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

For transport operators, the Thai VAT law specifically prescribes:

1. An operator of domestic transport is exempt from VAT;
2. An operator of international transport by land is exempt from VAT; and
3. An operator of international transport by air or by ship is 0% VAT.

But a freight forwarder is not an operator of domestic or international transport. Instead, as a manager, an organizer or facilitator of transport services, or supply chain or logistics services provider, a freight forwarder is subject to Thailand VAT under the Thai VAT law for services providers.

For services providers, the Thai VAT law prescribes that 0% VAT applies for:

• Services provided in Thailand and used/consumed in a foreign country.​

That is, in order for the 0% VAT to apply, the actual services that are provided in Thailand (i.e. the management services, the organizer services or the facilitation services) have to be used/consumed by the recipient of the services in a foreign country.

But in relation to the management services, organizer services or the facilitation  services provided by a freight forwarder, Thailand Revenue Department lawyers have determined that as the services are:

• Services provided in Thailand and used/consumed in Thailand (i.e. are not used/consumed in a foreign country),

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

What this means is that, as freight forwarders are not transport operators, and freight forwarders have had their services determined to be used/consumed in Thailand (not used/consumed in a foreign country), then the services are:

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, and that
   
3. If a freight forwarder in Thailand would like a customer to benefit from an exemption from VAT for sub-contracted domestic transport or 0% VAT for sub-contracted international transport, the freight forwarder needs to bill customers separately for reimbursement of the sub-contracted 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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