The core answer
A VAT-registered Thai business may charge 0% VAT on a service for a foreign client only if the service is performed in Thailand and used abroad, and only if it meets the Revenue Department's conditions and holds the evidence. Sending the invoice to a company overseas is not enough. A service can be invoiced to a foreign company and still be used in Thailand, and then 7% applies.
The rule (Revenue Code and Notification No. 105). Section 80/1(2) of the Revenue Code applies the 0% rate to a service performed in Thailand and used abroad, according to the types, criteria, procedures and conditions the Director-General sets. Those are in Notification of the Director-General on VAT No. 105 (12 July 2000, effective 1 August 2000, later amended by Nos. 122 and 181). Under clause 2(1), the service is performed in Thailand for a recipient abroad and is used abroad. Under clause 3, you need evidence of payment of the fee matching your invoice.
Our practical view. Treat 0% as a position you must be able to prove, not a default for foreign customers. Before the first invoice, write down where the result of the service will be used, put that in the contract, and keep the file the Revenue Department would ask for. If the answer is unclear, charge 7% or ask the Revenue Department or your tax adviser first.
This guide covers VAT on the services. For the wider tax calendar of a foreign-owned company, read accounting and tax obligations of a foreign-owned Thai company. For BOI and customer contracting in software businesses, see BOI for SaaS founders.
1. Where does the VAT law say a service is "in Thailand"?
Section 77/2 of the Revenue Code says a service in Thailand means a service performed in Thailand, whether it is used abroad or in Thailand (paragraph 2). So work done by your team in Thailand is within Thai VAT from the start. The 0% rate in section 80/1(2) is then a special rate applied to part of that work, not an exemption from the system.
The opposite case is in paragraph 3: a service performed abroad but used in Thailand is also treated as a service in Thailand. Departmental Order Por. 104/2544 deals with that case and with the 0% case. That is why "who is the customer" is the wrong first question. The right ones are where the work is done and where its result is used.
2. What does Notification No. 105 actually require?
For the general export of services, clause 2(1) of the notification covers:
- a service performed in Thailand for a recipient abroad, and used abroad;
- where the service is used partly in Thailand, 0% applies only to the part used abroad;
- "service" is defined as any act of value that is not a sale of goods;
- international tour services performed abroad are not included.
Clause 3 requires evidence of payment of the fee matching the invoice, in the name of the registered operator. The listed examples include letters of credit, telegraphic or term-of-payment transfers, receipts, bank statements, bank transfer records, card payment records and e-money records. No payment evidence is needed where the service is provided free.
Other clauses of the notification cover other zero-rated services: shipbuilding and repair for international transport operators, marine insurance, and services for export processing or bonded zones. They have their own conditions and are not the subject of this guide.
We did not find in the notification a rule that payment must be in foreign currency or that the money must come from a particular country. Do not assume one; check clause 3 and your own facts.
3. How do the scenarios come out?
The table sets out how the rule and the Revenue Department's published rulings point. It is general information. The result in your case depends on the facts and the contract.
| Scenario | Likely outcome | Why / what to check |
|---|---|---|
| Work done in Thailand, results delivered to and used only abroad by a foreign client with no business in Thailand | 0% is available if the conditions and evidence are met | Matches clause 2(1). In ruling Kor Kor 0702/Por.10961 the Revenue Department accepted photo retouching done in Thailand for a Swedish parent with no Thai operations, if payment evidence under the invoice was held |
| Work done in Thailand for a foreign company, but the result is used in Thailand (for example, to run its Thai factory, staff or customers) | 7% | It is not "used abroad". In ruling Kor Kor 0702/Por./3267, information services about suppliers and factories in Thailand were treated as services at 7% |
| Training of the foreign company's staff delivered in Thailand | 7%, based on the 2015 ruling | In ruling Kor Kor 0702/2897 the Revenue Department held that training held in Thailand was not a service used abroad, and 7% applied. Training delivered abroad was outside Thai VAT |
| One contract with some use abroad and some in Thailand, fees not separated | 7% on the whole fee, based on the 2013 ruling | The Revenue Department said that without separation, 7% applies to all fees |
| One contract with use abroad and in Thailand, fees clearly separated and invoiced separately | 0% on the part used abroad, 7% on the rest | Clause 2(1) allows 0% for the part used abroad. The 2013 ruling supports separation by contract and invoice |
| Service about property, goods or a project located in Thailand (for example, surveying, repair, project support) | Usually points to use in Thailand, so 7%, but check | Use depends on where the benefit lands. Get advice before zero-rating |
| Foreign client has a Thai branch, agent or subsidiary that receives or uses the work | Unclear, high risk | We did not find a published ruling on this point. Assume the Revenue Department will look at who actually uses the result |
| Service performed abroad by you (not in Thailand) | Different rule | Outside section 80/1(2). Use section 77/2 and Order Por. 104/2544 for services performed abroad and used in Thailand |
In every row, the label on the invoice is not the test. The documents have to show the facts.
