The business environment in Thailand is booming. Due to that, VAT registration has become
a critical factor. This is true, especially among entrepreneurs. Thailand requires businesses
that earn a specified income to register for VAT. The type of goods and services to which
this tax system is applied is diverse.
What Is VAT in Thailand?
VAT is a consumption tax imposed on the sale of goods. The Thai government is one of the
main beneficiaries of this source of revenue. Companies are required to collect VAT on their
products. Then, they will pay it to the tax collector. Thailand has a current VAT rate of 7
percent. It is not just levied on the sale price of goods. It is levied on the sale of services, too.
When Do I Register for VAT?
Any business in Thailand whose annual turnover exceeds 1.8 million Baht must register
under VAT. Nevertheless, it is open to businesses whose turnover may be under this
amount to voluntarily register for VAT. Registration enables businesses to recover VAT
charged on business expenses. This proves to be an important saving for many firms. It is
essential to mention that after registering a business under VAT, it needs to submit periodic
VAT returns to the Revenue Department.
Advantages of VAT Registration
Being VAT registered has a number of advantages, particularly when businesses are
expanding or have suppliers. Among the foremost benefits is the right to recover VAT you
paid on purchases connected to your business activities. When exporting goods, VAT
registration in Thailand enables you to claim the VAT refund on the exported goods since
exports are not subject to VAT.
VAT registration enhances the integrity of a business as well. Partners and customers tend
to engage with a VAT-registered firm more because it demonstrates professionalism and
adherence to Thai regulations. Moreover, VAT-registered businesses can show the amount
of VAT paid on their invoices. This is a feature that could simplify their accounting
procedures.
The Process of VAT Registration
The registration of VAT in Thailand is a simple procedure. However, one that needs attention
to detail. Here’s a step-by-step guide:
1. Make Ready Documents
Always have these necessary papers with you, including: registration of your company, the
name of the company owner, and the address.
2. Submit the Application
Your application will be required at the Revenue Department in Thailand. You can do this
online or in person, whichever you choose.
3. Wait for Approval
Upon application, the Revenue Department shall process your application and issue a VAT
registration number (where applicable). This may require weeks.
4. Start Charging VAT
Upon receipt of your VAT registration number, you can start charging VAT on your goods or
services. Remember to generate VAT invoices on all transactions.
5. File VAT Returns
Businesses registered under the VAT scheme should submit monthly VAT returns, even
when there is no VAT due. Proper records of all purchases and sales are important.
In conclusion, registration of VAT in Thailand is a mandatory process required to enable
businesses to operate efficiently and legally. The process might be overwhelming initially.
But the requirements can make it a lot easier to navigate through. You can maintain your
business compliance with proper planning.