Revenue Department Order No. Por. 164/2568 regarding the sale of goods outside the Kingdom by a VAT registrant was issued to amend and update the Value-Added Tax (VAT) regulations for the sale of goods outside the Kingdom by VAT registrant operators, as previously stipulated in Revenue Department Order No. Por. 89/2542. The details are as follows:
- Clause 3 paragraph 2 of Revenue Department Order No. Por. 89/2542 is removed.
- Clause 3/1 of Revenue Department Order No. Por. 89/2542 has been added to clarify the principle of input tax allocation based on the proportion of revenue when a VAT registrant operator operates both VAT business and out of VAT scope business under Section 77/2 of the Thai Revenue Code (TRC). In case where VAT operators acquire goods or services used for both types of businesses, they must first allocate input tax in proportion to the revenue from businesses which are not subject to VAT. After such allocation, the remaining input tax can be deducted from the output tax.
- For example, a VAT registrant company has total revenue of 20 million THB, categorized as follows:
- Revenue from domestic sales, which are subject to VAT: 16 million THB (80% of total revenue).
- Revenue from overseas sales, which are not subject to VAT: 4 million THB (20% of total revenue).
- In the following month, if the VAT registrant operator has 1 million THB in input tax that cannot be specifically attributed to either type of business, the input tax shall be allocated as follows:
- Input tax which cannot be used for VAT deduction: 200,000 THB (20% of one million THB).
- Input tax can be deducted from output tax: 800,000 THB (80% of one million THB).
- In addition, Clause 3/2 of Revenue Department Order No. Por. 89/2542 has been added to clarify the principle of input tax allocation based on the proportion of revenue when a VAT registrant operator engages in various businesses which are subject to VAT, not subject to VAT (including VAT-exempt businesses, business which subject to specific business tax, and businesses which are exempted from specific business tax), and outside the scope of VAT under Section 77/2 of the TRC. The input tax should first be allocated based on the revenue proportion of businesses which are outside the scope of VAT. After such allocation, the remaining portion of input tax shall be apportioned according to the criteria specified in Section 82/6 of the TRC, in conjunction with the Director-General of the Notification of Revenue Department on VAT (No. 29) regarding rules, methods, and conditions for apportioning input tax under Section 82/6 of the TRC dated 9 March 2535
- For example, in 2023, a VAT registrant company has a revenue from non-VAT business for 50% of total revenue and VAT business for 50% of total revenue.
- In the following year, a VAT registrant company had total revenue of 20 million THB which is categorized as follows:
- Revenue from the exportation of goods to foreign countries which is subject to VAT at 6 million THB;
- Revenue from the domestic sale of goods which is non-VAT business at 10 million THB; and
- Revenue from the foreign countries which are out of the VAT scope at 4 million THB (20% of the total revenue).
- In such year, a VAT registrant operator has 1 million THB in input tax that cannot be specifically attributed to either type of business, the input tax shall be allocated as follows:
- Input tax which cannot be used for VAT deduction for: 200,000 THB (20% of one million THB)
- The remaining input tax amount for VAT and non-VAT: 800,000 THB (80% of one million THB) shall be allocated as follows:
2.1 Input tax which can be deducted from output tax of VAT business: 400,000 THB (50% of the remaining input tax)
2.2 Input tax which can be deducted from output tax of non-VAT business: 400,000 THB (50% of the remaining input tax)
The sale of goods outside the Kingdom by a VAT registrant operator_Bangkok Global Law