4. Is 0% the same as an exemption?
No. Section 80/1 applies a rate of 0% to the listed activities. Section 81 lists activities that are exempt from VAT. They are separate parts of the Revenue Code with separate consequences.
For a zero-rated service you remain a VAT registrant who calculates VAT, issues tax invoices and files returns, with a rate of 0%. How your input tax is treated is governed by the general credit rules in section 82/3 and the exclusions in section 82/5. The tax return and refund mechanics are for your accountant to confirm, and we have not set them out here. For a company that is not yet registered, or whose mix of Thai and foreign work is changing, see accounting and tax obligations of a foreign-owned Thai company.
5. What if the service turns out to be used in Thailand?
Then the normal rate applies. Section 80 sets the VAT rate at 10%. By Royal Decree the rate is reduced, and the Revenue Department lists Royal Decree No. 807 B.E. 2569, which extends the reduction to 30 September 2570 (2027). So the rate is currently 7% under the reduction Royal Decree. Check the Revenue Department's page before you rely on this after that date.
If you zero-rated a service that was used in Thailand, you under-charged output VAT. The exposure is the VAT that should have been charged. The Revenue Code also provides surcharges and penalties, which we have not detailed here. Raising the point early with your adviser is usually cheaper than a Revenue Department audit letter.
6. What evidence should you keep?
The notification itself requires the payment evidence in clause 3. The rest is what we recommend, so that you can show the Revenue Department that the service was performed in Thailand and used abroad.
Evidence checklist
- Contract with the foreign client that describes the service, says where the result will be used, and separates fees for any part used in Thailand.
- Tax invoice in the name of your VAT-registered company, showing the rate applied and matching the contract.
- Proof of payment of the invoice, in your name, as clause 3 requires: bank statement, transfer record, letter of credit, receipt or similar. Make sure the amount matches the invoice.
- Proof of use abroad. For example, delivery records to the foreign client, emails showing the result is sent abroad, and a statement or clause that the client uses it outside Thailand.
- Proof the recipient is abroad. Company registration of the foreign client and the address where it receives the service, plus confirmation that it has no Thai branch or operation using the result.
- Work records showing the work was performed in Thailand (timesheets, project files).
- Separate accounting for 0% and 7% revenue, so the VAT return can be reconciled.
7. Practical steps before you invoice
- Ask where the client will use the result, and write the answer into the contract.
- If the client also has Thai operations, split the scope and the fee.
- Keep payment evidence in your company's name for each invoice. Payment by a third party or in a different name needs advice.
- Review a new service line before the first invoice, not at the year end.
- Where you are unsure, charge 7% or request advice from the Revenue Department. Remember that the published rulings are answers to specific facts; a different set of facts can produce a different answer.
Hypothetical example. A Bangkok design studio edits product photos for a Swedish retailer that has no Thai operations. The files are returned online and used only in European stores. The retailer pays against the studio's invoice. This is close to the facts in the 2015 ruling, and 0% may be available if the studio holds the payment evidence. If the studio also trained the retailer's Bangkok buyers in the same contract, that part points to 7% and should be separated.
Further reading
- Accounting and tax obligations of a foreign-owned Thai company
- BOI for SaaS founders: overseas IP and foreign clients
- Selling into Thailand: distributor or own entity
- Accounting in the first year of a Thai company
Zero-rating a service for a foreign client depends on where the service is used and on the evidence you hold, so settle both in the contract before the first invoice.
We help businesses review contracts and tax positions on services to foreign clients. Initial consultation is free — call +66 92 254 2045 or send us the details. See also accounting and tax compliance, contracts and documents and legal retainer.
This guide is published by Suwanvara Law Firm — a Khon Kaen law firm established in 1986. General information only, not legal advice on a specific matter.
