Key takeaways
A condo developer that is VAT-registered and has both SBT or exempt income and VAT income must separate input VAT into 3 pools and apportion only the shared pool, under Section 82/6 and Director-General's VAT Notification No. 29. In the first year, the input VAT credit may not exceed one half and must be adjusted at year-end. In later years, apportionment follows the prior year's income proportions with no adjustment, unless the company elects to adjust on actual figures.
Why condo developers are caught by VAT
A company registered under PP 20 has monthly obligations, even though its main income from selling units falls outside the VAT system. This obligation is separate from the question of how much input VAT can be credited.
| Revenue | Output VAT | Related input VAT | Reference |
|---|---|---|---|
| Sale of freehold condominium units | SBT 3.3% | Not creditable; treated as cost | Section 91/2(6), Royal Decree 342 |
| Registered leasehold rights | VAT-exempt; stamp duty 0.1% | Not creditable; treated as cost | Section 81(1)(ta), Order Por. 90/1999 |
| Sale of furniture | VAT 7% | Creditable when directly attributable | Section 77/1, Section 82/3 |
| Other services subject to VAT | VAT 7% | Creditable or apportioned | Section 82/6 |
Booking all input VAT into WIP forfeits the creditable portion and leaves the input VAT report incomplete. Recording it as WIP does not remove the duty to enter it in the report.
Accounting is not tax
Accounting (TFRS)
- Answers where this cost sits in the financial statements
- Driven by cost documents and progress payments
- Non-creditable VAT forms part of cost
Tax (VAT)
- Answers how much of this invoice can be credited
- Driven by the tax month on the invoice
- Every invoice must be recorded, whatever the accounts show
Steps from one tax invoice to PP 30
- Receive every input tax invoice
- Check that the items are complete under Section 86/4
- Screen out prohibited expenses under Section 82/5, such as entertainment and passenger cars seating up to 10
- Match to the activity: VAT, SBT, exempt or shared
- Flag for the input VAT report and file PP 30
| Pool | Example | Treatment |
|---|---|---|
| Claimable: fully creditable | Furniture for sale, services charged with VAT | Record cost net of VAT, set up input VAT and credit it under Section 82/3 |
| Apportioned | Office overheads, consultants, utilities, IT, shared assets | Apportion this pool only; the non-creditable portion is added to cost or expense |
| Non-claimable: not creditable | Construction for sale or rent, prohibited expenses, incomplete invoices | Included in cost, but must still be recorded and reported through the system |
Recording table
| Expenditure | Account | Input VAT entitlement | Flag |
|---|---|---|---|
| Construction, contractors, materials | WIP including VAT | Not creditable | Non-claimable |
| Furniture for sale | Inventory, net of VAT | Fully creditable | Claimable |
| Shared OPEX | Expense, including the non-creditable VAT | Apportioned by income | Apportioned |
| Shared assets | Asset, including the non-creditable VAT | Apportioned by income | Apportioned |
| Entertainment, passenger cars | Expense or asset cost | Credit prohibited, Section 82/5 | Non-claimable |
| Services from abroad | Expense or WIP | Remit PP 36 first; can then be used as input VAT according to the related activity | PP 36 |
Prohibited input VAT under Section 82/5(4) and (6) is deductible as a CIT expense under Section 65 ter (6 bis) and Royal Decree 243. A common mistake is setting a Tax Exempt code across every invoice, which forfeits the creditable group.
The apportionment rule under Notification No. 29
Creditable input VAT = shared-pool input VAT × (VAT business income ÷ total income)
| Case | Rule | Reference |
|---|---|---|
| First year with no income yet | Use estimated income; the credit may not exceed one half of the input VAT being apportioned | Clause 2(1) |
| Adjustment at the end of the first year | Recalculate using actual income, adjusting in the month after the last month of the period. If too much was claimed, pay the difference; if too little, a refund can be requested. Surcharges and penalties are generally waived for this adjustment. | Clause 2(2) |
| Later years | Apportion by the prior year's income proportions, with no year-end adjustment, but the company may elect to adjust on actual figures. Once elected, it must be applied consistently, and any change needs approval. | Clause 2(3) |
| VAT business income of at least 90% | May elect to credit all input VAT, without including it in cost or expense | Clause 3 |
| Income from non-VAT business of at least 90% | May elect not to credit, and include it in cost or expense | Clause 3 |
| Building constructed for shared use | Apportion by estimated floor-area use, not by income proportion. An adjustment is required if actual use differs from the estimate, or if the use changes within 3 years of completion. This adjustment carries penalties and surcharges. | Clause 5 |
| Notifying the Revenue Department about the building | Notify the construction and use of space within 30 days of the specified events. Failure to notify without good reason may forfeit the right to credit the apportioned input VAT. | Clause 5(7) |
The year-end adjustment is mandatory only in the first year. In later years no adjustment is needed, unless the company elects to adjust on actual income. When a project has a low proportion of VAT income, the credit will be low, but the obligations to record, report and file remain.
Example: apportioning by prior-year income
Shared-pool input VAT in one month is THB 70,000. Prior-year income: furniture sales THB 5,000,000 and unit sales THB 95,000,000. The VAT proportion is 5%, so THB 3,500 is creditable. The other THB 66,500 is cost or expense.
Input VAT not claimed in the invoice month can be claimed in another tax month within 6 months after the month stated under Section 82/3. Beyond that period, seek advice on a refund claim within the limitation period.
6 practices to enforce
- Record every invoice: every payment channel and PP 36 must carry a tax code. Never leave it blank or set an exemption across everything.
- 4 minimum data fields: invoice number, seller's tax ID, tax base, VAT amount
- 4 flags: Claimable, Apportioned, Non-claimable by activity, Non-claimable under Section 82/5
- Separate accounts: creditable input VAT and input VAT awaiting apportionment, kept apart from WIP
- 3-way reconciliation: the input VAT report, the GL and PP 30 must agree before filing
- Complete and retain: prepare the report every month even if the credit is zero; keep documents for at least 5 years
Obligations calendar
| Function | Type | Deadline | If not complied with |
|---|---|---|---|
| Input VAT and output VAT reports | Under Section 87 | By the filing deadline | Fines and assessment risk |
| Monthly VAT filing | PP 30 | The 15th, or the extended date for e-Filing | Penalty and surcharge of 1.5% per month |
| VAT on services from abroad | PP 36 | The 7th, or the extended date for e-Filing | Penalties and surcharges |
| Withholding tax | PND 3, 53 | The 7th, or the extended date for e-Filing | Surcharge of 1.5% per month |
| Review of apportionment | Working papers | At least quarterly and at the end of each period | Retrospective assessment |
SBT on the transfer of condominium units is paid at the land office on the registration day, not through monthly filing. Keep the receipts to reconcile income with PND 50.
Under Ruling 90/2542, granting a right to use space without handing over possession does not qualify as leasing real estate, so it may be a service subject to 7% VAT. Check that the leasehold agreement wording matches the exemption.