Understanding VAT in Thailand: A Complete Guide for Foreign SMEs

gentlelawlawfirm
Jul 28
3 min read

Understanding VAT in Thailand: A Complete Guide for Foreign SMEs

Value-Added Tax (VAT) in Thailand is a crucial compliance element for any foreign-owned SME operating in the country. Misunderstanding or neglecting VAT obligations can result in significant legal exposure, including administrative penalties, interest surcharges, and potential disruption to operations.

At GENTLE LAW IBL, we provide trusted, one-stop legal support tailored to foreign businesses. This guide explains who must register, how to register, and how to comply with Thailand's VAT regime—ensuring you're legally protected and optimized for operational success.

📌 What Is VAT in Thailand?

Under Thailand’s Revenue Code, Part 4 of the VAT Act B.E. 2534 (1991), VAT in Thailand is a consumption-based tax collected at each stage of the supply chain. The current standard rate is 7%. The VAT rate has been temporarily reduced from its previous 10% rate under Royal Decree reductions (e.g., Royal Decree No. 744, B.E. 2566), and this may be extended.

VAT is imposed on:

Sales of goods
Provision of services
Importation of goods into Thailand

✅ Who Must Register for VAT in Thailand?

Entities must register for VAT within 30 days once they meet any of the following criteria (per Revenue Code, Section 85):

Annual VATable turnover exceeding THB 1.8 million within any 12-month period
Engaging in import or export activities (regardless of turnover)
Providing digital or cross-border services to recipients in Thailand (in compliance with Section 77/1 and recent amendments in line with OECD's BEPS Action 1)

🔹 Voluntary VAT Registration: Permissible for entities below the THB 1.8M threshold if they wish to claim input tax credits.

🛠️ How to Register for VAT in Thailand

Step 1: Gather Company Documents

Certificate of Incorporation
Articles of Association
List of Shareholders (BOJ.5)
Company Affidavit (issued within 30 days)
Proof of Registered Address (Lease Agreement or Ownership Evidence)

Step 2: Submit VAT Registration (Form ภ.พ.01)

Submit to the local Revenue Department Office or via e-Filing on RD.go.th
Include certified copies of all supporting documents

Step 3: Receive VAT Certificate

Receive VAT Registration Certificate (Form ภ.พ.20)
Display visibly at your business premises

⏳ Approval Timeframe: Typically within 5–10 business days, if documentation is complete.

🔄 Ongoing VAT Compliance for SMEs

Task	Frequency	Key Details
Filing VAT Return (Form ภ.พ.30)	Monthly (by 15th of following month)	Report Output VAT & Input VAT
VAT Payment	Monthly (same deadline as filing)	Late payment incurs 1.5%/month interest + administrative penalties
Record Keeping	Maintain for 5 years	Invoices, receipts, and ledgers in Thai or English
Tax Invoices	Per transaction	Must include VAT ID, description, amount, and date

📌 Note: Tax invoices must comply with Section 86/4 of the Revenue Code. Only tax invoices issued by VAT-registered suppliers are creditable.

⚠️ Common VAT Pitfalls & How to Avoid Them

Pitfall	Risk	GENTLE LAW IBL’s Recommended Solution
Missing THB 1.8M Threshold	Late registration penalties	Monitor monthly turnover proactively
Non-compliant Tax Invoices	Input VAT credit denied	Use Por Por 20 format with full fields
Late Filing or Payment	Penalties and audit risk	Implement calendar alerts & auto-filing tools
Claiming Non-VATable Purchases	Input credit rejected	Verify vendor’s VAT registration ID
Poor Recordkeeping	Legal non-compliance	Maintain digital backups and audit logs

💡 Best Practices for VAT in Thailand (H2 with focus keyword)

Price Transparently: Always display VAT-inclusive prices in B2C transactions, as required under Consumer Protection Act B.E. 2522.
Automate Accounting: Use Thai-compliant accounting tools (e.g., PEAK, FlowAccount) for returns and recordkeeping.
Train Key Staff: Educate finance teams on timelines, required documents, and risk triggers.
Maintain Cash Flow Discipline: Treat collected VAT as a liability—not as usable operating cash.
Conduct Internal VAT Audits: Schedule quarterly reviews to ensure accuracy and prevent Revenue Department audits.

🛡️ How GENTLE LAW IBL Supports Foreign SMEs

Our multilingual team at GENTLE LAW IBL offers legal services that bridge regulatory compliance with commercial success. We provide:

✅ Full-service VAT registration and document preparation ✅ Filing and submission support (e-Filing) ✅ Review and correction of VAT invoices ✅ Input tax optimization analysis ✅ Representation during Revenue Department audits or investigations

With GENTLE LAW IBL, your VAT in Thailand becomes predictable, compliant, and business-friendly.