Sometimes companies can make costly tax-related mistakes. That’s why companies in Thailand should be aware of issues that may result in surcharges, fines or investigations by the Ministry of Finance.
This article will show you common tax mistakes that businesses in Thailand often make.
Mistake #1: Tax invoice in Thailand
This is an obligatory document that must be made by sellers of goods and services in order to submit VAT.
Failure to provide tax invoices in accordance with the requirements listed below may result in non-deductibility of expenses, which adds those expenses to taxable income and ultimately increases the company’s tax liability.
A tax invoice must at least contain the following information:
- The wording “Tax Invoice”
- The mention “Head Office” or “Branch” number for both the seller & customer.
- The name, address, and tax identification number of the seller.
- The name, address, and tax identification number of the customer.
- The tax invoice issue date.
- The tax invoice serial number.
- The description, quantity, unit price and total value of goods or services.
- The amount of VAT charged on goods or services.
The tax invoice must be written in Thai language or English with Thai language, Thai currency and Thai or Arabic numerals.
The fine will not exceed 2,000 baht per case for non-compliance. The fine will not exceed 100 baht per case for the first mistake. The company must not change the form of the tax invoice during the tax year. Of course your accountant can assist and guide you in preparing the best tax invoice template.
A “normal” invoice is created to request payment for goods and services; a tax invoice is then created upon delivery of the goods or receipt of payment. The date of the tax invoice is the point of taxation for VAT purposes.
Invoices issued in foreign currencies must have both currencies (on the front of the invoices) and display the exchange rate used for conversion. It must match the rates published by the Bank of Thailand.
Mistake #2: VAT registration in Thailand
The first thing to know is that any individual or organization that frequently donates goods or services in Thailand and whose turnover exceeds THB 1.8 million (USD 51,151) per year is subject to VAT in Thailand.
VAT registration in Thailand must realize:
• priority to the business operation;
• in a maximum of 30 days after its turnover has exceeded THB 1.8 million.
Our firm’s experts in company registration in Thailand can also assist investors to better understand the principles of VAT compliance.
Mistake #3: Withholding Tax in Thailand
Domestic payments
Withholding tax is to be deducted from payments made to suppliers who provide a service.
This tax rates may change depending on the type of income and the status of the resident.
By the 7th day of the following month in which the payment was made, the WHT must be reported and submitted to the Revenue Department. The company is also required to provide a tax certificate as proof.
Foreign payments
The following will require the deduction of WHT:
- Expenses greater than 1,000 Baht; and
- Expenses less than 1,000 Baht for which a long term contract is in place (e.g. telephone)
However, no deduction is made for payments to non-taxpayers (e.g. the Government, BOI promoted company).
Common WHT deduction rates:
| Service | Rate (**) |
| Rent | 5% |
| Rental service fee | 3% |
| Parking | 3% |
| Transportation (*) | 1% |
| Telephone | 3% |
| Advertising | 2% |
| Non-life insurance premiums | 1% |
| Professional fees | 3% |
| Royalties | 3% |
| Interest | 1% |
| Dividends | 10% |
| Prizes | 5% |
| Water and electricity | N/A |
| Public transportation / air tickets | N/A |
| Life insurance | N/A |
The fine for late submission is:
- 100 baht within the first 7 days
- 200 baht after 7 days
An additional penalty of 1.5% of the outstanding amount calculated monthly.
Mistake #4: VAT Tax Point
The standard rate of VAT is 10%, but the rate is presently reduced to 7% until 30 September 2023.
VAT is charged on the sale of goods and the provision of services. Exports are zero-rated, while a number of goods and services are exempt (e.g., basic foodstuffs, education, health care, interest, rental of real estate, sale of real estate).
The following are the key conditions for VAT collection:
- Digital services are provided from abroad
- Services are provided by electronic means and are used by a customer in Thailand
- The customer in Thailand is not a VAT registrant.
Mistake #5: Stamp duty
Stamp duty is imposed on goods and not on transactions or persons. For stamp duty purposes, property is defined as any document subject to duty under the Revenue Code. The rules relating to stamp duty are all contained in Chapter VI of Title II of the Revenue Code.
Please visit the Revenue Department website for more information on stamp duty.
Payment of stamp duty:
There are two ways to pay the stamp duty:
1. Affix the stamps to the instrument
2. Payment in cash (filing form Or Sor 4 along with the related payment with the Revenue Department)
The following are notable assets for which stamp duty must be paid in cash:
1. Agreement for lease of land, building, other construction or floating house for which the rental fee for the entire lease period is Baht 1m or more;
2. Agreement for lease of land, building, other construction or floating house for which the registration to the officer under the land law is required; and
3. The hire-of-work service agreement for which the service fee is Baht 1m or more.
| Days paid late | Surcharge (maximum amount) |
| Up to 15 days | No surcharge |
| 16 days to 90 days | Two times the amount of stamp duty payable |
| More than 90 days | Five times the amount of stamp duty payable |
To easily avoid these 5 mistakes, the Gorioux teams are there to accompany and advise you throughout the process.
If you require any support with this topic or any other business operations, please do not hesitate to contact us.