Vat

[cambridge]

I recently purchased a new pick-up and financed it through Ayudhya Auto Lease (previously GE Auto Lease). On carefully going through the finance agreement, something I should have done some time ago, I find that they have added the interest to the amount financed and then added VAT @ 7% to the total. This means that I will end up paying more than Baht 8,000 extra in VAT. This seems the wrong way of doing it. I would have thought the VAT should be added to the amount financed before interest is added. Anybody else have a similar experience and if so who with?

[MoonRiverOasis]

VAT is applicable to finance repayments as well as the vehicle, however for *new and privately owned* vehicles, the finance company can claim a VAT refund for the tax on your repayments - even in this case it's normal/required practice for them to display the VAT component on receipts issued to you.

If the vehicle was purchased new, and under a personal name (not a business name), check the total numbers - although VAT will be displayed you shouldn't actually be paying it.

If it was purchased used, or through a company you will have to pay VAT on the repayments.

[tigerbalm]

VAT is applicable to finance repayments as well as the vehicle, however for *new and privately owned* vehicles, the finance company can claim a VAT refund for the tax on your repayments - even in this case it's normal/required practice for them to display the VAT component on receipts issued to you.

If the vehicle was purchased new, and under a personal name (not a business name), check the total numbers - although VAT will be displayed you shouldn't actually be paying it.

If it was purchased used, or through a company you will have to pay VAT on the repayments.

Are you shure about this info regarding shouldn't actually be paying the VAT, my wife is the same as the OP car financed (Private name not company) through Toyota leasing monthly Bill always states the amount XXX The VAT XX and the total amount XXX which includes the VAT.

Just a bit reluctant to phone the company up and say hey whats going on why am i paying VAT.

Whats the reason one should not be paying the VAT Toyota i would assume is quite a reputable company and find it a little difficult to think they would be charging for some thing with out there being a justifiable reason for it.

Regards

TB

[robblok]

Normally VAT is already included int he price of the car.

So you don't pay vat on finance if you pay you might have to pay over the interest amount not over the part used for paying off the loan.

So there might be VAT on the interest amount but i am not 100% sure of it. But i am 100% sure there cant be vat on the amount that is used for paying of the loan.

[cambridge]

Normally VAT is already included int he price of the car.

So you don't pay vat on finance if you pay you might have to pay over the interest amount not over the part used for paying off the loan.

So there might be VAT on the interest amount but i am not 100% sure of it. But i am 100% sure there cant be vat on the amount that is used for paying of the loan.

That is not the position with GE Auto Lease (now Ayhuda Auto Lease). Their agreement clearly states the amount owing plus interest ,dived by the number of payments, then plus 7% VAT. This does not equal the VAT owing on the vehicle but comes to considerably more!

[cambridge]

VAT is applicable to finance repayments as well as the vehicle, however for *new and privately owned* vehicles, the finance company can claim a VAT refund for the tax on your repayments - even in this case it's normal/required practice for them to display the VAT component on receipts issued to you.

If the vehicle was purchased new, and under a personal name (not a business name), check the total numbers - although VAT will be displayed you shouldn't actually be paying it.

If it was purchased used, or through a company you will have to pay VAT on the repayments.

Thank you for your comments.

In my case the vehicle was purchased new and in a private name and the agreement clearly states the amount outstanding, plus total interest, divided by the number of payments due, then plus 7% VAT. That is the amount I am paying. This works out at considerably more than the VAT on the purchase price. Nobody at the finance company has ever mentioned the possibility of reclaiming the VAT!

[MoonRiverOasis]

The only way to know for sure is go all the way back to the start, and work out of your repayment value is correct, luckily all car finance in Thailand is calculated in advance using simple interest, so the match is nice & easy:

Vehicle Price - Downpayment Amount = Amount Financed.

Amount Finanaced x Interest Rate Offered x Term of loan (in years) = Total Interest.

Amount Financed + Total Interest = Total Repayable.

Total Repayable ÷ Term of loan (in months) = Monthly Repayment.

If the Monthly Repayment you calculate equals the monthly repayment they're asking you for, all is good and the VAT you're seeing is just what they necessarily have to declare so they can claim it back. If not, then you know you're getting charged VAT..

[stingray]

VAT is applicable to finance repayments as well as the vehicle, however for *new and privately owned* vehicles, the finance company can claim a VAT refund for the tax on your repayments - even in this case it's normal/required practice for them to display the VAT component on receipts issued to you.

If the vehicle was purchased new, and under a personal name (not a business name), check the total numbers - although VAT will be displayed you shouldn't actually be paying it.

If it was purchased used, or through a company you will have to pay VAT on the repayments.

Thank you for your comments.

In my case the vehicle was purchased new and in a private name and the agreement clearly states the amount outstanding, plus total interest, divided by the number of payments due, then plus 7% VAT. That is the amount I am paying. This works out at considerably more than the VAT on the purchase price. Nobody at the finance company has ever mentioned the possibility of reclaiming the VAT!

So far as i know the VAT can only claimed back, if the car goes to export.

[basjke]

I remember that there was a similar topic not long ago.

The answer is as follows.The finance company calculates on the price of the new car excluding VAT and the adds VAT to the monthly payments.So after all it is exactly the same.

To calculate the amount of montly payments is also pretty simple.Take the amount you finance included the VAT.You should know the interest rate,so apply the interest rate on the amount you finance and multiply with the amount of years you finance.Add this to the original amount and divide by the amount of months you will be paying.It will give you the exact same amount as which is on the monthly payment slips.