The Local Government Tax line on your Thailand invoice is Thai value added tax (VAT). Thai law requires our local payroll partner in Thailand to charge 7% VAT on the staffing services it provides, including employing and paying your team. Outstaffer passes the VAT on your team's total payroll through to you as part of the cost of employment.
Note: You can check every part of this charge yourself. The calculation is set out below, and each law is linked to its official source.
Why VAT is charged on your team's payroll
Thai VAT is required by Thai law. It applies because your team's employment services are performed in Thailand, as staffing services for a foreign company. Those services include employing and paying your team, so the VAT is calculated on your team's payroll, not only on the local payroll partner's fees. Revenue Department rulings have applied 7% VAT to staffing services performed in Thailand for a foreign company.
Why the line is called Local Government Tax
Outstaffer uses the label Local Government Tax on invoices and in the cost of employment platform for any government tax it must pay in the country where your employee is located. The tax behind the label is different in each country. In Thailand, the Local Government Tax line is Thai VAT.
How the charge is worked out
The Local Government Tax line is the Thai VAT at 7% of each employee's total payroll, rounded to the nearest whole dollar, in your billing currency.
Included in total payroll: base salary, Social Security Fund, Workmen's Compensation Fund, Annual Leave and allowances.
Not included: the EOR Premium, health insurance, equipment and work visa fees.
Example calculation
This example uses sample figures for one employee, in USD. The Local Government Tax line is 7% of total payroll: 7% of 1,830.00 is 128.10, shown as 128.00 after rounding.
Invoice line | Amount (USD, sample) |
Payroll | |
Payroll | 1,752.00 |
Social Security Fund | 24.00 |
Workmen's Compensation Fund | 7.00 |
Annual Leave | 47.00 |
Total payroll | 1,830.00 |
Local Government Tax (7% of total payroll, rounded) | 128.00 |
Health Insurance | |
Health - Core Plus Plan | 68.00 |
Outstaffer fees | |
EOR Premium | 250.00 |
The 7% Local Government Tax is calculated on the Payroll lines only. It is not charged on Health Insurance or Outstaffer fees.
Office costs
Where your team uses office space arranged through our local office partner in Thailand, the office cost is a pass-through to you. Our local office partner charges 7% Thai VAT on the office cost, and that VAT is a pass-through too, on its own Local Government Tax line after the office line.
This example uses a sample office cost, in USD. The office Local Government Tax line is 7% of the office cost: 7% of 2,450.00 is 171.50, shown as 172.00 after rounding.
Invoice line | Amount (USD, sample) |
Workplaces | 2,450.00 |
Local Government Tax (7% of office cost, rounded) | 172.00 |
Where you will see the charge
On your invoice: one line per employee, described as Local Government Tax, listed with that employee's payroll lines, plus one line after any office cost line (for example Workplaces).
In the cost of employment platform: one line per employee, shown as Local government tax in the compliance section.
When it is billed: your monthly Thailand invoice is issued in advance for the following calendar month, around the 10th of the month. Issue dates differ by country: see The Monthly Cycle: Key Dates Explained.
After payroll is run: any difference is adjusted on a reconciliation invoice or credit note, shown as Thailand Payroll - Local Government Tax Reconciliation.
Final pay: final pay amounts carry a Local Government Tax line at 7% of the final pay amounts.
Is Outstaffer making money from this charge?
No. The Local Government Tax line is a pass-through of the Thai VAT our local payroll partner charges Outstaffer.
A pass-through of the cost of employment: you pay the same 7% VAT our local payroll partner charges Outstaffer on your team's total payroll.
VAT on fees is not passed through: our local payroll partner also charges Outstaffer VAT on its own fees. Outstaffer pays that VAT itself.
Office costs as a pass-through: office space arranged through our local office partner is a pass-through, with only the Thai VAT charged on it.
The law behind the charge
Thai VAT is set by the Thai Revenue Code. These are the rules that apply:
VAT applies to services in Thailand: VAT applies to services performed in Thailand, calculated on the total value received for the service (Section 77/2; VAT chapter, including Section 79).
Registered businesses must charge VAT: a VAT-registered business must charge VAT on the services it supplies (Section 82/4).
The rate: the rate set in the Revenue Code is 10% (Section 80). Royal Decree No. 807 (B.E. 2569) keeps the rate at 7% from 1 October 2026 to 30 September 2027 (Revenue Department notice, reported by Orbitax; Royal Gazette publication, reported by Money & Banking).
Is Thai VAT 7% or 10%?
Thai VAT is 7% until 30 September 2027. The rate in the Revenue Code is 10%, and Royal Decree No. 807 reduces it to 7% for that period.
If the Thai Government does not extend the 7% rate beyond 30 September 2027, Thai VAT returns to 10% and the Local Government Tax line on your Thailand invoice will increase to match.
What your Terms of Service say
Under our Terms of Service, you agree to pay the full Cost of Employment for your team. Cost of Employment includes "any value added tax, goods and services tax, sales tax or similar indirect tax imposed on any supply made to or by us in connection with the employment" (clause (f)). The Thai VAT on your team's total payroll is a pass-through on that basis.
Office space arranged through our local office partner is a client-directed cost (clause (i)), and the Thai VAT on it is covered by clause (f). The Terms of Service also state that "Cost of Employment may increase due to changes in applicable laws or regulations", which covers a return of Thai VAT to 10%.
What happens if this charge is not paid?
The Local Government Tax line is part of your monthly Subscription Invoice. It is due and payable in full, with the rest of the invoice.
Your Subscription Invoice funds your team's payroll. Outstaffer needs the full invoice paid in cleared funds by the payroll cutoff: 11:59pm on the 28th of the month (Melbourne time), or the 27th (local time) for Clients in the United States, to release your team's next payroll. Under our Terms of Service, invoices for EOR Services must be paid in full, even if part of the invoice is disputed.
Important: If your Subscription Invoice is short-paid, including by leaving out the Local Government Tax line, your team's payroll may not be released on the scheduled pay date.
If you have a question about the Local Government Tax line, pay your invoice in full and raise the question with your Customer Success Manager.
Who to contact
Questions about the Local Government Tax line or your invoice: contact your Customer Success Manager. You can book a call or send a request from the My Team page in the Outstaffer platform, or email your Customer Success Manager directly. See How to Contact Your Customer Success Manager.
For how the Local Government Tax label is used in other countries, see What Is Local Government Tax?.