Value Added Tax: VAT System and Duty of Entrepreneurs (PART 2)

From the previous articles, we already know what the criteria for tax registration are, whether our business is exempt from VAT, or whether our business’s annual turnover exceeding 1.8 million baht. If your business is not in the list of tax exemption or has the income exceeding 1.8 million baht, you should be prepared for the VAT registration within 30 days.

After registering VAT, we will receive the certificate for being the VAT registrant which called The Certificate of Value Added Tax registration or P.P. 20.

The Certificate of Value Added Tax Registration – P.P. 20

After receiving the certificate of value added tax registration or P.P. 20, you have to do as follows:

1. Issue the tax invoice every time after selling goods or receiving money from providing services and ask for the tax invoice after buying goods or services from the entrepreneurs who are VAT registrants.
   

2. Use the input tax invoice to record and make the input tax report and use the output tax invoice to make the output tax report. If this is selling goods, it is necessary to make the goods and raw material report following the form from the Revenue Department.
   

3. Submit the VAT returns to the Revenue Department (after subtracting the output tax from the input tax and the result is positive) or claim for the refund (in case the input tax exceeds the output tax) by filing the VAT return or P.P. 30 within the 15th day of the following month.

Example

Company A buys goods and has to pay for its VAT 100,000 baht (VAT is 7% of goods is 7,000 so the total is 107,000 baht). After that the Company A sells such goods to Company B for 200,000 baht (VAT  7% of goods is 14,000 so the total is 214,000 baht). Thus, what Company A has to do are as follows:

1. Ask for the tax invoice (when purchasing)

2. Issue the tax invoice (when selling)

3. Make the relevant report

4. Submit the VAT return which is 14,000-7,000 = 7,000 baht to the Revenue Department

These are steps for entrepreneurs who are VAT registrants have to know and follow. However, you have to always think about the consistency of business cost and expense of your business every time you submit the VAT return to the Revenue Department.

Credit: Flowaccount.com