Value Added Tax (VAT)
VAT replaced sales tax on 1 January 1992. It is an indirect tax imposed on the value
added of each stage of production and distribution.
Any person or entity that regularly supplies goods or provides services in Thailand and
has an annual turnover exceeding Baht 1.8m is subject to VAT in Thailand. A supplier
of services to an offshore person will also attract VAT if the service is used in Thailand.
VAT will also apply to any import of goods or services. Suppliers of goods and services
collect VAT output tax. Purchasers of goods and services pay VAT input tax. Input tax
is deducted from output tax to determine VAT liability. Certain businesses are exempt
from VAT.
VAT is currently levied at a rate of 7% on gross receipts, although a zero rate applies
to exported goods and services (that are totally used abroad). The official VAT rate is
actually 10% not 7%; however, the VAT rate was reduced to 7% in 1997 and this
reduced rate has since been extended by the TRD continuously thereafter