VAT 101: Navigating Thailand's 7% Value Added Tax

Value Added Tax (VAT) is the most frequent interaction you will have with the Thai Revenue Department. Unlike the annual income tax, VAT is a monthly obligation that requires disciplined record-keeping.

 

The 1.8 Million Threshold

Registration is mandatory as soon as your company’s annual revenue exceeds 1.8 million THB. However, many businesses choose to register immediately upon setup because:

• It allows you to reclaim VAT on initial startup costs (office rent, equipment).
• It makes your company look more established to corporate clients.

 

How It Works: Input vs. Output

Each month, you calculate:

1. Output VAT: The 7% you charged your customers.
2. Input VAT: The 7% you paid to your suppliers.
3. The Formula: Output VAT - Input VAT = Net VAT to pay.

 

The Tax Invoice

Every sale to a VAT-registered customer should be documented with a proper tax invoice—not an ordinary receipt. It must show your VAT registration number and the VAT charged on the sale. Without compliant tax invoices, your customers cannot claim their input tax, and your own records fail an audit. Issuing them correctly from day one is far easier than reissuing a year of paperwork.

 

Priority Deadlines

VAT returns (Form Por Por 30) must be filed by the 15th of every month for the previous month's activities (extended to the 23rd for e-Filing). Late filing, even by one day, triggers an automatic fine of 300 to 500 THB plus a 1.5% monthly surcharge.

One further habit: reconcile your VAT filings against your income statement every few months. The Revenue Department's systems compare the two, and a mismatch between reported revenue and reported VAT is among the most common triggers for a review.

 

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Related Service: Accounting & Tax Compliance — Seamless monthly VAT management and reporting.