In addition to the recently approved flood relief loans by the Thai Cabinet, the
Thailand Board of Investment (BOI) has offered tax relief measures to its
promoted companies operating in Industrial Zone 1, Zone 2 and Zone 3 which were
really affected, might be affected or were not affected by the present flooding.

1. For flood-affected BOI-promoted companies

General measures particularly the corporate income tax (CIT) exemptions/reductions are
being granted to BOI-promoted companies that have been affected by floods and for
those who wish to invest in temporary manufacturing facilities or in new
projects to restore their businesses in Thailand. Such tax relief incentives
for each Industrial Zone are as follows:

Customs duty exemption on imported machinery is also being granted to BOI-promoted
companies in all zones. Companies must submit their applications to the BOI
within the year 2012.

2. For new or existing BOI promoted companies not affected by the floods.

In order to maintain and gain more investors, tax incentives are also being
granted to new or existing BOI-promoted companies not affected by the flooding
and who wish to invest in new projects or expand current investment projects in
Thailand. Such corporate income tax (CIT) exemptions/reductions for each Industrial Zone are as follows:

Exemption on customs duty for imported machinery is also being granted for all zones. Companies must submit their applications to the BOI within the year 2012.

3. For specific businesses affected by the flooding

Automotive manufacturers in all zones are exempted from corporate income tax for 5 years with the tax exemption equal to 100% of investment (excluding land and working capital).

Meanwhile, for “eco car” manufacturers, the current corporate income tax exemption scheme already grants the maximum tax incentives and so there is no change.

For other industries, the BOI board will consider relief measures on a case-by-case basis.

4. For BOI promoted industrial estates/industrial zones operators affected by flooding

The BOI-promoted industrial estates/industrial zones operators wishing to invest in flood prevention infrastructure in the future, whether in current areas or zone extensions, will be granted a corporate income tax exemption equal to 200% of the investment (excluding land and working capital), valid for eight years.

Certain types of businesses are subject to Specific Business Tax (SBT) rather than Value Added Tax (VAT). Businesses subject to SBT must pay VAT on their purchases of goods and services but are not entitled to a VAT credit. The SBT ranges from 2.5 – 3.0 per cent on monthly gross receipts. When a monthly return is filed and SBT is paid, an
additional amount of 10% of the SBT payable is levied as a municipal tax.

Businesses that are subject to SBT

• Banking, financial and similar business
• Life Insurance
• Pawn Brokerage
• Real Estate
• Any other business specified by the Royal Decree i.e. business engages in repurchasing agreement (REPO) and factoring

Activities of certain entities are exempted from SBT such as:

• Activities of Bank of Thailand, Government Savings Bank, Government Housing Bank and Bank for Agriculture and Agricultural Cooperatives
• Activities of the Export-Import Bank of Thailand, the Industrial Finance Corporation of Thailand, Asset Management Corporation, Small Industrial Finance Cooperation and Secondary Mortgage Corporation
• Activities of National Housing Authority, Government Pawn Brokerage and Pension Fund
• Activities of selling securities listed in the Stock Exchange of Thailand

Specific Business Tax Base and Rates

Filing Specific Business Tax Return and Payment

SBT taxable period is a calendar month. SBT return (Form SBT 40) must be filed (and payment must be submitted) on a monthly basis by the 15^th of the following month
whether or not the business has income.

Contact MSNA for your accounting and tax questions.

The Board of Investment of Thailand offers a wide range of incentives and services to foreign investors that can help them to make their investments more profitable.

Thailand BOI Promotion provides privileges to attract more and more
investors to set up their operations here in Thailand. The privileges are
summarized as follows:

Tax incentives

• Exemption/reduction of import duties on machinery.(section 28/29)
• Reduction of import duties for raw or essential materials.(section 30)
• Exemption of juristic person’s income tax and dividends.(section 31 and 34)
• A 50 percent reduction of the juristic person’s income tax.(section 35(1))
• Double deductions from the costs of transportation, electricity and water supply.(section 35(2))
• Additional 25 percent deduction of the cost of installation or construction of facilities.(section 35(3))
• Exemption of import duty on raw or essential materials for use in production for export.(section 36)

Non-Tax incentives

• Permit for foreign nationals to enter the Kingdom for the purpose of studying investment opportunities.(section 24)
• Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities.(section 25 and 26)
• Permit to own land.(section 27)
• Permit to take out or remit money abroad in foreign currency.(section 37)

Guarantees

• The State will not nationalize the activity of the promoted person. (section 43)
• The State will not undertake a new activity in competition with the promoted person’s. (section 44)
• The State will not monopolize the sale of products similar to the promoted person’s.(section 45)
• The State will not impose price controls on the products of the promoted person’s.(section 46)
• The State will grant permission to export at all times.(section 47)
• The State will not allow any government agency, government organization or state enterprise to import any kind of the product being produced by the promoted person into the Kingdom by granting import duty exemption.(section 48)

