Value-added tax (VAT) is a key factor in cross-border trade, and Thai businesses should give it careful consideration, particularly in an era where economies are interconnected and interdependent on both the regional and global level. Systematic VAT planning and management not only mitigates tax-related risks but also directly impacts business competitiveness, influencing pricing strategies, cost reduction, cash flow management, and the effective use of tax benefits.

In this article, we’ll explore approaches to managing VAT in international trade, covering VAT registration requirements, applicable VAT rates, tax types related to cross-border trade, and VAT calculation methods for international businesses. We’ll also introduce automated tax management solutions that enable businesses to systematically and comprehensively comply with tax regulations in both Thailand and international markets.

Key takeaways

• If value-added-tax (VAT) is calculated by deducting input tax from output tax and the result is positive, the business must remit the difference to the Revenue Department. However, if the result is negative, the business can either request a tax refund or carry the tax credit forward to the following tax period.
  
• Those required to register for VAT for international trade include importers of goods or services, exporters of goods or services, and foreign digital service providers with revenue exceeding ฿1.8 million, as well as foreign businesses that sell goods or have a business base in Thailand, regardless of minimum revenue.
  
• VAT is levied on all imports, along with import duties and excise taxes (if applicable). Even if an importer’s revenue is less than ฿1.8 million, they should register for VAT if they import goods regularly, as input VAT credits can be used to offset domestic output VAT.
  
• Thai exporters of goods or services are subject to a 0% VAT rate and are eligible to claim input tax refunds as the result of a measure designed to promote and stimulate exports.
  
• In international trade, besides local VAT, businesses must pay other taxes such as import and export duties, VAT or GST (goods and services tax) in the destination country, withholding tax, and other special taxes.
  

Understanding VAT in international trade

VAT in international trade (cross-border VAT) is an indirect tax levied when businesses import goods or services from foreign countries or export goods or services across borders. In Thailand, the principles for collecting VAT differ between imports and exports.

• Imports: Goods passing through customs must pay 7% VAT immediately at the point of import. The Customs Department collects this along with import duties. This tax is considered input tax for the importer.

• Exports: The sale of goods or services to foreign countries is subject to a VAT rate of 0%. Therefore, exporters are not required to charge VAT to overseas buyers, but they’re still entitled to claim a refund or credit for input tax incurred.

• Input tax: VAT that a registered business pays when purchasing goods or services, or when paying at the point of import.

• Output tax: VAT charged by a business to customers upon the sale of goods or services within Thailand.

In each tax period (usually monthly), if VAT is calculated by deducting input tax from output tax (output tax minus input tax) and the result is positive, the business must pay the difference to the Revenue Department by the 15th of the following month. However, if the result is negative, the business can claim a refund or carry the tax forward to the next period. This mechanism is considered highly important for exporters who typically accumulate input VAT but have no output VAT to offset (i.e., a 0% rate), necessitating a VAT refund application with the Revenue Department. In contrast, importers can use input VAT credits obtained from customs to offset domestic output VAT, thereby immediately reducing their tax burden upon commencing sales.

Currently, there are 175 countries worldwide that use VAT, which is also known as goods and services tax (GST) in some countries. In addition to VAT or GST, businesses might be liable for other local taxes in the destination country, depending on the nature of the goods or services and the specific laws of that country.

Parties required to register for VAT in international trade

Businesses required to register for VAT in international trade can be categorized into key groups. The following outlines the conditions and important points that should be noted:

• Importers of goods or services: VAT is charged on every import, along with import duties and excise taxes (if applicable). While VAT registration is mandatory for those with annual revenue exceeding ฿1.8 million, businesses that import goods regularly should register for VAT even if they fall below this threshold; doing so allows them to deduct the input tax from their output tax, provided they hold valid receipts issued by the Customs Department.

• Exporters of goods or services: Businesses with annual revenue exceeding ฿1.8 million are required to register for VAT. They’re allowed to issue 0% VAT invoices (under Section 80/1) and are eligible to claim input tax refunds, provided they possess export documentation as prescribed by the Customs Department, including evidence for services rendered from Thailand for use abroad.

• Foreign digital service providers: Businesses that provide services to Thai customers (B2C) and have annual revenue exceeding ฿1.8 million must register for VAT using the VAT for Electronic Service (VES) system provided by the Revenue Department.

• Foreign businesses with products or operations in Thailand: Foreign businesses conducting operations in Thailand—such as maintaining warehouses or offices, making domestic deliveries, or selling goods or services on Thai ecommerce platforms—are required to register for VAT starting from the very first transaction, even if sales have not yet reached the ฿1.8 million baht threshold.

