Thailand Freight Forwarders VAT
Tax Insight | February 2012
The Thai VAT law prescribes:
An international transport services operator is a carrier of goods or people from one port in one country to another port in another country, and as a carrier of goods or people, the operator is usually asset-based with sea-going ships or international airplanes.
A domestic transport services operator is a carrier also, but this time, from one port in a country to another port in the same country, and similarly to international transport services operators, a domestic transport services operator is usually asset-based with river-going boats, domestic airplanes, trains, trucks and/or buses.
Additionally, both international transport service operators and domestic transport services operators operate their businesses in Thailand under “transport licenses”.
Freight Forwarders VAT
A freight forwarder, however, is an organizer, a facilitator or a manager of transport of goods or people (like, for example, a supply chain manager or a logistics services provider), which the Thailand Revenue Department treats as hire-of-work services, not as transport services.
Thus, whilst international transport services operators are subject to the 0% rate of VAT and domestic transport services operators are exempt from VAT, freight forwarders are subject to VAT at the standard rate of VAT in Thailand (currently 7%).
Sherrings recognizes that this might be different to the treatment that is applied in other countries, and we would urge international businesses that are actually freight forwarders in Thailand to always charge VAT on their services in Thailand and on-pay the VAT to the Revenue Department.
This Tax Insight is general information only. It should not be used to determine any particular matter without consulting with your experienced Thailand tax advisor.