally required to register for VAT operates without doing so, it may face a fine of up to THB 5,000, imprisonment for up to one month, or both.

Penalties for Late VAT Filings and Errors

Late filing of VAT returns (Form P.P. 30) is subject to multiple penalties, including:

• A 1.5% monthly surcharge on unpaid VAT
• A penalty of up to 200% of the unpaid VAT
• Fixed fines of THB 300 (if filed within seven days of the due date) or THB 500 (if filed after seven days)

If errors are discovered, such as under reported sales or inflated purchases, businesses may face an additional 200% penalty on the extra VAT owed, plus the 1.5% surcharge.

Voluntary Disclosure Reductions

The Revenue Department offers reduced penalties for businesses that voluntarily report late filings or errors before being contacted. These reduced rates include:

• 2% if disclosed within 15 days after the due date
• 5% if disclosed between 15 and 30 days
• 10% if disclosed between 30 and 60 days

Other Compliance Failures

Non-compliance is more than just missing filing deadlines. Businesses that fail to update their VAT registration details or not notify authorities of key changes, such as opening, closing, or relocating premises are subject to potential fines ranging from THB 2,000 to THB 5,000. 

More serious breaches, such as not preparing the required VAT records, carry stricter penalties, including up to six months’ imprisonment, a fine of up to THB 10,000, or both.

Intentional VAT Evasion

The most severe penalties are reserved for deliberate fraud, such as issuing fake VAT invoices. These offenses can result in imprisonment for three months to seven years, fines ranging from THB 2,000 to THB 200,000, or both.

How to Decide if your Company should Register For VAT?

If your business is not yet required to register for VAT, deciding whether to do so voluntarily still requires careful consideration. VAT registration in Thailand should be decided in the context of your financial strategy, customer base, and operational requirements.

Key Factors to Consider

Revenue Thresholds

The most significant consideration is whether the company’s revenue meets the mandatory thresholds: THB 1.8 million annually or hiring a foreign employee. 

Businesses need to track their income closely to avoid missing the 30-day registration window. For new businesses, having a realistic idea of how much revenue you’ll generate is key to knowing when VAT registration might be required. It helps you stay ahead of the rules and avoid any issues.

Type of Business Activity

Not all businesses need to register for VAT. If your goods or services are VAT-exempt, or if your company falls under the Specific Business Tax (SBT), VAT registration may not be required at all. 

Credibility

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

On the other hand, 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 signals reliability, proper accounting and long-term business stability.

Customer Base: B2B vs. B2C

If your customers are mostly VAT-registered businesses (B2B), registering for VAT allows your clients to claim input VAT, which can help keep pricing competitive. However, if your customers are non-VAT registered consumers (B2C), adding 7% VAT could raise your prices and reduce competitiveness, unless you’re prepared to absorb the cost.

Administrative Capacity

VAT registration requires regular filings, invoice tracking, and proper bookkeeping. Understanding whether your accounting team can manage this in-house or if you’ll need external accounting support.

Cash Flow Impact

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.ported goods are correctly documented and declared under the approved project code to preserve exemption status.

Importance of Professional Accounting and Tax Advice

Understanding VAT rules in Thailand, from thresholds and exemptions can be complex. At VB & Partners, our team of local tax experts can help you understand your obligations and also help you optimise your accounting. 

Whether you’re considering voluntary registration or managing currently registered and dealing with monthly filings, we’ll provide clear, practical guidance tailored to your business. Let us help you stay compliant, minimize risk, and make the most of your tax position in Thailand.

Our Thoughts

Companies registered for VAT in Thailand must file monthly VAT returns even for zero-rated transactions. If applying the 0% VAT rate, consult with your accountant to confirm eligibility and maintain the proper supporting documentation.

Revenue Department audits are strict, and officials will not hesitate to reclassify transactions (apply the 7% rate to the transaction) if supporting documents are missing or if eligibility is questionable.

Another important consideration is that requesting reimbursement of accumulated VAT credits will likely trigger a Revenue Department audit, so it’s always recommended to ensure all documentation and procedures are properly in place before submitting such requests. Proper preparation and consultation with qualified tax professionals can help avoid costly compliance issues.

Disclaimer

This information is provided for general informational purposes only and is not legal, tax, or financial advice.