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Archives for September 2011

Internet Tax Filing Thailand – late payment

Today, THAI ACCOUNTANT got a question regarding the online filing of VAT.

Question:

We recently filed VAT return via the internet and paid for it by check but the clearing of this check took so long although we already filed VAT and made the payment before the deadline. Would it be considered late submission of VAT if the check was not cleared on time?

Answer:

At times like this, the Revenue Department sees that your company has a justifiable reason for the late payment and they usually consider extending the deadline of the VAT filing without imposing penalties and a criminal fine. However, you will still be liable to pay a surcharge at the rate of 0.75% per month on the amount of tax payable.

For Thailand taxation and accounting questions, please contact MSNA.

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Rewards paid to Employee – what is the tax implication?

When an employer company pays rewards to its employees, there are both Personal Income Tax on the employee and Corporate Income Tax on the employer company to consider.

THAI ACCOUNTANT got a question about the tax implication when paying monetary rewards to employees as follows:

Question:

The Company used monetary rewards as an incentive for employees to improve performance or reduce operating costs. Such rewards are paid at a rate of 3% of the profit before corporate income tax based on profit and loss figures reviewed quarterly. However, if in any quarter the company incurs a loss, the rewards would not be given. What does the Company has to consider tax-wise.

Answer:

The amount of money received is considered as assessable income of the employees pursuant to Section 40 (1) of the Thai Revenue Code and must be included in the personal income tax computation of the employees. And the Company is responsible to deduct withholding tax as per Section 50 (1) of the Thai Revenue Code at the time of payment.

From a corporate income tax perspective, even though the payment is based on a profit that the company makes every quarter as opposed to the profit at the end of accounting period, it is evident that the payment is based on profit and no compensation is paid if the company generates no profits. Therefore, the payment is a non-tax deductible expense in
accordance with Section 65 ter (19) of the Thai Revenue Code.

Please contact MSNA for more information regarding accounting and tax in Thailand.

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Dividends received by a Thai company from overseas subsidiaries – tax exempt or not

Today, THAI ACCOUNTANT got an interesting question regarding Corporate Income Tax:

Question:

We, a registered Thai company, are entitled to receive dividends from our subsidiary company in Japan. How will this affect our Corporate Income Tax?

Answer:

Dividends received by Thai Companies from their subsidiaries which are foreign companies located overseas are exempt from corporate income tax provided that the following conditions are met:

– Thai Companies that receive dividends must hold at least 25% of shares with voting rights in the foreign company;

– Upon receipt of the dividends, Thai Companies must have held the shares for at least 6 months from the date of acquiring the shares in the foreign company;

– Dividends received must be paid out of the foreign company’s taxable profits which are subjected to normal rate of at least 15% in accordance with the foreign tax laws.

In the case that there is a tax exemption or reduction on taxable profits from the normal tax rate due to special rules or regulations in the foreign countries, the dividend income received by the Thai companies is still exempted from corporate income tax in Thailand.

If you have any tax or accounting questions, please contact MSNA.

 

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Work Permit Holder with Dependents in Thailand

Today Thai Work Permit Expert got an interesting question about Work Permit Holder with Dependents in Thailand.

What kind of visa should a dependents of a Thai work permit holder apply in order
to stay in Thailand legally?

Answer:

A dependent (e.g. spouse, children below 20 years of age and parents) of a
foreigner holding a Thai work permit is suitable to apply for a Non-Immigrant
Visa “O” in order to stay in Thailand. However, unmarried or same-sex
relationships are not recognized under Thai Immigration law and therefore not
qualified as dependents to apply for a Non-O visa.

Non-O visa holders are not permitted to work unless he/she obtained a valid Work
Permit on their own. Such dependent holding a Non-O visa must first obtain a
Non-B visa to be qualified to apply for a Work Permit. For example, a foreign
husband of a foreign teacher holding a Thai work permit must apply for a change
of his visa from Non-O to Non-B if he wishes to work here in Thailand. After
obtaining a Non-B visa, he can now apply for a Thai work permit.

Meanwhile, for the children below 20 years old holding a Non-O visa, they are also
required to apply for a valid Education visa if they will study here in Thailand.

Contact MSNA, thailand workpermit expert, when you need to have a Work Permit to work in Thailand.

