Claiming Back Vat

[dvdlock]

Hi,

Appreciate if anyone could give me an overview of how VAT is handled in Thailand.

In the UK I filed my VAT return quarterly. The VAT return requires that you state the amount of VAT you have paid in that period to suppliers and the amount of VAT you have taken on your sales. The difference is the amount of VAT that has to be paid to Inland Revenue.

Does it work in a similar way in Thailand?

How about with an Export Company, what would be the 'typical' process regarding VAT on products sourced in Thailand and exported to the UK?

I'm not looking for detailed information but would appreciate an overview of how it works.

Many thanks.

[bkkflyer]

The VAT system here is very similar to the one in Europe. You can deduct VAT for purchases from the VAT you have charged on local sales.

As an export company you might not have any local sales, and would only claim back VAT for purchases. That said.... They hate to pay out VAT here... so be prepared for a lot of "hassle", especially if you are a new/small company. We have been fighting with them for 10+ years... always a hassle, better have a good book-keeping company and auditor, because they will CERTAINLY scrutinze ALL your documents before paying out VAT....

If everything is okay, they will pay it in the end, expect 6-12 months or more.... especially if they can find something questionable in your books. If you dont have profit in a year, they will most probably force you to "withdraw" some of your expenses, to make profit, and pay income tax. Then they might hold back the VAT until your accept their numbers, which are not the correct ones, but shows profit.....

This is a banana republic and quite "challanging" to run a small business.... but it can still be fun

[dvdlock]

The VAT system here is very similar to the one in Europe. You can deduct VAT for purchases from the VAT you have charged on local sales.

As an export company you might not have any local sales, and would only claim back VAT for purchases. That said.... They hate to pay out VAT here... so be prepared for a lot of "hassle", especially if you are a new/small company. We have been fighting with them for 10+ years... always a hassle, better have a good book-keeping company and auditor, because they will CERTAINLY scrutinze ALL your documents before paying out VAT....

If everything is okay, they will pay it in the end, expect 6-12 months or more.... especially if they can find something questionable in your books. If you dont have profit in a year, they will most probably force you to "withdraw" some of your expenses, to make profit, and pay income tax. Then they might hold back the VAT until your accept their numbers, which are not the correct ones, but shows profit.....

This is a banana republic and quite "challanging" to run a small business.... but it can still be fun

Many thanks for your insight.

Sounds like it would prove to be more frustrating than anything. My situation would be as an Export Company and I did wonder about how the VAT is handled for local purchases, especially with a new company when expenses are likely to be at the highest..

I can't really think of a situation where there would be any local sales, but I guess one never knows what is lurking around the corner.

Thanks again for your input.

[monty]

Can't really say we have problems with VAT. But we do sell locally...

If due to some big purchases outgoing VAT is higher then incoming, they prefer to keep it as credit against future VAT you'd have to pay.

In one instance we actually got a refund of VAT (resulting from a 6 million Baht investment in materials), where we argued that the amount they owed us was too big to keep as credit and that as an upstart company we really needed the refund to keep our cash flow healthy.

Wasn't easy, but didn't take too long, about 2 months if I remember correctly...

Additionally, you do the VAT thing on a monthly base here in Thailand...

[dvdlock]

Can't really say we have problems with VAT. But we do sell locally...

If due to some big purchases outgoing VAT is higher then incoming, they prefer to keep it as credit against future VAT you'd have to pay.

In one instance we actually got a refund of VAT (resulting from a 6 million Baht investment in materials), where we argued that the amount they owed us was too big to keep as credit and that as an upstart company we really needed the refund to keep our cash flow healthy.

Wasn't easy, but didn't take too long, about 2 months if I remember correctly...

Additionally, you do the VAT thing on a monthly base here in Thailand...

Hi monty,

Thanks very much for your input.

It seems that the VAT issue may not be as daunting a prospect as I first thought it may.

Monthly VAT reporting eh! I Shall have to remember that. I was always late with my VAT return on a Quarterly basis. I hope old habits 'don't' die hard

Thanks again.

[CWMcMurray]

If you are looking to file applications for vat refund based upon export, then you will need to ensure that all exports are done via formal customs clearance (i.e. no thai post office or DHL,Fed Ex courier shipments). You will need these docs to "prove" the goods were exported.

Also do to the fact that you will not be collecting any vat from customers (no local sales) you will not have any vat collections from customers.... only applications for vat refund that you have paid to suppliers. So from what I have heard the revenue department will be sticklers for the details... it is key to have a gook book keeper or accountant who knows the system or you could have problems in getting your refund based upon small details.

Edited July 11, 2010 by CWMcMurray

[raro]

we did a VAT refund a while ago in Pattaya for a relatively new company...the accounting documents were one file only. They took that file with them and returned it about two months later with a cheque covering almost the expected amount. Again, we are talking here some 100 receipts only!

