Service Companies Have Different Rules
If you sell services instead of products, two things work differently in Thailand: your VAT tax point and your clients’ withholding obligations.
For goods, VAT is due when you deliver. For services, VAT is due when you get paid, even if you invoiced months ago, unless you issued a tax invoice first. This changes how you track output VAT and when it shows up on your PP.30 return.
Your Clients Will Withhold 3%
When a Thai company pays you for services, they withhold 3% of the price before VAT and send it to the Revenue Department on your behalf (PND.53). If they pay through the e-Withholding Tax system, the rate is 1% until 31 December 2027. You receive 97% of the price (plus the VAT) and a withholding tax certificate.
That 3% is a prepayment of your corporate income tax. At year-end, you deduct all withholding certificates from your tax bill. If they withheld more than you owe, you get a refund. Keep every certificate: losing one means losing the credit.
Foreign Business Act Restrictions
Many service activities are on List 2 or List 3 of the Foreign Business Act, meaning foreign-majority companies need a license to operate. Common restricted services: consulting, marketing, IT services, and property management.
Options to get around this: BOI promotion (if your service qualifies), a Thai-majority company structure (51/49), or the US-Thai Treaty of Amity (for American companies). Each has trade-offs on ownership, tax benefits, and setup time.
Selling Services to Overseas Clients
Services exported to clients outside Thailand can be VAT zero-rated (0% instead of 7%). This means you don’t charge VAT on those invoices but can still claim input tax credits on your Thai business expenses. The net effect is lower operating costs.
To qualify for zero-rating, you need evidence that the service was consumed outside Thailand: contracts showing the client’s foreign address, proof of payment from abroad, and documentation of service delivery. We help structure your invoicing to meet these requirements.
BOI for Service Companies
BOI promotion is available for qualifying service activities: software development, digital content creation, R&D centers, international trading headquarters, and regional operating headquarters. Promoted service companies get the same benefits as manufacturers: 100% foreign ownership, tax holidays, and simplified work permits.
The application process is identical to other BOI categories. We help identify which activity code fits your service and prepare the proposal.
Related Business Types
We handle this for you: Company Registration Value Added Tax (VAT)
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