Thailand VAT Input Tax Credit: What You Can and Cannot Deduct (ภาษีซื้อ)

In short

Thai VAT works by "tax month": take the month's output tax (ภาษีขาย), subtract the month's input tax (ภาษีซื้อ), and pay the balance when filing the PP.30 returnSection 82/3Section 83. To credit input tax you must hold a lawful tax invoice with complete information, and the item must not fall into the six non-deductible categories listed in Section 82/5 of the Revenue Code — no tax invoice, materially incorrect invoice, not related to the business, entertainment-type expenses, invoice issued by a person with no right to issue one, or items excluded by Director-General notificationSection 82/5. If input tax exceeds output tax in a month, the excess becomes a tax credit that can be used to pay VAT in later periods as prescribed, or refunded on a request filed with that month's returnSection 84.

How the input tax credit is calculated

The core mechanism of Thai VAT is that a registered entrepreneur nets "tax collected" against "tax paid" every month: the VAT you charge customers on sales of goods or provision of services is output tax, and the VAT suppliers charge you on purchases is input tax; for each tax month, under the mechanism of Section 82/3, output tax minus creditable input tax gives the amount payable (or the excess credit)Section 82/3Section 82/6. The current standard VAT rate is 7%.

The filing vehicle is the monthly VAT return (commonly known as the PP.30): a registered entrepreneur must file every month whether or not it made any sales that month, and must complete filing and payment within the 15th day of the following month (unless the Director-General prescribes otherwise — for example, e-filing deadlines follow the official announcements); in principle a return is filed separately for each place of business, and consolidated filing is allowed with the Director-General's approvalSection 83.

Running taxable and exempt lines together: input tax must be apportioned

If you operate both VAT-taxable business and non-VAT business (for example an exempt business line) and the goods or services you purchase are used in both, you cannot credit the input tax in full — it must be apportioned according to the criteria, procedures, and conditions prescribed by the Director-General, and only the portion apportioned to the taxable business enters the Section 82/3 credit calculationSection 82/6.

Three preconditions for a credit

Directly related to the business Section 82/5(3)

The purchase must serve the operation of your business. For expenses not directly related to the business, the input tax cannot be credited even if you obtained a tax invoice.

Hold a lawful tax invoice Section 86/4

The credit rests on a "full tax invoice": the invoice must state all the statutory particulars (see the checklist below) and be issued by a registered entrepreneur with the right to issue it.

Not on the non-deductible list Section 82/5

Section 82/5 lists, item by item, the types of input tax that cannot be credited — in practice the place where clients most often get caught; check each item before booking.

Section 82/5: six types of input tax that cannot be credited

The law expressly excludes the following input tax from the Section 82/3 credit calculationSection 82/5:

No tax invoice — there is no tax invoice, or a tax invoice evidencing payment of the input tax cannot be presented (except in cases of sufficient cause prescribed by the Director-General);
Materially incorrect or incomplete invoice — the tax invoice contains incorrect or incomplete information in the material part (judged under the criteria and conditions prescribed by the Director-General);
Not related to the business — input tax not directly related to the operation of the entrepreneur's business (judged under the criteria and conditions prescribed by the Director-General);
Entertainment-type expenses — input tax arising from expenses for entertaining or expenses of a similar nature (the exact scope is judged under the criteria and conditions prescribed by the Director-General);
Invoice issued by a person with no right to issue it — the tax shown on a "tax invoice" issued by a person who has no legal right to issue tax invoices cannot be credited;
Items excluded by Director-General notification — input tax otherwise prescribed as non-deductible by the Director-General with the approval of the Minister.

⚠️ Entertainment expenses are the most common trap

For entertainment-type spending — client meals, banquets, gifts and the like — the input tax can never be credited, even with a fully compliant tax invoiceSection 82/5. On top of that, Director-General notifications exclude a number of specific items; the exact list is subject to the official regulations (our firm can help confirm). Slipping non-deductible input tax into the PP.30 is one of the errors the Revenue Department most easily uncovers in an audit.

Documentation: what a lawful tax invoice must contain

A tax invoice (ใบกำกับภาษี) must be prepared immediately when the VAT liability arises and delivered to the buyerSection 86, and must contain at least the following itemsSection 86/4:

The words "tax invoice" in a conspicuous place;
The name, address, and tax identification number of the issuer (the registered entrepreneur); where a representative issues the invoice on its behalf, the representative's name, address, and tax identification number must also be stated;
The name and address of the buyer (the purchaser of goods or recipient of services);
The serial number of the tax invoice (and the volume number, if any);
The name, type, category, quantity, and value of the goods or services;
The amount of VAT calculated on the value of the goods or services, separated clearly from the value of the goods or services;
The date, month, and year of issuance;
Other matters prescribed by the Director-General.

