Thailand Localization in Dynamics 365 Finance Part – 1 (VAT)

Value Added Tax (‘VAT‘) in Thailand was put into effect on January 1, 1992. Value Added Tax (‘VAT‘) is a tax on the sale of goods or the provision of services. The current rates are 7% and 0% with some exemptions from VAT. VAT paid (‘input VAT‘) is offset against the VAT charged on sales (‘output VAT‘)

Generally, the operator charges VAT on the sale of goods or provision of services to the consumer (“Output Tax“). The VAT paid by the operator to other operators for the purchase of goods or services (“Input Tax“) is then deducted and the balance remitted to the Revenue Department. Thus, tax will accrue at each stage only on the “value added” to the goods or services at that stage. Under the VAT system, the tax will ultimately be borne by the consumer. The operator is therefore regarded as a collector of tax for the Revenue Department.

A registered operator must file a VAT return and pay tax (if any) to the local district office within 15 days from the end of the month in which the VAT is to be accounted for.

Rate of VAT :

Standard Rate is 7.00% (which is reduced from original 10.00%)

Other : 0.00%

The 0% rate applies only to certain businesses specified under the provisions of VAT. A business that makes only zero-rated supplies will not be required to collect any tax on its supplies and can refund all input tax paid. The following are examples of businesses subject to the 0% rate:

• Exporters of goods.
• Providers of services performed in Thailand but used in a foreign country.
• Providers of international transport services by aircraft or sea-going vessels, organized under Thai or foreign law.
• Sellers of goods and providers of services to the United Nations organization or its specialized agencies or to a foreign embassy or consulate.

TAX Invoice:

The invoice must, as a minimum, contain at least the following:

• The words “tax invoice” in a prominent place;
• The name, address and taxpayer identification number of the VAT registrant issuing the tax invoice;
• The name and address of the purchaser of the goods or service;
• Serial number of tax invoice;
• Description, type, category, quantity and value of goods or services;
• The amount of VAT calculated on the value of goods or services clearly separated from the value of goods or services;
• The date of issuance;
• Tax identification number of the purchaser of the goods or services;
• The wording “Head Office” or “Branch No. …” which is the seller’s place of business from which such tax invoice, debit or credit note is issued; and
• The wording “Head Office” or “Branch No. ….” which is the purchaser’s place of business to which such goods or services are sold or provided.

Invoices raised in currencies other than Thai Baht require the presentation of both currencies on the face of the invoice and must indicate the exchange rate used in the conversion. It is the amount in Thai Baht which is reported to the Revenue Department.

Configuration of Sales Tax will be require following workflow which is Provided by Microsoft :

Which Contain Two Part:

1.VAT Configuration for FULL VAT Calculation Workflow

2. Average VAT Setup Workflow

I am using Standard Contoso Database for showcase purpose you will find this setup in “THMF” Legal entity.

As provide in workflow we need to configure following setup:

1. Use  Sales Tax Branch as Yes

Go to General Ledger parameter  and Select Sales Tax and in Tax Option and  Select “YES” for  “use Tax Branch”

2. Setup tax Branches

Go to Sales tax module and Select Tax Branch in Indirect Tax Group

Create Tax Branched as many you require

3. Use Tax Branch as Financial Dimension

Enable tax branch as Financial Dimension from General Ledger Module.

4. Setup TAX Ledger Posting Group:

TAX ledger Posting group is Posting Profile for TAX Transaction. Ledger posting group Setup is same as we use for other countries.

Go to TAX module – Setup – Sales Tax and Select “Ledger Posting Group”

You should create Two different posting profile if you going to use “Realization” Functionality.

5. Setup Sales Tax Code: (Normal)

You need to create Sales Tax Code with Tax Type as “Normal” for “Unrealized VAT” and “VAT”.

6. Setup Sales Tax Code: (Average Realization)

You need to create Sales Tax Code with Tax Type as “Average Unrealized” for TAX Code”Average Unrealized” and “Average Realized” for TAX Code “Average Realized”.

7. Sales Tax Group:

There can be Two Different group Possible:

1. Domestic – Unregistered
2. Domestic –  Output

Or You can create only one Group as provided in standard database

After completion of above configuration you can start posting normal transaction such as “Sales Order”, “Free Text Invoice”, “Purchase Order” and “Invoice Journal”. You can check VAT amount in TAX document in each transaction.