Export Issue-can I Get The Vat Back?

[Doi Thong]

The prices in Thailand as we know including 7% VAT. My question is if I buy a product and export it straight away,do I get VAT back in this way or another? I'm sure it's a few exporters here that can enlighten me on this one.

[ubergnome]

If you have it shipped directly from the mfr or the reseller out of TL then you shouldn't have to pay VAT. If you take delivery here and ship it yourself then you can apply for a VAT refund.

[Doi Thong]

First of all thanks for the reply. Now...apply for VAT refund in what form? Can you be more specific plz?

[Richard Hall]

The prices in Thailand as we know including 7% VAT. My question is if I buy a product and export it straight away,do I get VAT back in this way or another? I'm sure it's a few exporters here that can enlighten me on this one.

Just in very short words:

Your company certainly needs to be in the tax system means having a VAT number and Por Por 20 certificate and so does your supplier.

When buying the goods you need to get an official tax invoice from the seller indicating all proper information (company name, company address, tax number, kind, number and value of goods, amout of tax paid).

When exporting the goods the shipment has to pass Thai customs and an appropriate certificate is issued in Thai language. THIS (just an AWB or B/L will not suffice) is you evidence that the goods have actually left the country.

Finally you need to provide proof that payment (by T/T or L/C) for the goods has actually been made means money in the appropriate amount came from abroad into Thailand.

When you have all the above together you apply at the tax department (the place where you usually make your monthly VAT reporting).

Be ready to get "grilled" by the tax authorities and that they are going to check you at a 200% level that this transaction and all the other transactions your company ever made were legitimate. When in doubt better kiss the money goodbye rather than having the tax officiers turn your entire place up-side down. Tax authorities just hate to refund money! It is generally a quite long lasting process but if you succeed you either get a check from them or they credit the amount against your tax debts.

Once I eventually got a check for a personal tax refund from them and I swear there were traces of dried tear drops on it.

Lots of luck.

[p_brownstone]

Absolutely agree with Richard.

(Unless you are a Tourist buying stuff "once off": to take home with you, then the procedure is different of course)

For regular Export business from Thailand then both your Company and that of your Supplier have to be registered for V.A.T. and you must get a Tax Invoice when you purchase the goods. (Bear in mind that if you are buying from Chatuchak type vendors then they are usually not registered - or, if you ask for a Tax Invoice, they will simply add the 7% to the "final" price which you thought you had already negotiated).

In THEORY your Company can reclaim the V.A.T. (subject to submitting the documentation as described by Richard) when the goods are exported but you had better be 100% squeaky clean, because not just your records of that transaction, your Company Registration, Tax Payments etc. will be examined before you get the refund, your own Visa and Work Permit Status, sexual orientation and whether you dress on the left or right will be looked at - OK the last two are an exaggeration but as Richard says getting cash out of the Revenue Department makes getting blood from a stone seem commonplace.

And if Working Capital is tight, do not expect to get the refund for at least 6 months so build that into your Cash Flow.

Many times it's simpler to eat the V.A.T. and accept it as an additional Cost of Goods Sold - assuming your margin can stand the charge of course.

By far the easiest way to get the "refund" is to sell something, anything, IN Thailand, with a V.A.T. liability from your Company, and deduct the amount of V.A.T. you are due from the Export of goods from the amount you should pay to the Revenue Department for those local sales.

And even that is not a guaranteed formula.

[Doi Thong]

I'm not gonna sell thinngs in Thailand(export company only) so this combination wont work for me. One last clearing question: even if I buy FOB Bangkok I should pay VAT to supplier? I mean if the goods going straight away to the port?

[Richard Hall]

I'm not gonna sell thinngs in Thailand(export company only) so this combination wont work for me. One last clearing question: even if I buy FOB Bangkok I should pay VAT to supplier? I mean if the goods going straight away to the port?

The question is a matter of the buyers/customers location. If a deal is carried out on Thai soil and/or generates income within Thailand it is subject to VAT and in some cases service charges.

Well if the selling party (manufacturer) sells FOB Bangkok to an abroad customer directly this deal does not require VAT collection from the seller. If you, however, live and work in Thailand and function as an middleman/exporter we have basically two business transactions:

1. You buy as a Thai resident from a Thai supplier - this is a strictly LOCAL business transaction and hence subject to local VAT.

2. You export to the abroad customer. No need to collect VAT from the foreign client and entitled for refund of VAT your previously paid to your supplier.

Assuming you are the manufactuer AND the exporter of the goods but to manufacture your items needed to import intermediate products that you had to pay VAT and customs duty for. When you eventually export the finished items this is under these circumstances kind of a re-export and hence a blue corner tax refund can be filed means you can claim the VAT previously paid for the imported intermediates back.

Assuming you are just an "agent" and do not do the export yourself but the manufactuer does. Well, as previously said the manufacturer does not need to collect VAT from the foreign customer because it is strict export business for him. Now we get to the part that you (the Thai resident) collect commission for your services from the Thai supplier for generating the export business. This transaction is strictly local business (income generated on Thai soil) and you have to pay VAT and even service charge to the Thai Revenue Department.

All is basically about where a deal is carried out, income is generated and where are the business partners residing. Another aspect is also where benefit is achieved. Let's say you are a consultant and carry out a survey about the Thai market for a foreign company that wants to go into the Thai market by setting up a business here. Although the client is residing abroad all is about benefiting from Thailand means targeting at future income on Thai soil. Under these circumstances your have to charge to your foreign customer VAT (7%) and local service charge (3%).

Hope all this does not have just caused confusion but rather gave a better idea how the system works