Getting back the VAT your exports have tied up
Plenty of exporters have a sum of refundable tax sitting on their books that they have simply never gone after.
Exports are zero-rated,so the input VAT you pay on purchases has no output tax to absorb…
Exports are zero-rated,so the input VAT you pay on purchases builds up as a credit. That…
Whether input VAT can be credited,and whether it can be refunded,is settled first by whet…
Holding investment promotion does not mean a separate VAT refund process — the forms,the…
An input VAT credit can only be carried forward for six months;unused past that window,it…
For a factory that mainly exports, is VAT just money paid for nothing?
No. Exports are zero-rated, and the accumulated input VAT credit can be claimed back under the law — for many exporters this is cash that has been overlooked.
Is a refund hard to get? How long does it take?
There is a review process. Complete paperwork and a consistent reporting basis are what matter; when a claim drags on, it is usually the invoices or the reporting basis that caused it. Our consultants can file the claim and follow it up on your behalf.
When does a refund not go through?
Non-compliant invoices, filings that do not line up, a missed deadline — any of these will stall it. Keep the input invoices in order month to month, and the refund runs smoothly when you come to claim it.
Does claiming a refund invite an audit?
An inspection alongside a refund claim is a normal part of the process; if the records hold up to scrutiny, there is nothing to be afraid of. The real risk is a reporting basis that was inconsistent all along, and the inspection is simply where it surfaces. The work is done in the ordinary months, not at the claim.
When must a Thai company register for VAT?
Once annual turnover goes over THB 1.8 million, the company must register as a VAT operator — a compulsory threshold, whatever the industry and whatever the registered capital. Once you cross it, register with the Revenue Department promptly; putting it off means penalties accruing by the month. Check the exact time limit for your own case with our consultants.
The company is newly set up with no revenue yet — should it register for VAT early?
Not compulsory, but most companies with real business plans are better off registering early. Below the THB 1.8 million threshold the law does not require registration; but the input VAT on equipment, fit-out and factory rent during the set-up period can only be credited or refunded by a registered VAT operator — without registration that tax is simply paid for nothing. Check your own case with our consultants before deciding.
Turnover is below the threshold — is voluntary VAT registration worth it?
It depends on your customer mix and how much input VAT you carry: if you sell to business customers and your input VAT is substantial, it pays off; if you sell to end consumers and have little input VAT, usually it does not. Registration lets you credit and reclaim, but it also means monthly filings, properly issued tax invoices, and VAT added on top of your prices. Run the numbers for your own case before deciding.
What happens if you are over the threshold and never register for VAT?
The consequences are heavy. Carrying on business while required to register and failing to do so draws a penalty of 200% of the tax due for each month, with a minimum of THB 1,000 per month, and the tax owed carries a further surcharge of 1.5% per month. Every unregistered month counts separately, so if you find you have crossed the line, register late straight away to stop the loss growing, and check the remedy with our consultants.
What is the difference between exempt and zero-rated?
The difference is whether input tax can be claimed and refunded, and it is the foundation of the whole refund line. Zero-rated supplies (typically exports) remain within the tax net at a rate of zero — output is nil while input remains claimable, and what cannot be absorbed becomes a credit, which is what makes a refund possible at all. Exempt supplies fall outside the net entirely: there is no output, and the related input cannot be claimed either. So "we do not have to charge VAT on this line of business" sounds like good news while it may mean that input is never recoverable.
We have BOI promotion. Does that mean no VAT?
No. Promotion privileges operate mainly on corporate income tax and on certain import stages; the obligations to register, file and pay VAT are unchanged. A promoted company files monthly like anyone else, can accumulate credit like anyone else and can claim a refund like anyone else — the process is the same, with a few differences in detail. Reading "tax-privileged company" as "exempt from every tax" is one of the more expensive misunderstandings on this subject.
What is PP.30, and must it be filed every month?
It is the monthly VAT return. Once registered for VAT, it must be filed every month, with the deadline in the middle of the following month (typically the 15th for paper filing). It always covers the previous month's business, not the current one. It is a compulsory return, not one you file only when there has been activity.
There were no transactions at all this month. Do we still file?
Yes — a nil return. No transactions does not mean no filing obligation: the VAT return sits alongside payroll withholding and social security as a compulsory return, and a nil return must still be filed on time in a month with no activity. On the record, missing a nil return and missing a return with tax payable are the same thing: late.
We filed something wrong. Can it be corrected, and will we be penalised?
An amended return can be filed, and the sooner the better. Late filing and amendment attract different treatment, and correcting voluntarily is treated very differently from being found out. More importantly, the returns reconcile against each other — output against booked revenue, input against purchases, and the two cross-border returns — so changing one often moves another, and it is not enough to correct the current period's figure in isolation. The treatment and amounts are as currently provided by the Revenue Department.
We have both taxable and exempt business. How is input tax handled?
It has to be apportioned rather than claimed in full. Input directly attributable to taxable business is claimable, input relating to exempt business is not, and shared costs used by both are apportioned on a reasonable basis. The difficulty is not the arithmetic — it is that the underlying records have to be separable in the first place. Unpicking it after the fact rarely comes out clean, and whatever remains unclear is the first thing struck out on a refund review.
What is reverse charge, and why am I the one paying the tax?
An overseas service provider has no Thai tax obligation and will not charge you VAT, so the law shifts the tax to the buyer to self-assess and pay (Revenue Code Section 83/6), on return PP.36. It is triggered by the service being used in Thailand, regardless of where the provider is or which account the money left from. What Chinese-invested companies usually miss is not the money — it is not knowing the return exists.
We pay our Chinese head office. Does PP.36 apply?
Very likely. Paying management fees, technical service fees or royalties overseas triggers two independent obligations at once: withholding income tax on the outbound payment (PND.54), and self-assessing VAT (PP.36). They are separate returns, and filing one while missing the other is a frequent problem. Both are due by the 7th of the month following payment — note that this is earlier than the monthly VAT return.
Is the tax paid on PP.36 simply money gone?
Usually not. Once paid, the Revenue Department receipt supports claiming it back as input tax on the PP.30 for the tax month the receipt belongs to, so the net burden is close to nil. The payment itself is therefore mostly not a cost — the real cost is failing to file: the surcharge and the audit record are real, and a missed filing also means the input was never claimed.
Which costs can never have their input tax claimed?
Thailand provides for certain categories of expenditure to be non-claimable by law, entertainment-type expenditure being the classic example. There is a second category as well: input that would have been claimable but is lost because the documentation does not comply — a tax invoice missing required particulars, a wrong name or tax ID, the wrong period. The first is the law; the second you do to yourself, and in practice the second is usually the larger amount. Which items fall into the non-claimable category is as currently provided by the Revenue Department.
Related
A few questions, a first read on where you stand, then decide whether to go further.
中文版 · Chinese version