The Thailand VAT law specifically prescribes for transport services, but it does not specifically prescribe for freight forwarder services.

For transport services, the Thai VAT law specifically prescribes:

1. A provider of domestic transport services is exempt from VAT;
2. A provider of international transport services by land is exempt from VAT; and
3. A provider of international transport services by aircraft or ship is subject to 0% VAT.

But a provider of freight forwarder services isn't specifically prescribed. Instead, as managers, organizers or facilitators of transport services or supply chain or logistic services providers, a provider of freight forwarder services falls under the Thailand VAT law as a general services provider.

And whilst the VAT law Section 80/1(2) permits a general services provider to apply the 0% rate of VAT for:

• Services provided in Thailand and used/consumed in foreign countries,

the Thailand Revenue Department's lawyers have determined that because freight forwarder services in Thailand are:

• Services provided in Thailand and used/consumed in Thailand (not used /consumed in foreign countries),

then the services of a freight forwarder are not entitled to the 0% rate of VAT.

What this means, therefore, is that a freight forwarder in Thailand is:

1. Subject to the standard rate of VAT (7%) for a provision of services under Section 80(2) of the Revenue Code, and
2. Subject to the tax base prescription for VAT in Section 79 of the Revenue Code, which prescribes that the tax base is the total value receivable by a provider of services (i.e. the total gross value receivable from a customer without any deduction from that total gross value for any sub-contracted domestic and/or international transport costs).​

And what this also means, is that, if a freight forwarder in Thailand would like a customer to benefit from the exemption from VAT for sub-contracted domestic transport and/or the 0% rate of VAT for sub-contracted international transport services, then the freight forwarder in Thailand needs to separately invoice for reimbursement of the incurred amount of sub-contracted domestic transport and/or sub-contracted international transport costs.

Sherrings recognizes that this might be different to the treatment that applies in other countries and points this out for freight forwarders in Thailand to note.

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