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How to calculate VAT 7% and service charge 10%
Wondering why the bill is higher than the menu prices? The answer is service charge and VAT. This guide explains the order and formula simply.
Service charge vs VAT
Service charge is an extra fee the restaurant keeps, usually 10% of food — it is revenue, not a tax.
VAT is a government tax, 7% in Thailand. VAT-registered restaurants must collect and remit it.
The correct calculation order
The standard order is service charge first, then VAT on the service-inclusive amount, because VAT applies to the full value of the service.
Formula: total = (food + 10% service charge) × 1.07
- Food = menu prices ordered
- Service charge = food × 10%
- VAT base = food + service charge
- VAT = VAT base × 7%
- Total payable = VAT base + VAT
Worked example
Food 1,000 THB → 10% service charge = 100 → 1,100 THB.
7% VAT on 1,100 = 77 → total = 1,177 THB.
Split equally among 4 that is 294.25 each; if orders differ, distribute service charge and VAT proportionally.
Good to know
- Some menus already include VAT (net price) — look for 'price includes tax'.
- Non VAT-registered restaurants can only add service charge.
- Some items like alcohol may already include excise tax in the price.
Key takeaway
Remember service charge first, VAT second, and let HarnDuay distribute the tax proportionally for each person.
FAQ
Service charge or VAT first?
Service charge first, then VAT on the service-inclusive total.
Do menu prices include VAT?
It depends; if it says tax included, it does, otherwise it is usually added at the end.
How to split VAT fairly?
Distribute it proportionally to each person's food total — HarnDuay does this automatically.