[dvdlock]

Many thanks Charlie & raro.

All good information thank you.

[bkkflyer]

If you are looking to file applications for vat refund based upon export, then you will need to ensure that all exports are done via formal customs clearance (i.e. no thai post office or DHL,Fed Ex courier shipments). You will need these docs to "prove" the goods were exported.

I am quite sure it is possible to export through the Thai Postoffice or DHL and still claim VAT refund. If I am not mistaken, it might take an extra day to do the customs formality, and for export through the Post office (at least here in Bangkok) it can only be done at the Central Post Office (if you want to do customs declaration).

Please correct me if I am wrong.

[inventorinthailand]

The VAT system in Thailand is a joke. I have been running companies here for almost 7 years and have NEVER been able to get back any VAT that we had the right to clam. ALL, bookkeepers, auditors have told us to avoid the VAT system as much you can as Thais does. Buy your things where you don't need to pay any VAT. If you clam for any VAT you will be threatened by the officials and told that it is best for your company to just forget your money.

Do it wrong and Thaiways and you will have no problems - Do it correct and you will be punished for it.

Edited August 9, 2010 by inventorinthailand

[raro]

The VAT system in Thailand is a joke. I have been running companies here for almost 7 years and have NEVER been able to get back any VAT that we had the right to clam. ALL, bookkeepers, auditors have told us to avoid the VAT system as much you can as Thais does. Buy your things where you don't need to pay any VAT. If you clam for any VAT you will be threatened by the officials and told that it is best for your company to just forget your money.

Do it wrong and Thaiways and you will have no problems - Do it correct and you will be punished for it.

thanks for your rant. I have received VAT back from the Revenue Department and also others here on this forum have reported that it works. Please refrain from further suggestions of breaking existing laws.

Edited August 10, 2010 by raro

[stevenlev]

Hello,

My vat claim is in process (30 000 Bath). All docs are submitted and approved by revenue dept.

My questions:

1-I understand revenue dept. will prepare a cheque and send to my company address, is this the normal?

2-Does revenue dept send this by registered mail or normal thai post?

3-Is the cheque a cashier cheque on name or on company?

4-Is it possible to pick up the cheque personally at the revenue department?

5-Is it possible that revenue bank in money into my company account?

thank you.

Regards,

Steven

[Aromaz]

My recent experience and guide:

File your VAT forms and pay your VAT on time, monthly. VERY important.

Make sure your books are in perfect order. Obviously you need this else . . .

File for VAT return one month before you are due for PND50. (150 days after end of tax year)

RIGHT ON TIME - file your INCOME TAX report PND 50; About 30 days after VAT return is best. Hope fully you made some profit. If it is a loss on Income VAT Refund claims are difficult and will probbably be 'lost' until next tax year - or worst, they come and occupy your office for a month, scratching through all pieces of papers, go back to their office and work your case for another 12 months.

A word of causion: Always have your doccuments correctly in a file; how you file is your problem - as long as you can get a document quickly. Here I find the Thai way of millions of files a recipy for disaster.

NEVER keep ANY scraps of paper (or recycle as back of small receipts) laying around. When they come to inspect, they take and look at EVERYTING on / in your desk, computer, drawers, files - even waste bin. They do not only inspect your last year, they are most interested in your current operation. If they find something wrong, better for you to tell them "OK, sorry - forget about my VAT claim" and please . . . You will face very difficult times, been there.

What will happen next is they will dissect your Income tax report, then see you have to pay tax of say Tb 60,000.

Now they will call you / your accountant in and say:

"We have to pay your VAT return, but you have to pay us Income tax. "

Option #1 - we take income tax from your VAT and refund the balance - will take 3 to 6 more months

Option #2 - You go pay income tax, bring us receipt and we will mail your cheque end this month.

I had this good fortune of getting my VAT refund now two years in a row.

Nice Tb 274,450 in April 2009 and Tb 483,217 in March 2010.

Best of all: I did not even had inspection these two times. This year I do because my claim is very big.

Had inspection in another business four years ago - so I learned from my mistake. Scraps of note pads! If you are using an ACCOUNTANT - make sure minimum papers are around. They LOVE copies of copies, files on files - a truckload of papers is the norm of Thai. Cut down and make sure there are no excess of copies all over the place. Best lock that dam_n (*&^ photocopy !@#$% machine in your safe and refuse to pay for external photo copies.

ONE transaction, ONE document, NO other copies is the real best way to prevent any problems.

Lastly: AVOID Journal entries and corrections at ALL times. Can cause confusion. Confusion cause payment - from your pocket.

Edited February 8, 2011 by Aromaz