February 2025: 7% VAT in checkout on low-value consignments of goods imported to consumers
From 18th February 2025, Thailand has introduced the obligation to charge VAT on low-value consignments of goods being imported directly to consumers. Any consignment at or below Baht 1,500 was VAT exempt – although there has been a soft launch of the policy since December.
Import VAT will now be collected all on packages at the border by Customs. To facilitate the transition, the Customs Department plans to provide additional resources and guidance for businesses to help navigate the new tax requirements. They aim to develop streamlined processes to minimize the administrative load on small businesses and maintain support systems for vendors reliant on international shipments.
Alternatively, VAT could be charged at the online checkout, and the sellers then register for VAT and submit returns and remittances. This will be through a simplified registration scheme with no registration threshold. In the case of failure to register, payment service providers (e.g. credit cards) would have to withhold the VAT.
Ending low-value consignment relief to level playing field on cheap Chinese imports
The measure is being introduced to boost government revenues and level the playing field for Thai-resident e-commerce sellers who must charge VAT on all sales to consumers. They have been losing out to Chinese sellers able to take advantage of the existing import threshold.
Similar measures already apply to Thai VAT on digital services since 2021.
The measure will extend to deemed supplier marketplaces. For VAT purposes, they will become the party responsible for VAT collections on behalf of their third-party sellers.
