When Must a Business Register for VAT in Thailand? The THB 1.8 Million Threshold and the 30-Day Deadline

Who Must Register for VAT in Thailand, and Who Need Not

As a general rule, a person carrying on the business of selling goods or providing services in Thailand that are subject to VAT, with turnover exceeding THB 1.8 million a year, must register for VAT. A small business whose tax base (turnover) does not exceed THB 1.8 million a year is exempt from VAT under Section 81/1 of the Revenue Code, and the amount of THB 1.8 million is fixed by Royal Decree (No. 432) B.E. 2548 (2005).¹ Goods and services that are exempt from VAT because of the nature of the business under Section 81, which is separate from this turnover threshold, are summarized in the article on goods and services exempt from VAT under Section 81 (Thai).

Apart from the turnover threshold, the law exempts certain businesses from VAT by their nature, whatever their turnover, for example the sale of agricultural produce in fresh condition, educational services of government educational institutions, private higher education institutions and private schools, the practice of the healing arts, and transport services within Thailand.² A business in this group need not register for VAT even if its turnover exceeds THB 1.8 million, but it should confirm that it falls within an exemption under Section 81, particularly for processed agricultural products, which are not covered by the exemption for produce in fresh condition.

A business that sells goods or provides services in general and whose turnover is approaching THB 1.8 million should monitor its accumulated turnover regularly, because the duty to register arises once turnover exceeds the threshold. This threshold is separate from the SME criteria for corporate income tax, which require paid-up capital of not more than THB 5 million on the last day of the accounting period and revenue from sales of goods and services of not more than THB 30 million in the accounting period, under Section 6 of Royal Decree No. 530 B.E. 2554 (2011); see the guide to corporate income tax for SMEs (Thai).

How the THB 1.8 Million Is Counted, and from When

The THB 1.8 million is the value of the tax base, meaning the total value that the business receives or is entitled to receive from selling goods or providing services under Section 79; it is not profit. A business with thin margins or a loss must therefore register if its sales that are subject to VAT exceed THB 1.8 million. Under Section 5 of Royal Decree (No. 432), a "year" means a calendar year for an individual or a non-juristic body of persons and an accounting period for a juristic person, and for a business that starts operations it runs from the date business commences.

Under Section 85/1(1)(a), the 30-day period runs from the date on which the value of the tax base exceeds the small-business amount, as explained in the next section. A business should therefore record its accumulated turnover regularly, so that it knows at once the date on which turnover exceeds the threshold rather than discovering it later when closing its accounts.

Within How Many Days Must a Business Register for VAT? The 30-Day Deadline under Section 85/1

The Revenue Code sets the time for filing an application for registration (Form P.P. 01) in two main situations.

The 30-day deadline separates registration on time from carrying on business without registration, which attracts a penalty under Section 89(1) and a criminal penalty under Section 90/2(2). Where it is unclear on which date turnover exceeded the threshold, the business should check its revenue records to fix the correct date from which the period runs.

Voluntary VAT Registration: Benefits and Obligations to Consider

A business whose turnover has not reached THB 1.8 million may choose to register voluntarily. Section 81/3 gives a small business under Section 81/1 (and a business selling certain goods under Section 81(1)(a) to (f)) the right to notify the Director-General in order to register and pay VAT, computing tax under Section 82/3.⁵ Whether to register before reaching the threshold depends mainly on the business's cost structure and customer base; there is no answer that fits every business.

When voluntary registration is beneficial

• The business has high input tax, for example from investment in machinery, raw materials or large stocks of goods; registration allows input tax to be credited or refunded
• Most customers are companies that need a full tax invoice to claim their own input tax, so being VAT-registered helps the business compete for corporate work
• An exporter, which is taxed at 0% under Section 80/1, usually has input tax that can be refunded, so registration helps liquidity

Additional obligations once registered

• File Form P.P. 30 every month, even in a month with no transactions
• Issue correct tax invoices and keep input and output tax reports systematically
• Prices of goods or services to consumers who are not VAT-registered rise by 7%, which may affect competitiveness in the retail market

Once registered voluntarily under Section 85/1(2), a business may stop paying VAT only after exercising its right to apply for deregistration under Section 85/10(3) and after the Director-General has ordered the deregistration, under Section 81/3, paragraph two. Voluntary registration is therefore a commitment that should be considered carefully. In general, a business whose customers are juristic persons and whose costs carry substantial input tax tends to benefit from registering, while a business that sells at retail to consumers and has little input tax may be better off remaining exempt until its turnover reaches the threshold.

