The Thai Revenue Department (TRD) issued Departmental Instruction No. Paw. 164/2568 on 5 February 2025, updating the input tax allocation process for businesses selling goods outside Thailand. This revision provides new guidelines for VAT registrants involved in export sales, aiming to streamline audits and clarify the allocation of input VAT.
The instruction updates Departmental Instruction Paw 89/2542, issued on 2 September 1999, and offers more detailed procedures on how to allocate input VAT between VAT-liable and non-VAT activities, as well as between VAT-liable, non-VAT, and out-of-scope activities.
Under the new guidelines, VAT registrants must first exclude input tax in proportion to revenue from non-VAT activities. The remaining input tax can then either offset output tax in the monthly VAT return under Revenue Code Section 82/3 or be allocated as per Section 82/6, depending on the nature of the activity.
For businesses with both VAT-liable and VAT-exempt activities, input tax must be allocated based on the revenue proportion from VAT-exempt operations. For example, a business with THB 16 million in domestic revenue and THB 4 million from exports will allocate 20% of its common input tax to VAT-exempt sales, with the remaining amount deductible from output tax.
