Recently, Thailand’s Revenue Department and the Central Investigation Bureau jointly uncovered a major case involving the use of fake value-added tax (VAT) invoices to fraudulently claim export tax refunds, with the amount involved exceeding one billion baht. Furthermore, the authorities ultimately dismantled the criminal network after it systematically defrauded the government of refund payments over an extended period by registering multiple companies, fabricating purchase and export transactions, circulating invoices, and forging documents.
This case has not only caused significant losses to the national treasury but also serves as a serious warning to businesses engaged in export activities in Thailand. To avoid similar legal risks, export companies should pay close attention to the following key compliance requirements.
Interpretation of Basic Policies on Export Tax Refunds
When Chinese companies export goods to Thailand, they can generally benefit from the “export tax refund” policy. According to China’s customs and tax regulations, any enterprise that manufactures goods domestically, actually exports them, and has duly paid value-added tax (VAT) is therefore eligible to apply for a partial or full refund of the VAT paid.
However, this policy is based on the principles of “genuine transactions, lawful declarations, and complete documentation.” The right to claim a tax refund depends on the following conditions:
- The company genuinely purchases the goods and pays verifiable VAT;
- It actually exports the goods and supports the export with relevant documentation;
- It properly documents the entire transaction process and meets tax filing requirements.
Tax Invoice Compliance Requirements
1. Input invoices must be genuine and lawful
- All purchases must involve actual delivery of goods;
- A legally registered VAT enterprise must issue the invoice.
- Product descriptions, amounts, and tax amounts must match the actual transaction;
- Businesses must not fraudulently issue or reuse invoices, or include falsified information.
2. Output invoices must align with export documentation
- Export invoices should match the information on commercial invoices, customs declarations, bills of lading, etc.;
- Amounts, product descriptions, and quantities must be consistent;
- Exporters should support their invoices with corresponding customer payment records to avoid issuing “empty invoices” or using “nominee customers.”
3. No fabrication of transactions through affiliated companies
- Using affiliated enterprises to create fake transactions, circulate invoices, or artificially inflate VAT input credits constitutes tax evasion;
- Issuing input invoices with companies that have no genuine business activities is also illegal.
Summary of Required Documents for Export Tax Refund
When applying for an export tax refund, export companies should ensure that the following materials are genuine, complete, and properly archived for inspection:
- Purchase invoices (VAT invoices) from suppliers;
- Proof of actual payment, such as bank transfer records;
- Export customs declarations, bills of lading, commercial invoices, packing lists, and other relevant documents;
- Logistics and transportation records proving the goods have left the country;
- Trade contracts or purchase orders with the customer;
- Legal identification information of both the exporter and the purchaser (such as tax ID numbers, copies of business licenses, etc.).
It is recommended that all refund-related documents be kept for at least five years for potential tax authority audits.
How Export Companies Can Strengthen Compliance Management
In international trade, compliance is not only essential for successfully obtaining tax refunds but also a fundamental guarantee of sound business operations. The following are key compliance management areas that export companies should focus on:
1. Optimize internal process systems
Companies should establish standardized export procedures covering the entire chain—from contract signing, shipping, customs clearance, payment collection, to tax refund filing. Moreover, each step should be well-coordinated with clear responsibilities. Business, finance, and documentation data must be consistent to ensure alignment of accounts, invoices, and documents, preventing refund delays or triggering audits due to process confusion.
2. Strengthen invoice and financial management
Invoice management must be genuine and compliant. Both input and export invoices must match the actual transactions. Certainly! Here’s your sentence with transitional phrases added for smoother flow: Businesses must not issue fake invoices, reuse them, or allow mismatches between goods and invoices. Additionally, they should have professional staff regularly review the invoice chain to avoid being flagged as a high-risk enterprise by the tax authority for invoice issues.
3. Standardize export documentation retention
All export-related documents—such as customs declarations, contracts, bills of lading, and payment records—must be complete, archived, and consistent in information. Companies can establish an electronic document archive to facilitate tax refund applications and potential future audits. These materials should be retained for at least five years.
4. Establish a compliance risk control mechanism
Companies should set up an export risk warning system to assess large or unusual transactions in advance and avoid tax risks caused by errors or misconduct. They should also stay updated on policy changes and engage third-party professional teams for compliance reviews when necessary to enhance their overall risk management capabilities.
Compliance is not a burden, but a fundamental skill for businesses expanding internationally. Clear processes, genuine invoices, and complete documentation are essential to ensure smooth tax refunds and sustainable operations. If you would like to learn more about export compliance procedures or optimize your tax refund structure, feel free to contact WELLION. We provide professional support to help your business grow steadily.
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