Thailand's Value-Added Tax (VAT) implementation has received a lot of attention in recent years. The administration has been seeking to boost income and lower the fiscal deficit, and one method it has chosen is to adopt a VAT system. In this post, we will go over what you need to know about Thailand's VAT implementation and how it will influence the country's companies and customers.

Understanding Value-Added Tax (VAT)

First, it is critical to comprehend what VAT is and how it operates. VAT is a sales tax that is applied to the cost of products and services at each step of production and delivery. Although the customer ultimately pays the tax, it is collected and repaid to the government by businesses at each point of the supply chain. The typical VAT rate in Thailand is presently 7%.

VAT Implementation in Thailand

The Thai government originally implemented VAT in 1992, but only on a limited range of products and services. The government announced intentions in 2013 to expand the VAT system to encompass a broader variety of products and services, which were enacted in 2015. However, the government has encountered opposition from companies and consumers, making it difficult to completely implement the VAT system. 

VAT Changes in 2023

The government has declared that a new VAT system would be implemented in 2023, including several adjustments to the existing system. The rise in the VAT rate from 7% to 10% is one of the most important adjustments. This will have a tremendous impact on companies and customers, since the cost of products and services would rise. The administration has also declared that the VAT system would be expanded to include a broader variety of products and services, including e-commerce transactions. This implies that companies who offer products and services online must now collect and remit VAT to the government.