On 29 March 2011, the Thailand Export Services 0% VAT rule was amended by a Director-General's Notification on VAT, supposedly for the purpose of easing the rule for the application of the 0% rate of VAT to export services.

The Thai VAT Law

Export services are services provided in Thailand and used/consumed in a foreign country and similar to export goods that are used/consumed in a foreign country, export services should enjoy 0% VAT.

This is indicated in the first two sub-sections of the Revenue Code's Section 80/1, which prescribes that 0% shall be applied when computing VAT for:

1. Export goods; and
2. Export services.

But whilst for export goods the law simply prescribes the 0% rate can be applied when computing VAT for "exports of goods", for export services, the law contains the additional proviso words that:

• The services shall be provided in Thailand; and
• The services shall be used/consumed in a foreign country.

Additionally, there is a Director-General's Notification, that the Thailand tax audit officers investigate for compliance just about every time a company zero rates an export service.

The Director-General's Notification

The compliance requirement in the Director-General's Notification on VAT (No 105) is as follows:

From and including 01 Aug 2000		The 0% VAT applies for: Services used/consumed by a recipient in a foreign country entirely (1)
From and including 29 Mar 2011		The 0% VAT applies for: The part of services used/consumed by a recipient in a foreign country (2)

(1) As prescribed in the DG's Notification on VAT (No 105) issued on 01 Aug 2000
(2) As amended by the DG's Notification on VAT (No 181) issued on 29 Mar 2011

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