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Year end audit for your Thai company

As required by the Thai law, all Thai registered companies, joint ventures, foreign businesses operating in Thailand and other forms of juristic entities are required to have their fiscal year-end financial statements audited by an independent auditor. This audit, sometimes called external auditing, is a kind of audit conducted in accordance with specific laws or generally accepted auditing standards on the financial statements of either a company, government sector, other legal and registered entity or organization. The auditor who conducts the audit must be appointed and independent of the entity that is being audited. The external auditor will then present an independent and fair audit report which is essential for the end-users of audited financial statements such as the entity’s investors, shareholders, financial institutions, government agencies like the Department of Business Development and the Revenue Department and the general public, etc.

With the specific auditing standards being followed, careful planning and professional thinking are required to obtain a reasonable assurance in checking the accuracy and completeness of the financial statements. The procedures also include evaluation of the significant policies and assessment of accounting standards used by the management of the entity specifically how the overall financial statements are presented.

Contact MSNA for your audit needs whether it is an external or internal audit.

 

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Work Permit and Visa When Changing Employer in Thailand

Today, we discuss what to do with your work permit and visa when changing employer in Thailand.

Question:

I am a foreigner who has a work permit working for a Thai company but am moving to a new job. What should I do to ensure the transition is smooth in terms of my work permit and visa?

Answer:

Before you leave the old company, make sure you agree with them on the date of your official resignation which should be the same day that they will inform the Labour Ministry of your resignation, or agree with them the day you will return the work permit to the Labour Ministry. On the same day you return the work permit, you must take your
passport to the Immigration Bureau to cancel the extension of your stay otherwise
you will be overstaying your visa. The immigration officer will stamp in your passport that you have to leave the country right away. You will then apply for an extension of stay, which they will allow only 7 days. On the same day, your new employer should submit the work permit application for you so that it can be done within the 7 day period that you have got in your passport. While waiting for the new work permit, the new employer should get all the documents ready for extending your permit of stay from 7 days to one year based on the new work permit. Once you pick up your new work permit, you must go to the Immigration Bureau to submit the documents to extend your permit of stay right
away, which must be before the end of the 7 day period that you got.

In this case, you do not have to go out of Thailand to apply for a new Non-Immigrant Business Visa.

Please note that it is not always possible for the Labour Ministry to produce your new work permit within the 7 day period that you got. It usually takes at least 7 business days for a work permit to be ready to pick up, but your 7 day period is one calendar week.
This is when you need MSNA, Thailand work permit and visa expert to help. We will make
sure your work permit and visa transition is done correctly and within the little time limit the Immigration rule allows.

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Is it Possible to Use Old Non B Visa to apply for New Work Permit in Thailand?

A question to Thai Work Permit Expert, Is it Possible to Use Old Non B Visa to apply for New Work Permit in Thailand?

Question: We have a registered company here in Thailand. In the event that a Non-B visa of our new foreign employee does not expire at the same time as his old work permit with his previous employer, can he use the same visa to apply for a new work permit sponsored by our company?

Answer:

  1. If the Visa referred to is a multiple – journey visa granted to him by a Thai Consulate overseas, and when he comes in each time with the said visa, the immigration officer at the airport gives him a 90 day permit of stay, then his Non-B visa that he has can be used to apply for a new work permit.
  2. If the Visa referred to means the permit of stay in the Kingdom that was extended to a longer period when he had his work permit (his permit of stay in Thailand was extended based on the fact that he was working with his previous employer), when his work permit expires or when he leaves the old company, he has to take his passport to the Immigration Bureau to cancel the extended permit of stay right away. The immigration officer will stamp in his passport that he has to leave Thailand right away. This means that if your new foreign employee has left the old company, or his old work permit has already expired and he has not taken his passport to Immigration Bureau to cancel the extended permit of stay, he is considered having already overstayed his permit of stay. Overstaying a permit of stay incurs a fine of Baht 500 per day (Baht 20,000 maximum) from the time that he started to overstay (in this case, the day that his work permit expired). Paying for the fine does not prevent the foreigner from being deported. In this case, he has to leave Thailand and comes back in with a new Non B visa so as to be able to apply for a new work permit.

Consult with MSNA Thailand Work Permit and Visa expert , before you make a move on your work permit and visa in Thailand.

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Thailand Company Dissolution Process

Recently Thai Business Expert was asked how to close a Thai limited company.

