Transcript of the above video:

As the title of this video suggests we are discussing Value Added Tax or VAT here in Thailand. This isn't something I bring up a lot, but VAT is an important thing to note. I have talked about it especially here recently as there has been all this talk about Tax Residency, the possibility of reintroducing Tax Clearance Certificates, especially in a digital context, as it pertains to what we talked about earlier in the year where they seem to be kind of trying to roll that out in conjunction with the so-called Destination Thailand Visa. 

But long story short, VAT was sort of created back during the, if you go back into the ‘80s and early ‘90s, there was this Tax Clearance Certificate regime and then they phased that out because they brought in VAT. VAT to my mind, first of all let me be clear conceptually where I'm at on this. I think it's one of the most horrible tax ideas you could ever come up with because it taxes exactly what you don't want to tax which is the addition of value. Value add is what stimulates an economy, okay? Now I don't agree with property taxes per se but I can at least understand the argument in favour of Property Tax, one argument I should say which is look if we institute property tax, it creates an impetus on property owners to make their property productive. Now I disagree with the underlying theory that anyone has an inherent right to tell you what to do with your property to begin with. If you want to buy a piece of land and let it sit there fallow and do nothing with it, that's your business. But that said, I can at least understand the argument of "hey, we want to make it productive". Well Value Added Tax is like the counter argument, the antithesis of that argument, it's taxing value creation, which if you want a vibrant economy, you want value created.

That said, Thailand has a Value Added Tax. I look at it very much akin to a Sales Tax which is basically what it is. Back home, well not back home, Thailand is my home now, but from where I was born, back in the United States, Thailand has got a 7% VAT.  Now as we have discussed in other videos, the actual tax amount is 10%, but it has been lowered, periodically they had this ongoing temporary lowering to 7%, so as a practical matter it has always been 7%, but again this is added on to all bills in Thailand; it's like a sales tax. I met people in America before that were from New Hampshire. I remember one time I was sitting in a bar years ago when I was in law school actually, I was sitting in a bar on like a Friday or Saturday night, there was this guy from New Hampshire and he just going on and on about, "What's this sales tax? Every time I pay for something around here, I have got this sales tax. We don't have sales tax in New Hampshire." It's like well that's nice in New Hampshire, good for you, but we are in Kansas, we have this. It is what it is. In Thailand they have this 7% VAT, it's part of the deal, it's kind of a given as the title of the video suggests.

That said, I thought of making this video after reading a recent article from the Bangkok Post, bangkokpost.com, the article is titled: Diner refuses to pay the VAT, causes scene at restaurant. Quoting directly: "A customer heatedly refused to pay VAT on the bill at a ramen restaurant in a Bangkok petrol station and tried to storm out without paying - only to be stopped by other diners. The heated argument was recorded on video by one of the other customers, who posted it on TikTok. The incident occurred on June 8 at a PTT pump on Sukasawat Road, according to TikTok user @moveforwardlandslide. The customer, a woman, argued loudly with the staff, claiming she was being overcharged and refusing to pay the bill." You know, look, I don't know the full context of this. I urge those who are watching this video to check out the article on bangkokpost.com. 

That said I kind of wanted to talk about this generally because I have seen this before where foreigners, especially tourists come in, and they will get a bill - I have seen this personally - they get a bill and they start like trying to dispute it with the staff, "I don't want to pay this. I'm not paying that. Da da da." Well, it's VAT. It’s VAT. It's a tax, it is like sales tax; it just is what it is. And by the way, I mean frankly, if we are talking sales taxes and all kinds of add-ons and things, Thailand is way better than the West. Now that said that's a low bar and frankly I worry Thailand is kind of moving in the Western direction and it's not a good thing. I think Thailand needs to take a long moment, reassess itself and understand the way of doing things in the East is far better than what has been going on in the West but that's my opinion. In any event, yeah VAT is kind of a given. 

One little tip here for folks - especially if you haven't ever been to Thailand - one thing that you will see like on chalkboards and things outside of restaurants is they will have a price and then next to it will be a "+ +".  That "+ +" means plus VAT and plus service charge; you will oftentimes see that next to prices. Again, you can get into as much of a fight as you want, but VAT is what it is here in Thailand. So if you try to get into a dispute and not pay your bill, especially as a foreigner here - I think this person was a local, I am not sure - I didn't want to get that far into it, I don't want to like point somebody out and make a show of things, but the point I am trying to make and the reason for the video is yeah VAT is kind of a given here; it's not kind of a given, it is a given. You are going to deal with VAT. It generally is set up so it's in addition to whatever the price is and oftentimes, especially in a dining capacity, you will oftentimes see service charge, so that's why you always will often see the "+ +" when you see prices, again on chalkboards and things out front of restaurants. Especially as a foreigner, if you try to dispute your VAT charge which you know, if you spend a 1,000 baht, VAT is going to be 70. Maybe I'm just a person who is not quite that money conscious or frugal or penny-pinching, however you want to say it, I'm not necessarily casting aspersions there, I'm not trying to talk in the pejorative, but if you can't dine out and pay 70 baht on a 1,000 baht tab, I do have to question whether you should be dining out. I mean there is sort of that angle.

I do understand where people get confused like if you are a foreigner and you don't know that it's there, okay fair enough. But again, now you are aware of it, and that's what I hope this video does is to sort of diffuse frustration, consternation in the future so that people know, look, one, presume VAT is going to be on top of it. It's like when we bill for certain things here in the firm that are relevant to VAT, there is the cost and then when we do the invoicing you will see the VAT, it's in addition to whatever the price, whatever that service is. So again, the thing to take away from this video is VAT, it is basically a given here in the Kingdom of Thailand.