Running a business here in Thailand, we all know that we have to pay VAT when providing services locally but not everybody knows whether VAT must be paid on income attached to services provided abroad.

It is interesting to note that not all kinds of service fees received are subject to VAT. In fact, paragraph two of Section 77/2 of the Revenue Code imposes VAT only on services that are performed in Thailand or performed outside Thailand where the revenue of which
is used in the country.

Based on the above principle, if your company is providing services to overseas customers whereby the performance of such service takes place outside of Thailand, then there is no VAT even if you are required to declare the income in the corporate income tax base.

If this kind of case applies to you or your business, please keep the following ruling
as a reference to show the tax auditor when they call for a tax audit so that you don?t need to collect VAT from such customers:

Ruling No. Gor Khor 0 8 11 /Phor. Gor. 1184 dated 3 October 2000
Company informaton & Questions: The Company provided services to a Singapore company by
constructing a station to check the air quality in Singapore. The Company provided
equipment and sent its officials to work in Singapore.

The Company would like to know whether such services were subject to VAT at the rate of
zero percent and whether there was any other tax?

The Revenue Dept. answer: The provision of services where the Company constructed the station to check the air quality in a foreign country and no service was used in Thailand was not subject to VAT under Section 77/2 paragraph 3 of the Revenue Code. The Company was
not required to pay VAT on the payment received under the agreement. However, the Company was required to include income received from such construction business for the calculation of corporate income tax under Section 65 of the Revenue Code.

If you have any questions concerning the Revenue Department, please feel free to e-mail: sirirat@thaiaccounting. com. We will select an appropriate question and publish it in Thai
Tax Tips.

K Sirirat is the Managing Director of NAT accounting firm, the ISO 9001 certified accounting firm. Please call: 076-375-699 or visit: www.thaiaccounting.com