Spotting Fake Tax Invoices: Risks and How to Protect Your Business

In Thailand, a tax invoice is the key evidence a VAT-registered business uses to claim input tax credits or refunds. When an incorrect invoice is used, the state collects less tax than it should — and the most serious case is a fake tax invoice, which the Revenue Department treats as deliberate tax evasion.

The problem is that many businesses receive fake invoices without realising it. This article explains the penalties and how to protect yourself.

Criminal penalties under Section 37

From 1 September 2017, the Revenue Department announced it would pursue criminal cases over fake tax invoices strictly, rather than settling them, as in the past, with back tax and fines alone.

Section 37 of the Revenue Code sets imprisonment of three months to seven years and a fine of 2,000 to 200,000 baht for anyone who knowingly gives false statements or false evidence, or uses fraud or deceit, to evade tax or obtain a tax refund.

The penalty applies both to the business that uses a fake invoice and to anyone who helps — including accounting firms involved, which may also be liable under the Accounting Act B.E. 2543 (2000) and face discipline from the Federation of Accounting Professions, up to revocation of registration.

“I didn’t know” is not a defence

Under the second paragraph of Section 89(7) of the Revenue Code, if the business using a tax invoice cannot prove who issued it, the invoice is deemed fake. So checking that a supplier is registered with the Ministry of Commerce and for VAT is not enough: you must be able to show that the invoice issuer and the seller are the same party, and that the sale and payment really happened.

Seven ways to protect your business

1. Assess your own risk

Some sectors face higher risk, such as construction (especially subcontracts where the subcontractor sources materials), construction materials trading, plastics and chemicals trading, exporting, and textiles and garments.

2. Buy from suppliers you know

Work with suppliers you deal with regularly, and be wary of one-off sellers in a hurry to close the deal.

3. Check the documents carefully

Check every tax invoice and supporting document. If in doubt, ask to see the seller’s original VAT registration certificate (Por.Por.20) and verify their tax ID on the Revenue Department’s VAT registrant search.

4. Be careful with unusually low prices

Keep track of market prices. Avoid goods priced well below market without a good reason — especially when the seller wants cash immediately and offers no credit terms.

5. Check what you receive

Compare the goods actually delivered with the tax invoice and the agreed order, line by line.

6. Pay in a traceable way

Pay by transfer directly to the seller’s bank account, or by crossed cheque made out to the payee only (A/C Payee Only), so you can prove who received the money. Be wary of sellers who refuse these methods.

7. Set a process for receiving purchase invoices

Define clear steps and responsibilities for checking purchase tax invoices, backed by good internal controls. Even if the owner acts in good faith, fraud by an insider cannot be used as a defence against the Revenue Department.

In short

Fake tax invoices are not always easy to detect, but they can be prevented with good checks. If you are unsure about a supplier’s documents, talk to your accountant before using them to claim input tax.

This article is general information. Thai tax law and Revenue Department practice can change; consult an expert before making decisions for your own case.