Value Added Tax (VAT)
Value Added Tax, or VAT, is a type of tax imposed by the revenue department, collected from the sale of goods or provision of services at each stage of production and distribution of goods/services, including those produced domestically and imported from abroad (according to the revenue code, the standard rate is 10%, excluding local taxes). However, there has been a temporary reduction to 6.3% for the VAT rate and 0.7% for local taxes, resulting in the current rate of 7% collected. On August 24, 2021, a resolution was passed to extend the reduced VAT rate of 7% for an additional 2 years, starting from October 1, 2021, until September 30, 2023.
VAT 0
VAT 0 means that the business generates income but does not collect Value Added Tax (VAT = 0). However, the business still has the obligation to file a tax return form (P.P.30) showing the details of purchase and sales taxes according to Section 80/1. The tax rate of 0% should be used for calculating Value Added Tax for various types of businesses as follows:
(1) Exporting goods that are not exempted from Value Added Tax according to Section 81(3).
(Refer to the directive of the Revenue Department, number P.D.97/2543)
(2) Providing services performed within the Kingdom and having the utilization of such services abroad, according to the main types, criteria, methods, and conditions specified by the Director-General.
The provision of services performed within the Kingdom, with the utilization of such services abroad, includes services performed within the Kingdom for the production of goods in the industrial free zone for exportation, and services performed in the export processing zone for the production of goods for exportation.
(Refer to the amended Revenue Code (Version 35), BE 2544)
(Refer to the directive of the Revenue Department, number P.D.104/2544)
(3) International transportation services by air or sea performed by corporate entities.
(Amended and supplemented by the Revenue Code Amendment Act (Version 33), effective from 1st January 2542 onwards)
(4) Sales of goods or provision of services to ministries, departments, local government agencies, or state enterprises under foreign loan projects or assistance programs, subject to criteria, methods, and conditions prescribed and approved by the Cabinet.
“(5) Sales of goods or provision of services to: (a) United Nations organizations, specialized agencies of the United Nations, embassies, consulates, consular offices, and diplomatic missions. (b) International organizations with which Thailand has bilateral agreements to provide equal treatment to embassies, consulates, consular offices, and specialized agencies of the United Nations. (c) Foreign economic and trade offices established in Thailand pursuant to agreements between the Thai government and foreign governments. Note: This applies only to sales of goods or provision of services in accordance with the criteria, methods, and conditions prescribed by the Director-General.
(Amended and supplemented by the Revenue Code Amendment Act (Version 49), effective from 28th February 2562 onwards)
“(6) Sales of goods or provision of services between bonded warehouses or between operators located within the same or different customs-free zones, or between bonded warehouses and operators located within customs-free zones. Note: This applies only to sales of goods or provision of services in accordance with the criteria, methods, and conditions prescribed by the Director-General.
(Refer to the Revenue Code Amendment Act (Version 35), BE 2544)
The term ‘bonded warehouse’ in this context refers to a bonded warehouse as defined by customs law.
Exemption from Value Added Tax (Non-VAT)
Exemption from Value Added Tax (Non-VAT) means that the business operator is not required to calculate tax based on their income. However, they must include the income in the calculation for Form P.P.30, Section 3.
Specific types of businesses are eligible for Value Added Tax (VAT) exemption according to Section 81. The following types of businesses are exempted from VAT for the sale of goods or provision of services:
(1) Sale of agricultural produce, including stems, branches, leaves, peels, shoots, roots, bulbs, flowers, fruits, seeds, or other parts of plants and floating materials derived from plants, provided they are fresh, preserved to prevent temporary damage during transportation (e.g., refrigeration), preserved by other methods, or preserved for retail or wholesale purposes through cooling, freezing, drying, grinding, or other methods. This includes rice or rice products obtained from rice milling, but does not include timber, rattan, or wood products obtained from wood sawing or industrial food products packaged in cans, containers, or wrappers as defined by the Director-General based on their nature and conditions.”
Please note that this translation is based on the provided text and may not capture the full legal context or implications. It’s always recommended to consult the original legal documents or seek professional advice for accurate information.
(Refer to the Ruling of the Tax Appeal Commission No. 32/2538)