In principle the items on the invoice must be in Thai language, in Thai baht, and in Thai or Arabic numerals; specific businesses that genuinely need a foreign language or foreign currency must obtain the Director-General's approvalSection 86/4. Check each of the above particulars when you receive an invoice — where required items are missing or material information is misstated, the input tax becomes non-deductible under Section 82/5(2).

Input exceeds output: what happens to the excess credit

If, after the Section 82/3 calculation for a tax month, input tax exceeds output tax, the excess becomes a tax credit. A registered entrepreneur has two routesSection 84:

Carry it forward — use it to pay subsequent VAT in accordance with the criteria, procedures, and conditions prescribed by Royal Decree (the specific carry-forward conditions are subject to the official regulations; our firm can help confirm);
Request a refund — file the refund request together with the return for that tax month.

If you did not request the refund with that month's filing, it can still be fixed afterwards: for the refundable tax of that tax month, a refund request may be filed within three years from the date the filing deadline for that month expired; in other cases, within three years from the date the tax was paidSection 84/1. Note also that where an additional return is filed because the original return was incorrect or incompleteSection 83/4, the refund right is exercised together with the additional returnSection 84 — the tax calculation of an additional filing and the credit chain of the normal filings must be handled separately, and the two are easy to mix up in practice.

Later price adjustments and discounts: input tax must follow

If the price is adjusted after the transaction, the input tax does not stay frozen: when you receive a debit note issued by the seller, the buyer includes the VAT shown on the note in input tax of the period in which the note is receivedSection 82/9; when you receive a credit note, you must deduct the VAT shown on the note from input tax of the period in which it is receivedSection 82/10. Missing the credit-note deduction means over-crediting input tax — a filing error.

What SLF can do for you

The input tax credit rules themselves are not complicated; the hard part is the month-after-month discipline: verifying the particulars of every invoice, judging deductibility item by item, apportioning for mixed business lines, rolling the credit forward month to month, and accounting for additional filings separately. SLF Accounting provides monthly VAT compliance services for businesses in Thailand: PP.30 preparation and filing, input tax documentation review, credit ledger management, and refund application support. If you are unsure whether a type of expense is creditable, or how to choose between carry-forward and refund, contact our firm and a licensed accountant will verify it against the latest official regulations.

FAQ

We entertained clients (meals, gifts) and got a compliant tax invoice — can the input tax be credited?

No. Section 82/5(4) of the Revenue Code expressly provides that input tax arising from expenses for entertaining or expenses of a similar nature cannot be credited (the exact scope is judged under the criteria and conditions prescribed by the Director-General) — regardless of whether you hold a compliant tax invoice. Book these expenses as ordinary costs; do not put them in the input tax box of the PP.30.

A supplier's tax invoice is missing the buyer's address or tax ID — can it still be used for a credit?

It is risky. Section 86/4 lists the minimum particulars a tax invoice must contain (the words "tax invoice", both parties' names and addresses, the issuer's tax ID, serial number, description/quantity/value, a separately stated VAT amount, the issue date, and so on); Section 82/5(2) provides that where the invoice is incorrect or incomplete in the material part, the input tax cannot be credited. If you receive a deficient invoice, ask the issuer to reissue it promptly.

This month's input tax is larger than the output tax — what happens to the excess?

It becomes a tax credit. Under Section 84 it can be used to pay subsequent VAT under the conditions prescribed by Royal Decree, or refunded on a request filed together with that month's return; if you did not request it that month, a refund request can still be filed within three years from the expiration of that month's filing deadline (Section 84/1). Which route to take, and how the carry-forward links up, is best planned with your accountant based on your cash flow.

We purchased from a supplier that is not VAT-registered — can the "invoice" they issued support an input tax credit?

No. Section 82/5(5) provides that input tax shown on a tax invoice issued by a person who has no right to issue tax invoices cannot be credited. Only a tax invoice issued under Section 86/4 by a duly registered entrepreneur with the right to issue one can serve as credit evidence. Confirm a supplier's VAT registration status before purchasing.