Key takeaways
Projects with a business inside the VAT system, such as a hotel, are entitled to use pre-opening input VAT as a credit or claim it as a refund. However, input VAT on the part sold as real estate under SBT generally cannot be refunded, so it must be separated or apportioned from the start.
Basic principles
Output VAT − input VAT = VAT payable, or a credit that can be refunded
Before opening, input VAT from CAPEX is high but output VAT is zero, so the tax credit accumulates. The VAT rate actually levied, including local tax, is 7%. Royal Decree No. 807 (2026), published in the Royal Gazette on 23 Aug 2026, continues the reduced rate of 6.3% plus local tax from 1 Oct 2026 to 30 Sep 2027.
Separate the refundable part first
Input VAT relating to real estate sales that are subject to SBT and outside the VAT system should not be included in the refund claim. The example in ruling 0811/Ph.4712 shows that if some condominium units have already been sold and the building is shared with hotel-style services, input VAT must be apportioned under the prescribed rules. If the units have not been sold and the building is used to provide hotel-style services, there may be scope to use input VAT in full. The facts of each project must be checked against the contracts and the actual use of space.
Example estimate: sample project
| Business segment | CAPEX excluding land | Theoretical VAT at 7% | Use of entitlement |
|---|---|---|---|
| Hotel | 855 | 59.85 | Usable once registered for VAT |
| Wellness | 350 | 24.50 | Usable once registered for VAT |
| Restaurant | 57 | 3.99 | Usable once registered for VAT |
| Segments that may be refundable | 1,262 | 88.34 | |
| Residences for sale | 1,350 | 94.50 | Mostly added to cost |
| Total | 2,612 | 182.84 |
The THB 88.34 million figure is a theoretical ceiling before deducting items without VAT or with incomplete documents. Using the actual proportion of 71-82% under the original assumptions, the credit would be around THB 63-72 million. All figures are examples.
Which CAPEX carries VAT
| Item | VAT 7% | Notes |
|---|---|---|
| Land | None | Out of scope |
| Construction and architecture | Yes | Contractor must be VAT-registered |
| MEP and equipment | Yes | |
| Domestic FF&E | Yes | |
| Imported FF&E | Yes | VAT at customs |
| Soft Cost | Yes | |
| Pre-opening salaries | None | |
| Pre-opening marketing | Yes | |
| Contingency | Depends on actual use |
The 5-step process
Step 1: Register for VAT before the first CAPEX
Input VAT incurred before registration may not be claimable. Register when the company is set up, or when business expenses begin, before paying design fees or permit fees.
Step 2: Keep complete full-form tax invoices
- The words "tax invoice"
- Name, address and tax identification number of the issuer
- Name and address of the buyer, and identification number under current rules
- Serial number and book number
- Name, type, category, quantity and value of the goods or services
- VAT amount shown separately
- Date of issue
- Other particulars as prescribed by the Director-General
Step 3: File PP 30 every month
File by the 15th of the following month, or under the e-filing conditions in force. Before opening, output VAT is zero and input VAT builds up as a credit.
Step 4: Choose how to handle the credit
Claim a cash refund
You receive the money back, but must be ready for an audit. Processing time depends on the claim and the documents.
Carry the credit forward
Less paperwork, but cash is tied up and is only used once there is output VAT after opening.
Step 5: Steps if you choose to claim a refund
- File PP 30 stating the intention to claim a refund
- Officers may schedule an inspection
- Submit tax invoices, bank statements, the EPC contract, tax reports and PP 20
- Once approved, the refund is paid
Common risk points
| Problem | Impact | How to prevent |
|---|---|---|
| Including input VAT on residences for sale | Entitlement denied and audit triggered | Separate costs from the start |
| Tax invoices with missing items | That invoice is disallowed | Use a checklist |
| Supplier not VAT-registered | No tax invoice obtained | Vet vendors |
| Expenses of the owner or executives | Unrelated to the business | Keep separate accounts |
| Late claiming | The time limit may be missed | File every month |
| Reverse-charge VAT not remitted | Surcharges and penalties | File PP 36 on time |
| Name and address do not match PP 20 | Invoice disallowed | Check before accepting |
Hybrid refund approach
- First year: carry forward while CAPEX starts to accumulate and the documentation is not yet settled
- Middle years: claim the first portion once the documents are ready
- Final year before opening: claim the second portion
- After opening: use the remaining credit to offset output VAT
Cash flow effect: example
| Year | Cash from VAT credit (THB million) |
|---|---|
| 2nd year before opening | 25 |
| 1st year before opening | 22 |
| Opening year and after | 16-25 |
| Total | 63-72 |
Test the effect on equity and IRR in the project's own model, because the result depends on the timing of refunds and the proportion of space used.
Legal references
- Revenue Code, Section 82/3: principles of output VAT and input VAT
- Section 82/5: input VAT that may not be deducted
- Section 86/4: items on a tax invoice
- Royal Decree No. 807 (2026) on the VAT rate
This case study is a hypothetical example. In practice, consult a tax adviser and the local Revenue Department office, especially for mixed-use projects with shared space.