Business owners and some tourists from the United States will notice an added tax for goods and services when doing business with companies in other countries such as Thailand. Understanding what this value-added tax (or VAT) is and what it does is important for business owners to know.
When completing company registration in Thailand, it helps to understand VAT, when you should be registered, and all of the various questions that come along with a process like this. Going into this scenario uninformed is not ideal, and thankfully, this guide will help you understand it better.
Is VAT Registration Required?
Generally speaking, compulsory VAT registration is needed if your company turnover is in excess of Baht 1.8 million per annum. A failure to register can mean you are subject to surcharges and penalties for late registration, and no one wants to pay anything more than they need to.
One thing to keep in mind is that if your company is only selling goods and services in Thailand that are exempt from VAT, your company is not required to register. One thing to keep in mind, however, is that you can still voluntarily register.
Voluntary VAT Registration
Even if your company turnover doesn’t exceed the aforementioned Baht 1.8 million threshold, or if your company only sells goods that are on the exemption list, you can still voluntarily register for VAT. There is an advantage to this: if your local customers are registered for VAT, you can recover the VAT that they charge you.
Not only that, but businesses are often better off being registered, as they might be entitled to refunds of VAT that is paid when importing raw materials and goods into Thailand. Being able to have access to those refunds can mean quite a bit of money, depending on the amount of business that you take part in.
A Better Understanding of VAT
This country-level sales tax applies to the vast majority of services and goods in Thailand. It can be applied at a standard or reduced rate, depending on the standards in a given area. To get refunds on VAT, a company needs a government-issued identifier known as a VAT number. For companies that are looking to reclaim that VAT, it is essential to have your VAT number on hand.
Generally speaking, you will need to have your VAT number ready when filing to reclaim those fees. Make certain that you have all of the pertinent details filled out to ensure that the process goes as smoothly as possible and that your refund is issued in short order.
Being able to reclaim value-added taxes on business in Thailand can be a nice benefit of doing business abroad. Your company gets a new audience to reach out to and can reclaim those taxes that may otherwise be lost with your VAT registration.
Take the steps to get your VAT number for your business today to begin the process of reclaiming those taxes for your business’ bottom line.