When to register for VAT: the THB 1.8 million threshold and your duties after registration

Value added tax (VAT) is a tax most businesses come up against as their sales grow. The usual questions are when you have to register, whether you can register before reaching the threshold, and what your duties are once registered. This article sums up the key points business owners should know.

Who must register for VAT

Business operators who sell goods or provide services in Thailand and whose revenue exceeds THB 1.8 million a year must apply for VAT registration within 30 days of the date their revenue exceeds the threshold. This applies to individuals and juristic persons alike.

• Operators whose revenue has not yet reached the threshold may apply to register voluntarily, for example when most of their customers are companies that need tax invoices.
• Some types of business are exempt from VAT by law, such as sales of certain unprocessed agricultural products or certain services, so check first where your business falls.

The VAT rate

The rate currently applied is 7%. This is a reduced rate, lower than the rate set in the Revenue Code, and the reduction is extended period by period by royal decree. Business operators should follow the latest Revenue Department announcements when planning prices and long-term contracts.

How to register

1. Prepare the documents, such as the company affidavit, copies of the directors' ID cards, evidence of the place of business and a map.
2. File the VAT registration application (form P.P.01, ภ.พ.01) online or at the Area Revenue Office.
3. Receive the VAT registration certificate (P.P.20, ภ.พ.20) and display it where it can be clearly seen at the place of business.
4. Set up your document and accounting systems so they can issue tax invoices from the effective date.

Your duties after registration

• Issue tax invoices every time you sell goods or provide a service, with all the particulars required by law, such as the name, address and taxpayer identification number of the seller and the buyer, the invoice number and date of issue, a description of the goods or services, and the amount of tax shown clearly separate from the price.
• Prepare reports, namely the output tax report, the input tax report and, for businesses that sell goods, the goods and raw materials report.
• File the VAT return (P.P.30, ภ.พ.30) every month, even in a month with no revenue, by the 15th of the following month for paper filing, with extra time for online filing as announced by the Revenue Department.
• Keep the documents, meaning tax invoices and reports, for the period required by law.

Input tax that cannot be claimed

Some input tax is non-deductible and cannot be offset against output tax. Common examples include:

• Input tax without a tax invoice, or on a tax invoice that lacks some of the required particulars
• Input tax on entertainment expenses
• Input tax relating to passenger cars or passenger vehicles with no more than 10 seats, unless the business is directly related to them as specified by law
• Input tax not related to the business

Common mistakes

• Revenue exceeds the threshold but the business does not register in time, and ends up bearing the tax plus penalties and surcharges
• Issuing tax invoices late or out of step with the point at which tax becomes due, especially for services, where the liability arises when payment is received
• Forgetting to file P.P.30 in months with no revenue
• Claiming input tax on tax invoices that show the wrong name or taxpayer identification number

Frequently asked questions

Our revenue is below THB 1.8 million. Should we register anyway?

It depends on your customers and cost structure. If your customers are companies that need tax invoices, or the business pays a lot of input tax, registering early may be worthwhile, but you must be ready to take on the duty of issuing documents and filing returns every month.

Can we deregister if revenue falls below the threshold?

You can apply to cancel your registration once you meet the conditions set by law, such as revenue staying below the threshold for the specified period. Plan this with your bookkeeper before applying.

Is VAT charged on sales to overseas customers?

Exports of goods and certain services used abroad may be taxed at 0% under the conditions in the law, but the business must still register, issue documents and file returns as usual.

Let us help you manage VAT

Kerwin & Vance helps assess whether you need to register, sets up your tax documentation and reviews your monthly returns for accuracy. Find out more about our Tax services, or book a consultation with us.

This article provides general information only. Tax rates and deadlines may change with Revenue Department announcements, so check the latest information or consult a specialist before taking action.