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Archives for November 2012

Amount of deductible expenses for the computation of personal income tax

Deductible expenses are personal expenses that may be deducted to calculate the Thai personal income tax depending on the category of assessable income of a taxpayer as follows:

  • For the income under the categories of assessable income (1), (2) and for copyright under (3), a deduction of 40% is allowed subject to a maximum of Baht 60,000.
  • For the income under the category of assessable income (3), other than for copyright and under (4), no deductions are allowed.
  • For the income under the category of assessable income (5), the rates of deduction vary from 10% to 30% depending on the type of rented property.
  • For the income under the categories of assessable income (6), (7) and (8), the rates of deduction vary from 30% to 85% depending on the type of income or type of business.

Moreover, the deduction of expenses in relation to assessable income under categories (5) – (8) may be made on an actual basis only if satisfactory evidence of the expenditure can be provided to the tax authorities.

Consult MSNA for Thai personal income tax computation.

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Thailand Social Security System Registration

In Thailand, the employers or companies with 1 or more employees have to register and submit the social security fund to the Social Security Office. To register the employees or insured person into the Thailand social security system, the employers or an authorized person can submit the Registration Forms as follows:

  1. The Employer/company Registration Form (SSO 1-01)
  2. The Insured Person/employee Registration Form (SSO 1-03)

Note that for the employers whose head offices are in Bangkok, the Registration Forms have to be submitted at the Social Security Office area 1-7. For the employers whose head offices are in the provincial area, the Registration Forms have to be submitted at the Provincial Social Security Office where their head offices are located.

Registration forms must be submitted to the Social Security Office within 30 days from the date on which the employee has started working with the company otherwise an employer shall be liable to imprisonment for a term of not exceeding 6 months or to a fine of not more than 20,000 Baht, or both.

In case the number of employees is increased, the employer has to submit a new employee Registration Form if the employee has never received social security card before. When an employee left the company, the employer has to submit the application to take out his/her name from the social security system. When the employer changed any information such as office address or company name, application to change information must be submitted to the respective Zone Office of Social Security not later than the 15th day of the following month in which the change has taken place. If any wrong information is given, it can affect the rights and benefits of the registered insured persons.

Contact MSNA for consultation on Thai labor law and assistance in Thailand social security registration.

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Thailand Personal Income Tax – assessable income

For the purpose of Thai personal income tax computation, residents and non-residents taxpayers are taxed on their assessable income. This assessable income can be in any form of cash or in-kind benefits derived from employment or business carried on in Thailand or assets located in Thailand regardless of whether such income is received in or outside Thailand. Any income derived from outside Thailand will be subject to Thai personal income tax only if the income is remitted or brought into Thailand in the year in which the income is derived.

Assessable income is classified into 8 categories as follows:

1. Income from personal services rendered to employers such as salaries and wages (including income from stock options, other equity or work-related compensation and other fringe benefits);

2. Income from hire of work, office of employment or services rendered;

3. Income from goodwill, copyright, franchise, patent, other rights, annuity or income in the nature of annual payments derived from a will, juristic act or judgment of the Court;

4. Income in the nature of dividends, interests (including interest on bank deposits in Thailand), shares of profits or other benefits from a juristic company, juristic partnership or mutual fund, payments received as a result capital reduction, a bonus, an increased capital holdings, gains from amalgamation, acquisition or dissolution of juristic companies or partnerships and gains on transfer of shares or partnership holdings;

5. Income from lease of property, breach of hire-purchase contracts and installment sale contracts;

6. Income from liberal professions such as law, medicine, engineering, architecture, accountancy and fine arts;

7. Income from construction and other contracts of work whereby the contractor provides essential materials other than tools; and

8. Income from business, commerce, industry, agriculture, transport and any income other than as specified in (1)-(7) above.

Since different types of income have different rates of standard deductions, taxpayers may choose to itemize expenses instead of taking the standard deductions specified by law. Consult with MSNA for further information and expert advice on Thailand personal income tax computation.

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Opening a business bank account in Thailand

Opening a bank account may not be easy for some foreigners who want to open an account with a local bank in Thailand. Most of the time, foreigners are required to present their passport with valid Thai visa and work permit before they can open a personal bank account. The same condition applies to those foreigners who are authorized directors, branch managers or representative office managers of their entities in Thailand whereas copies of company registration papers and other additional supporting documents are also needed before they can open a business bank account.

However, regardless of any type of business entity, foreign business owners or managers can open a business bank account since there are no restrictions on foreign firms opening a business bank account in Thailand.

Aside from major local banks, international banks such as Citibank, HSBC, Standard Chartered and UOB provide business banking services in Thailand. All of these banks are able to provide full online banking facilities and support as well. Both local and foreign currency accounts are available under similar terms and conditions.

In opening a Thailand business bank account, there is a minimum initial deposit required but usually, it is a relatively low amount. Normally, the international banks require Baht 50,000 or more (or the equivalent in foreign currency) as the initial deposit. For major Thai banks such as Bangkok Bank, Kasikorn Bank, Siam Commercial Bank, etc, the minimum initial deposit for a Thai Baht account is usually Baht 10,000 for a current bank account and Baht 500 for a savings account. However, it is advisable to know the terms and conditions of these banks before deciding to open a bank account.

MSNA can assist you in opening a business bank account in Thailand. We can help you coordinate with the respective bank officers and prepare the necessary requirements. Consult now for further information.

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Life insurance premium allowance for the computation of Personal Income Tax in Thailand

Life insurance premium is one of the specific allowances that are allowed to use as deduction for computation of a taxpayer’s personal income tax in Thailand.

Life insurance premiums actually paid by taxpayer or his/her spouse on the taxpayer’s own life in amount not exceeding Baht 100,000 are allowed as a deduction for the calculation of personal income tax as long as the insurance policies are for a minimum period of 10 years and the insurer’s life insurance business is registered in Thailand.

For life insurance policies carried out from 1 January 2009 on wards, the amount of any health or accident premiums enclosed will not be deductible. Additionally, if the policy includes savings plan which provides an annual return to the policy holder exceeding 20% of the annual premium, the whole amount of insurance premium will be non-deductible.

However, qualified pension life insurance premiums paid to a Thailand based insurer from year 2010 on wards are allowed as a deduction in an amount not exceeding 15% of total taxable income with a maximum of Baht 200,000. Nevertheless, such allowance along with the contribution to a registered provident fund, the welfare fund, the investment in a retirement mutual fund, long term equity fund and the civil servant pension fund should not exceed Baht 500,000 in the same tax year.

Moreover, a life insurance premium paid for the taxpayer’s spouse who does not earn income is also allowed as deduction provided that their marital status still exists throughout the tax year and the amount paid is up to a maximum of Baht 10,000.

Consult with MSNA, English speaking accountants for your accounting and taxation needs.

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