When a branch office of a foreign company has obtained a Foreign Business License from the Department of Business Development as required by Thailand Foreign Business Law, can it start operation without VAT registration?

You can start the operation of the branch office now. However, if your sales will reach Baht 1.8 M within the time before VAT registration, please refrain from issuing the invoice (whose amount will make the total sales to-date reach Baht 1.8 M) until you have registered VAT.

When a company’s gross income has not reached Baht 1.8 M in an accounting year for the first time, it is not required to be in the VAT system. However, your customers normally will not understand this and they will ask you for a tax invoice anyway. So that means you should register VAT before you make income from sales or services. If you are not registered in the VAT system, you cannot issue a tax invoice. You can only issue an invoice and a receipt and you cannot collect VAT from your customers. VAT can be collected by the companies that are registered in the VAT system.

Learn about Thailand VAT here.