VAT rates on cross-border transactions

The VAT rate for international traders operating under Thai standards is 7%, reduced from the statutory standard rate of 10%. To help support the economy, the reduced rate of 7% has been extended until September 30, 2026. Businesses should closely monitor any updates from the Revenue Department regarding the extension of this measure or potential rate increases.

In addition, there is a 0% VAT rate under Section 80/1; while business operators are still required to register for VAT, they have the right to issue 0% VAT invoices and claim input tax credits. The VAT rates for businesses engaged in international trade are as follows:

What other taxes do Thai businesses face in international trade?

In addition to VAT, Thai businesses might have to pay other taxes related to international trade. These depend on the type of goods or services being imported or exported and the destination country, as follows:

Import duty

In addition to 7% VAT, goods imported into Thailand are subject to import duties, which are calculated according to a product’s Harmonized System (HS) code, with rates ranging from 0% to 80%. Some goods are exempt from import duties, such as raw materials imported for re-export, raw materials for manufacturing under the BOI, and medical equipment for public benefit. Goods imported from FTA countries could qualify for a reduced rate or a rate of 0%, provided that valid proof of origin is presented.

Export duty

In order to promote and stimulate exports, most Thai products are exempt from export duties. However, some categories of goods could be subject to export duties, such as specific types of timber and processed wood, raw cowhide and buffalo hide, and goods exported from the Thailand-Malaysia Joint Development Area (JDA).

Excise tax

Excise tax is an indirect tax levied on goods or services that are considered luxury items, detrimental to health, or harmful to the environment—such as perfumes, automobiles, certain electrical appliances, alcoholic beverages, and tobacco products. It’s collected from manufacturers or importers in accordance with the Excise Tax Act B.E. 2560 (2017).

VAT or GST in the destination country

Most countries that levy a destination-based tax refer to it as VAT; however, a select few—namely Australia, Canada, India, Singapore, Malaysia, and New Zealand—call this indirect tax GST. Examples of major countries that collect destination-based VAT or GST from foreign businesses are as follows:

In addition to VAT or GST, some countries impose additional local fees and municipal taxes (such as city surtaxes). It’s advisable to thoroughly research the tax laws and regulations of the destination country, or to use a tax solution that automatically calculates taxes and offers expertise in both local and destination country taxation.

Domestic withholding tax

Withholding tax in international transactions occurs when a Thai business pays money to a recipient who is not a resident of Thailand, such as for software, royalties, or advertising on foreign platforms. In accordance with Section 70 of the Revenue Code, Thai legal entities will withhold tax of 1%–15% on the service fees or compensation paid to a foreign company and submit it to the Revenue Department before transferring the funds abroad. However, if the recipient is located in one of the 61 countries that has a Double Taxation Agreement (DTA) with Thailand, it might be possible to claim an exemption or a reduced withholding tax rate.

Withholding tax in the country of origin

When Thai businesses receive service fees or compensation from abroad, the originating country often mandates the deduction of withholding tax prior to the transfer of funds. Rates vary according to the laws of each country, generally ranging from 20% to 35%. However, a DTA can alleviate this burden if the Thai business submits a valid Certificate of Residence within the prescribed time frame; furthermore, evidence of the tax withheld abroad can be used to claim a deduction or tax credit in Thailand.

Special tax measures

Taxes related to international trade also include special measures such as:

• Carbon tax: The EU’s tax imposed on imported goods with high carbon emissions, such as steel, cement, fertilizers, and electricity, is intended to prevent carbon leakage and ensure fair competition for European manufacturers that pay carbon taxes under the EU Emissions Trading System (ETS). Full implementation is scheduled for 2026, requiring importers to purchase Carbon Border Adjustment Mechanism (CBAM) certificates based on actual emissions. If the exporting country already has a carbon tax, the CBAM certificate cost will be reduced proportionally to the amount already paid. In Thailand, the implementation of a carbon tax has been approved at an initial rate of ฿200 per ton of carbon (though a definitive enforcement date has not yet been set). This measure targets oil and fuel products through the excise tax structure, based on the “polluter pays” principle.

• Cross-border digital service tax: A Digital Service Tax (DST) is one levied on income derived from providing digital services to users in another country, even if the service provider does not have a permanent establishment in that country. Its primary objective is to close the loophole that allows technology companies to create significant revenue in destination countries while paying only minimal corporate tax in their country of origin.