Monthly Obligations of a VAT-Registered Business

Once in the VAT system, a registered business has continuing obligations that must be met in full and on time:

1. Issue a tax invoice for every sale of goods or provision of services under Section 86. A full tax invoice must contain the particulars required by Section 86/4, such as the words "tax invoice", the seller's name, address and taxpayer identification number, the buyer's name and address, the serial number, the date, a description of the goods or services, their value, and the amount of VAT.⁶ Where a tax invoice is incorrect or incomplete in an essential particular, the buyer may not deduct the input tax under Section 82/5(2).
2. File Form P.P. 30 every month by the 15th day of the following month under Section 83, even if there were no sales in that month (returns filed through the internet may receive an extended deadline under Ministry of Finance notifications issued under Section 3 octo, so the notification in force in the month of filing should be checked). The return shows output tax less input tax: if output tax is greater, the difference is paid; if input tax is greater, the excess may be refunded or carried forward as a credit, under Section 82/3.⁷
3. File Form P.P. 36 when receiving services from abroad. Where a business pays a foreign operator for services used in Thailand, the payer must remit the VAT on the foreign operator's behalf under Section 83/6 (reverse charge).
4. Keep an output tax report, an input tax report and an inventory and raw materials report (the last only for sellers of goods), making entries within three working days under Section 87, and retain documents ready for inspection.

These are continuing monthly obligations of a VAT-registered business. Preparing tax invoices and reports correctly from the outset reduces the risk of a tax assessment and keeps refund claims on schedule. The firm offers a monthly tax filing service for businesses that wish to delegate this work.

What Happens If a Business Reaches the Threshold but Does Not Register?

A business that is required to register but does not remains liable for the VAT for that period, must pay a penalty under Section 89(1) and a surcharge under Section 89/1, and may face a criminal penalty under Section 90/2(2), as follows.

The largest amount is usually the back tax itself, because the business cannot retrospectively collect the 7% VAT from customers who have already bought, so that tax becomes a cost of the business.

A business that discovers that its turnover has exceeded the threshold for some time should apply for registration promptly, because the surcharge under Section 89/1 accrues monthly. In addition, the penalty under Section 89 may be waived or reduced under regulations issued by the Director-General with the approval of the Minister. Registering and putting past records in order should therefore be done without delay.

Online Sellers, Freelancers and Services from Abroad: Is VAT Registration Required?

Online sellers and freelancers use the same THB 1.8 million threshold as any other business. Where services are received from abroad, the payer in Thailand may have to remit VAT on the provider’s behalf under Section 83/6, even though the foreign provider is not registered in Thailand.

Online sellers

Online sellers are subject to exactly the same threshold as conventional shops. If sales turnover exceeds THB 1.8 million a year, the seller must register within 30 days, whether it sells through marketplace platforms, social media or its own website. Sales recorded by platform systems are evidence that can be checked retrospectively, so fast-growing online sellers should monitor their accumulated sales closely.

Freelancers and service contractors

Independent services subject to VAT, such as design, consulting, media production or service contracting, also fall within the registration requirement if total turnover exceeds THB 1.8 million a year, even if the person works alone and has not incorporated a company.

Electronic services from abroad

Where a business pays a foreign service provider for services used in Thailand, Section 83/6 requires the payer to remit the VAT on the foreign provider's behalf (reverse charge) using Form P.P. 36 (Thai).⁹ There is an important distinction: for electronic services, the payer must remit only where the user is a VAT-registered business (Section 83/6(2)(a)), while for other, non-electronic services, the payer must remit in every case (Section 83/6(2)(b)). Foreign platforms that provide electronic services to consumers who are not registered register and remit VAT themselves under a separate system. Businesses involved in cross-border services should assess their position case by case.