In line with the growing trend of competition, profitability and economic stability, some business owners choose to wind down their Thai registered company either for the purpose of opening a new company or permanently cease doing business in Thailand. Whatever reasons you have for closing your Thailand business, legal, accounting and auditing assistance are required to ensure that the company will be closed in good faith. However, in closing down a registered company in Thailand, one must consider the following procedures:

1. Sending out invitation letters to all shareholders for an extra-ordinary Shareholders’ Meeting and publishing the letter in a local newspaper.

As prescribed by the Thai law, the company should hold a Shareholders’ Meeting to discuss the agenda of the company dissolution. An invitation letter for the meeting must be sent to all company shareholders by a registered post with an Advice of Delivery Service to ensure that the shareholders acknowledge the receipt of the letter. The same letter must be published in a local newspaper as well. This step must be done at least 14 days before the date of the shareholders’ meeting.

2. Registering the company dissolution at the Department of Business Development, Ministry of Commerce

Within 14 days from the closing date that the Shareholders’ Meeting has approved of, the
application form along with any required documents must be submitted to DBD to
register for company dissolution. The liquidator (either an outsider or one of
the company directors, whoever is appointed in the shareholders’ meeting) must
file the application at the Department of Business Development (DBD), Ministry
of Commerce, with a copy of his / her Thai I.D. card or passport. Once
everything is completed and accepted by the DBD, the officer will issue a
document which is a certification of the company’s dissolution showing the
closing date of the company.

3. Publishing the company dissolution and sending letters to inform creditors

Within 14 days from the date of dissolution, the liquidator must publish in a local newspaper the company dissolution at least once and send letters by registered mail to the
company’s creditors to inform them about the company dissolution.

4. Returning the VAT Registration Certificate (Por Por 20) to the Revenue Department (RD) in case the company is registered in the VAT system.

Within 15 days of the closing date, the company shall file Form Por Por 09 to return its VAT Registration Certificate to RD. In the event that the company fails to file it within the
specified time, there is a penalty of Baht 2,000.

Although the VAT certificate will be returned, the company is still responsible to submit its
monthly VAT return (Por Por 30) every month until the RD officer release their confirmation letter for deregistration of VAT.

5. Completing and auditing of the accounts and the Financial Statements until the closing date.

The company must prepare and complete its accounts and financial statements of the current accounting period until the date of dissolution registration and must have them
audited by a Thai auditor. The liquidator of the company must sign on the financial statements as well as the Corporate Income Tax Return Form (Por Ngor Dor. 50) for submission to the Thai Revenue Department within 150 days after the company closing date.

6. Returning the company’s Tax I.D. card to the Revenue Department

The tax I.D. card of the company must be returned to RD as well. The officer in this unit
will accept the application to return the Tax ID card only if a copy of the filed corporate income tax return and the receipt issued by the Revenue Department is attached to it.

7. Liquidating company’s assets, clearing company’s debts and returning the remaining cash to the shareholders

After step no.2 has been done, the liquidator of the company has to liquidate all assets of the company (converting them to cash), pay off the companies’ creditors and
divide the remaining cash and return it to the company’s shareholders according to the shareholding ratio.

8. Filing liquidation reports and registering the completion of liquidation process with the Department of Business Development

The liquidator has to file a liquidation report to the DBD every three months until the liquidation process is finished and the Revenue Department has issued a letter to the DBD certifying that the company owes no taxes, which will happen after step no.5. When this happens, the liquidator has to register the completion of the liquidation process with the DBD as well as submit the last liquidation report. The DBD will issue a document to certify that the company’s liquidation has been completed.

The above summary of Thai company closure procedures is intended for information purpose only. However, one must seek professional consultation before proceeding to dissolution because there are still a lot of details in the process such as closing of all bank accounts, submission of VAT on the book value of company’s fixed assets as of the closing
date within the 7th of the following month and what to do if the company’s assets’ value is not enough to cover its debts. Careful planning of the whole process until the completion of liquidation of the company is strongly advised.

Basically, the dissolution process should take about a month to complete. However, if the company has VAT registration, it takes around 6 months to obtain the acceptance letter for
deregistration from the Revenue Department. Thus, for bigger companies, the whole process may be completed within a year or two, depending on how long the company had been in operation and whether its books of accounts were properly maintained and all tax returns were filed as required by the Thai law. The tax authorities may also invite the liquidator (or his representative) to discuss the tax matters of the company upon its liquidation.

Being highly knowledgeable and well-experienced in Thailand Business Set Up Process, we at MSNA can also assist you in the process of Thailand Company
Dissolution. We can also represent you in negotiation with the tax authority (Revenue Department).

 

 

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