• Antidumping duties: “Dumping”—the practice of selling goods abroad at prices lower than those in the exporter's domestic market—causes injury to the importing country's domestic industry. For this reason, an antidumping duty is levied on imports when there is evidence of dumping.

How to calculate VAT for international businesses

The method for calculating VAT in Thailand for international businesses varies depending on the type of goods or services, the nature of the business, and the destination country. The following hypothetical examples serve as a guideline for calculating VAT based on the nature of the business.

How to calculate import VAT

(CIF + Import Duty) x VAT Rate = Import VAT
(฿260,000 + ฿26,000) x 0.07 = ฿20,020

How to calculate VAT or GST in the destination country

Service Fee x VAT or GST Rate = VAT or GST at Destination
฿200,000 x 0.1 = ฿20,000

How to calculate VAT on digital services

Revenue x VAT Rate = VAT on Digital Service
฿2,000,000 x 0.07 = ฿140,000

How to calculate VAT for foreign businesses based in Thailand

Output VAT - Input VAT = Total VAT Payable
฿17,500 - ฿4,550 = ฿12,950

What to look for in a tax solution for international business

Thai businesses operating internationally should have a robust tax management system to minimize risks—such as incurring penalties, facing retroactive tax assessments, or encountering export restrictions in certain countries. Choose a tax solution that addresses the following needs:

Automatic tax calculation

A good solution should feature automatic tax calculation for both Thailand and overseas. It should automatically identify tax rates for each country—eliminating the need for manual configuration—and accurately calculate and collect VAT, GST, and other relevant taxes for every transaction. You can choose a solution such as Stripe Tax, which supports tax calculation for customers in over 50 jurisdictions, including key Asia-Pacific (APAC) markets such as Japan, Singapore, and Australia. Stripe Tax offers convenience by allowing the use of automatic tax calculation functions directly from the dashboard, without the need for additional setup or coding.

Accurate and precise tax data reporting

Choose a solution that streamlines tax documentation and reporting, ensuring convenience, speed, and accuracy. Integrated platforms such as Stripe Tax and Stripe Checkout enable the automatic calculation and collection of taxes for cross-border transactions. You can directly export tax transaction reports and link them with data from your dashboard or other systems—such as Stripe Payments—thereby reducing processing time and minimizing errors associated with manual data entry.

Ability to check historical data

The ability to audit data, including login history, data modifications, and updates, is key. A system that can store, verify, and generate detailed, real-time tax and duty reports—such as import duty reports broken down by country and product—helps with cost planning and expense management, and reduces the risk of audits or delays in releasing inventory.

Multicurrency support

A good tax solution should support automatic conversion of foreign currencies to Thai Baht. Choose a system that supports multiple currencies, such as Stripe, which supports more than 135 currencies worldwide. Stripe offers payment processing with automated exchange rate conversion. It automatically updates exchange rates to mitigate the risks of currency fluctuations. It can also display product or service prices in the customer’s preferred currency to help boost conversion rates.

Local and global tax expertise

Choose an international business tax solution with local tax expertise and a comprehensive understanding of Thailand’s tax structure. This includes import duty exemptions, laws controlling prohibited goods, assessing the risk of overpayment or underpayment of taxes, and evaluating taxes in foreign countries, both at the origin and destination. A team of experts constantly monitors and updates tax information, legal provisions, or the latest measures in real-time, ensuring that the latest tax rates and criteria are applied, helping businesses comply with tax requirements accurately and on time.

High security standards

The tax management solution you choose should maintain high security standards. The system must be capable of logging usage, controlling data access through passkeys or encryption, and verifying the accuracy and integrity of historical tax data in the event of disputes. Additionally, the system should feature granular access controls and multifactor authentication (MFA) to prevent unauthorized access to data. Furthermore, service providers should be PCI DSS Level 1 certified, which is the highest standard in the payment industry.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful API.

Stripe Tax helps you monitor your obligations and alerts you when you exceed a tax registration threshold based on your Stripe transactions. It can also register to collect tax on your behalf in the US and manage filings through trusted partners. Stripe Tax automatically calculates and collects sales tax, VAT, and GST on:

• Digital goods and services in all US states and over 100 countries.
  
• Physical goods in all US states and 42 countries.
  

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration, or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: If you need to register for a sales tax in the US, let Stripe manage your tax registrations. You’ll benefit from a simplified process that prefills application details—saving you time and simplifying compliance with local regulations. If you need help registering outside of the US, Stripe partners with Taxually to help you register with local tax authorities.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax, or get started today.