3.1 Persons liable to VAT
The following persons are liable to VAT:
(1) Operator : which includes manufacturer, wholesaler, retailer and provider of services, exporters, a person who sells goods or provides a commercial or professional service, whether in doing so he is required for VAT registration under Section 85 or 85/1 or for temporary VAT registration under Section 85/3.
(2) Importer or any other person who imports or brings goods into Thailand and includes those who remove from an export processing zone not for export any goods whether liable to or exempt from import duty under the customs law.
3.1.2 Persons liable to VAT in special case
(1) In the case of an operator residing outside Thailand and selling goods or providing services in the ordinary course of business with an agent shall be liable to pay VAT.
(2) In case of the sale of goods or provision of service liable to tax at the rate of zero per cent to the United Nations, its specialised agencies, Consulate or Embassy, if the ownership in the goods or the right in the service is afterwards transferred to other person, the transferee shall be liable to pay VAT.
(3) In case of the importing of goods listed in the part for goods exempted from duty under the Law Governing Customs Tariff and VAT being exempted, if the goods afterwards become liable to duty under such law:
(a) the person with the liability under the Law Governing Customs Tariff,
(b) the transferee, if the goods are transferred.
(4) In the case of amalgamation : the persons amalgamated and the transferee shall be liable to VAT.
(5) In the case of transfer of business : the transferor and the transferee shall be liable to VAT.
3.1.3 Persons residing outside Thailand
Further in case of an operator residing outside Thailand, the person with the responsibility in carrying on business, including its employee or representative residing in Thailand who has direct or indirect authority to manage the business on behalf of such non resident operator, shall be liable to VAT jointly with such operator.
3.2 Tax Rate
3.2.1 7% Rate
The present tax rate is 7% although the law provide for a maximum rate of 10%. This 7% rate may be increased to 10% if the Royal Decree No. 23 reducing the rate to 7% is cancelled.
Tax rate of 0% applies to the following transactions:
(1) Export of goods other than those transactions exempt from VAT.
(2) Provision of services performed in Thailand and used in a foreign country, according to the Notification of the Director-General No. 15 dated December 27 1991, which includes provision of service performed in Thailand for manufacturing goods in an export processing zone, or for export and service performed in an export processing zone for manufacturing goods for export.
(3) Provision of International Transport Service by aircraft or sea-going vessels by an operator who is a juristic person organised under Thai Law. In the case of a non Thai operator organised under foreign law, the 0% shall apply only if such a country also grants 0% to the service of a Thai operator.
(4) Sale of goods and provision of services to a Ministry, Sub-Ministry Department, Local Government Authority or State Enterprise under a foreign loan or assistance profit as prescribed by Notification of the Director-General No. 28 dated March 5, 1992.
(5) Sale of goods and provision of services to the United Nations Organisation, its specialised agencies, an Embassy, Legation, Consulate-General or Consulate, as prescribed by Notification No. 27 of the Director-General dated February 1992.
(6) Sale of goods and provision of service between one bonded warehouse and another, between a bonded warehouse and an operator carrying on business in an export processing zone, or between one operator and another, each of whom carries on business in an export processing zone, whether or not to the same zone, as prescribed by Notification No. 31 of the Director-General dated March 26, 1992. A bonded warehouse means a bonded warehouse under the Law Governing Customs.
3.2.3 1.5% Rate
The tax rate of 1.5% applies to sale of goods or provision of service where a small operator has an income between 600,000 to 1,200,000 Baht per year. This 1.5% may be increased to 2.5% if the Royal Decree No. 230 reducing the rate to 1.5% is cancelled.
3.3 Tax Credit and Refund
A claim for a refund of VAT may be made under the following conditions, normally using from Khor. no. 10.
(1) In the case where a tax refund is due on the sale of goods or provision of services, but the operator fails to claim a refund on the monthly tax return, he is entitled to claim within three years from the expiry of time limit for filing the tax return.
(2) In other cases, a claim for tax refund shall be made within three years from the date of paying tax.
The claim shall be filed at the Local District Office where his business is located. If he has several places of business, the claim shall be filed for each place, except where he is authorised by the Director-General to file returns and pay tax at one place, he shall file the consolidated claim at the Local District Office or the place designated by the Director-General.
NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
If you would like further advice please contact: David Ellis, Johnson Stokes & Master, 16th Floor, Princes Building, 10 Chater Road, Hong Kong; Tel 2843 4226; Fax no. : 2845 9121. Alternatively do a text search "Johnson Stokes and Master" and "Business Monitor".