Supreme Court Rulings on VAT Registration

Two Supreme Court judgments show the effect of the registration date and the meaning of doing business in Thailand on a temporary basis. The first held that VAT arising before the registration date is not creditable input tax, even if it is remitted after registration. The second defined “temporary”, the word that separates foreign operators selling into Thailand irregularly from those that sell regularly.

Supreme Court Judgment No. 6341/2549: VAT arising before registration is not input tax

A business paid service fees to an operator that provided services from abroad which were used in Thailand between 18 November 1997 and 9 May 2000, so it had to remit VAT under Section 83/6 (2) within seven days from the end of the month of payment. That VAT arose before 17 August 2000, the date on which the business registered for VAT. The Supreme Court held that although the business remitted the VAT on 7 March 2003, after registration, this did not turn it into input tax arising while the business was a registered operator, so it could not be deducted from output tax or refunded¹⁰. The result is consistent with Section 85, under which an operator becomes a registered operator from the date stated in the VAT registration certificate⁴. The reasoning is that creditable input tax must arise while the business is registered. A business that expects substantial input tax before it starts selling, for example on machinery or construction, should therefore consider applying for registration before it commences business under Section 85.

Supreme Court Judgment No. 6753/2567: the meaning of doing business on a temporary basis

Section 83/6 (1) requires the payer to remit VAT on behalf of an operator located outside Thailand that enters Thailand to sell goods or provide services on a temporary basis and has not registered for VAT on a temporary basis under Section 85/3⁹. Section 85/3 exempts an operator located outside Thailand that enters Thailand to do business occasionally from registration, and allows the Director-General to permit such an operator, whose business has the characteristics and methods the Director-General prescribes, to register temporarily¹¹. Supreme Court Judgment No. 6753/2567 held that the Revenue Code gives the word “temporary” no special meaning, so its dictionary meaning applies: for a short time, not regular, not permanent¹². Regular or continuing sales therefore fall outside this meaning, and a foreign operator selling into Thailand must assess how it actually sells before concluding that it operates on a temporary basis.

Comparative Law: The VAT Registration Threshold in the United Kingdom

The United Kingdom uses two registration tests: a backward-looking test of the value of taxable supplies in the one-year period ending at the end of any month, and a forward-looking test where there are reasonable grounds for believing that supplies in the next 30 days will exceed the threshold. Thailand uses an annual tax-base threshold set by Royal Decree and requires the application within 30 days from the date the threshold is exceeded.

Under Schedule 1, paragraph 1 (1) of the UK Value Added Tax Act 1994, subject to sub-paragraphs (3) to (7), a person who makes taxable supplies but is not registered becomes liable to be registered (a) at the end of any month, if the person is UK-established and the value of taxable supplies in the one-year period then ending has exceeded GBP 90,000, or (b) at any time, if the person is UK-established and there are reasonable grounds for believing that the value of taxable supplies in the 30 days then beginning will exceed GBP 90,000¹³. Paragraph 5 requires a person liable under test (a) to notify the Commissioners within 30 days of the end of the relevant month, and requires the Commissioners to register that person with effect from the end of the following month, or an earlier agreed date, whether or not the person notifies them¹⁴.

Two practical differences follow. First, the UK test looks back over a rolling year at the end of every month and adds a 30-day forward-looking test, whereas Thailand counts the year as Royal Decree No. 432 provides and imposes no duty to register in advance, although Section 85 gives a person about to start a business the right to apply before commencing. Second, UK registration takes effect by law even without notification, whereas in Thailand an operator becomes a registered operator from the date stated in the registration certificate⁴. Read together with Supreme Court Judgment No. 6341/2549, which denied credit for VAT arising before the registration date¹⁰, the registration date has a direct effect on a Thai business’s costs.