Protection

• To charge extra import fees into the Kingdom on products similar to those produced by the promoted person at a rate not exceeding 50 percent of the price of overseas insurance and freight charges, effective for a period of not more than one year. (section 49)
• In the case of where the Board is of the opinion that Section 49 is inadequate for protecting the activity of the promoted person. it will increase the measure by banning the import of products similar to the local productions. (section 50)
• In the case where the promoted person encounters any problem or obstacles in the course of carrying out the promoted activity, the Chairman will have the power to render any appropriate assistance.(section 51)

We at MSNA together with our team of BOI experts and auditors can guide you to fully understand how to take full advantage of the BOI incentives, guarantees, protection and privileges. Moreover, we can also help you in complying with the BOI standards particularly in terms of reporting requirements.

Contact MSNA for an expert advice regarding Thailand BOI Promotion.

An MSNA’s accounting client has asked us a question about the VAT on purchase of
goods from a company overseas.

We just ordered some products from a US-based company. This US Company contracts a
Thailand-based manufacturer to produce these products and directly deliver to
us on behalf of them. Is there any VAT to be accounted for? How should we
recognize it?

Answers by THAI ACCOUNTANT:

Sales of goods between a Thailand-based company and a company based overseas with the
goods being manufactured and delivered in Thailand by a Thai manufacturer would
be considered as sales of goods in Thailand (under Section 77/2(1) of the Thai
Revenue Code) that is subject to 7% VAT.

For your case, since you ordered from a non-Thai company (US-based), you would be responsible to self assess the VAT on the gross payment, file a VAT remittance return (Form Por Por 36), and remit the VAT to the Revenue Department by the 7^th day of the following month in which the payment was made. Thus, a receipt issued to you by the
Revenue Department after you paid for the VAT can be used as your company’s input
tax invoice which is creditable against your output tax in the tax month when
VAT is remitted.

In the event that you did not account for VAT, both you and US-based Company would
be both liable to pay for the VAT deficit and a surcharge of 1.5% per month on
the tax deficit. Both of you will also be subject to a fine for not submitting
VAT.

Contact MSNA, Thailand Accountant, for your accounting and tax questions.

Today, THAI ACCOUNTANT got an inquiry about Thailand VAT on reimbursement for toll fees .

I own an agency for travel & tours around Thailand. We hire the vans and
driving services from another company. It is specified in our transport rental
agreement that we are responsible to pay for toll fees but in practice, their
drivers pay for the toll fees first whenever we have tours and we reimburse those
fees to them later. Should this reimbursement of toll fees be included in their
service fee and we have to pay VAT on it?

Answer:

As long as there is an evidence or proof that you are reimbursing the toll fees to
the vendor company based on the toll fees receipts, the toll fees are not
considered as part of the service fees and thus, not subject to VAT.

Contact MSNA for your Thailand accounting and tax questions.

Like MSNA’s Accounting Staffing Solutions, we provide human resource outsourcing services to our clients both based in Thailand and overseas.

In general, we outsource HR functions such as:

• Human resources administration
• Payroll processing
• Employee benefits and office administration
• Office management
• Others, depending on client’s business needs

Our main concern is to maintain the happiness of our clients in doing business. With
MSNA’s services, you can expect:

1. Time and cost efficiency savings because we will handle the paperwork and process the recruitment
2. Reducing usage of office space and stationery because we will outsource such functions
3. Staffing flexibility because we will provide the additional resources for a fixed period of time at a consistent cost.
4. Development of internal staff; because when we outsource such functions, we will also train the company’s staff
5. Level of continuity and reducing the risk on management; because we will outsource such functions, there will be no high employee turnovers and risk on the company’s daily operation.

We understand how to add value to your company that is why we are here as your
partner to ease the burden of your business needs by helping you in saving your
time and costs in managing your human resources.

Please contact MSNA for your questions regarding our Human
Resource Outsourcing Service.

The Thai Cabinet on its recent meeting has approved the Baht 250 billion principal loans to flood-affected businesses: industrial companies, small medium enterprises (SMEs) and independent business operators or self-employed workers.

Out of this Baht 250 billion, approximately Baht 210 billion will be provided to SMEs while an estimated Baht 15 billion are for those flood-hit industrial parks and the rest will be provided to independent business operators and self-employed workers.

Under this scheme, the loan provided to borrower is subject to a 3% annual interest rate with repayment terms of 3 years. Baht 120 billion out of Baht 250 billion will be provided by commercial and private banks and Small Business Credit Guarantee Cooperation will guarantee the 30% of the credit for each borrower. Approximately Baht 50 billion will come from the Japan’s Bank for International Cooperation and an estimated Baht 40 billion will be from matching funds between the Government Savings Bank and commercial banks. The rest of the amount will be distributed by the Government Savings Bank.