Today, Thai Tax Expert answers a question from one of our accounting clients.
Our Thai company issues Purchase Order to a company overseas but everything will be manufactured in Thailand. In this instance, there will be invoice from overseas company to our Thai company but there will be no physical documentation of shipment from overseas to Thailand. Do we need to pay taxes in Thailand? What are the taxed and tax rates involved?
Normally when you buy goods for use or sale in Thailand from an overseas supplier, you will have to import it and pay 7% VAT at the Customs.
In your case, because the goods will be produced in Thailand and sent to you domestically, you will have to submit to the Thai Revenue Department 7% VAT with Form PP.36 within the 7th of the following month. This is to pay VAT on behalf of your overseas vendor. This VAT becomes your input VAT in the month that you submit it and it will be used to offset the Output VAT that you have to submit normally. If your company is not VAT registered, you will still need to submit Form PP.36, but you will not be able to use that VAT. It becomes part of your product cost.
And the producer in Thailand should invoice your overseas vendor for the price of the product plus 7% VAT. However, it will be your concern whether or not they treat the transaction correctly.
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