Value Added Tax (VAT) has been established in Thailand since 1992 to impose taxation on the sale of goods and services. According to Section 80 of the Revenue Code of Thailand, the standard rate of VAT in Thailand is 10 percent. However, on 13 September 2023, the Cabinet approved an extension period for the reduction of the VAT rate, including the local tax, from 10 percent to 7 percent for an additional year.
The extension of the reduced VAT rate will be effective from 1 October 2023 to 30 September 2024, with the purpose of supporting the consumption of goods and services, promoting economic growth in the country, and encouraging investments by private sectors. In general, the reduced rate is typically extended on an annual basis, but it was previously extended by 2 years due to the challenges that arose from the COVID-19 pandemic.
To summarize, the recent decision to extend the reduced VAT rate in Thailand demonstrates a strategic government initiative aimed at boosting economic activity, encouraging investment, and mitigating the effects of economic challenges. This extension reaffirms the crucial role of VAT as a significant revenue-generating mechanism within the country’s fiscal framework.
VAT Requirement
Any business operator who engage in the business related to distribution of goods, providing services, importation and exportation of products in Thailand with an annual gross income exceeding THB 1.8 million or within 30 days from the date their income reach THB 1.8 million shall register for the VAT with the Revenue Office (RD) prior to business operation.
VAT Registration
The VAT application and supporting documents must be submitted to Local Revenue Offices for the area in which the business is situated in Thailand. The VAT registration can be completed within 1 day from the date of submission of VAT application and relevant documents to the RD.
Once the completion of VAT registration, the business operator will be granted the VAT Registration Certificate from the RD within 30 days from the date of RD’s approval.