Under Section 3 of the Permitted Activities of the Board of Investment, activities for Light Industry are as follows:

3.1 Manufacture of textile products or parts

3.1.1 Manufacture of natural or synthetic fibers

3.1.2 Yarn spinning

3.1.3 Manufacture of fabrics

3.1.4 Bleaching, dyeing and finishing

3.1.5 Printing and finishing

3.1.6 Manufacture of garments

3.1.7 Manufacture of parts or accessories for garments

3.1.8 Manufacture of household textiles

3.1.9 Manufacture of carpets

3.1.10 Manufacture of trawling nets

Conditions

1. Bleaching, dyeing and finishing project must be

1.1 Located in an industrial estate specified by the Industrial Estate Authority of Thailand or promoted industrial zones which have waste elimination systems and environmental conservation according to legal standards

1.2 Only the promoted companies that plan to expand the project in the existing location must obtain ISO 14000 certification within 2 years from the start-up date.

Rights and benefits

1. Shall be according to the Board of Investment Announcement No. 1/2543 dated August 1, 2000
2. Projects located in industrial estates for integrated production of the textile (except Bleaching, dyeing and finishing) shall be granted:

2.1 Exemption of import duty on machinery, regardless of zone

2.2 Exemption of corporate income tax for:

(1) Five years if located in Zone 1

(2) Seven years if located in Zone 2

(3) Eight years if located in Zone 3

2.3 Other rights and benefits shall be granted according to the BOI Announcement No. 1/2543 dated August 1, 2000

1. Only the manufacture of functional fiber and functional yarn shall be classified as a priority activity.
2. Bleaching, dyeing and finishing projects that are located in an industrial estate specified by the Industrial Estate Authority of Thailand and industrial estates for integrated production of the textile shall be granted:

4.1 Exemption of import duty on machinery

4.2 Eight-year corporate income tax exemption

4.3 Other rights and benefits shall be granted according to the BOI Announcement No. 1/2543 dated August 1, 2000.

Contact ThaiLawyers for BOI application, Thai company registration and visa and work permit application.

Why do we have to maintain our accounting even though our company is in dormant status?

Answer:

Even though your Thai company looks inactive, you have to pay rent and service fees to vendors, like MSNA or the contractors. You will have to withhold taxes and submit them within 7^th of the following month. Also once you are in the VAT system, you will have to file the VAT return every month. And when you have any transactions at all, you will need to talk to MSNA experts to give you guidance and advice. It is in your best interest to deal with a professional accounting firm who can communicate with you very well, like the English speaking accountants of MSNA.

Contact MSNA for your Thai accounting and taxation needs.

In Thai personal income tax computation, there are several types of income that the taxpayer shall not include or may not choose to include such income to the assessable income.

1. Income from sale of immovable property

A taxpayer shall not include income from sales of immovable property acquired by bequest or by way of gift to the assessable income when calculating personal income tax. However, if the sale is made for a commercial purpose, it is essential that such income must be included as the assessable income and be subject to personal income tax.

2. Interest income

The following forms of interest income may at the taxpayer’s selection, be excluded from the computation of PIT provided that a tax of 15% is withheld at source:

a. Interest on bonds or debentures issued by a government organization;

b. Interest on saving deposits in commercial banks if the aggregate amount of interest received is not more than 20,000 Baht during a taxable year;

c. Interest on loans paid by a finance company;

d. Interest received from any financial institution organized by a specific law of Thailand for the purpose of lending money to promote agriculture, commerce or industry.

3. Dividends

A taxpayer, who resides in Thailand and receives dividends or shares of profits from a registered company or a mutual fund which tax has been withheld at source at the rate of 10%, may opt to exclude such dividend from the assessable income when calculating personal income tax. However, in doing so, taxpayer will be unable to claim any refund or credit.

Contact MSNA for your Thai accounting and tax questions.

In forming a company in Thailand, company promoters are responsible for registering the company with the Ministry of Commerce (MOC). The promoters must be individuals, not juristic persons and must be available to sign documentation during the registration process.

For a private limited company, there must be a minimum of 3 promoters and at least 15 promoters for a public limited company. The promoters of a private limited company must be 12 years of age or older while for a public limited company, the promoters must be 20 years of age or older.

Each promoter of a private limited company is required to be among the company’s initial shareholders immediately after the company’s registration and is required to hold a minimum of one share upon the company’s registration. They are generally free to transfer those shares to existing shareholders or third parties, thereafter, if they wish. It is not required for the individuals serving as promoters to reside in Thailand.

The promoters of a public limited company must also be among the company’s initial shareholders immediately after the company’s registration. All promoters must subscribe for shares, which must be paid up in an aggregate amount equal to or not less than five percent of the registered capital. Said shares may not be transferred before the expiration of 2 years from the date of the company’s registration, unless specifically approved at a meeting of shareholders. Nevertheless, it is required that one-half of the individuals serving as promoters have their domicile in the Kingdom of Thailand.

Promoter’s potential legal liability is generally limited to the par value of the shares they will hold after registration is completed. The promoters are also responsible for paying expenses associated with the company’s registration. After registration, however, the company may choose to reimburse the promoters for those expenses.

Interested in forming a company in Thailand, contact ThaiLawyers for more information.

Question:

We are selling domestic animal feeds and decided to put up a signboard just outside our shop. Are we liable for any taxes? Please advice.

Answer:

Yes, in Thailand, owners of signs or billboards, which display a name, trademark or product to promote, advertise or provide information about a business, are subject to the annual signboard tax. The rate of tax varies according to the size of the signboard and the language written on the board.

Owners of signboards are required to file signboard tax return (Phor Phor 1) with the Revenue Department office in your area on or before 31 March of each year and tax must be paid within 15 days from the date of:

1. The installation of such taxable signboard after March of each year;
2. The changes made to the existing signboard;
3. Receipt of an assessment order.

An appeal against the assessment order may be filed within 30 days.

In case of failure to file a tax return, a surcharge at the rate of 10% to 24% of signboard tax payable will be imposed.

Contact MSNA for your Thai accounting and tax questions.

A client recently asked MSNA a question about fines for late filing of tax returns.

I understand that taxes must be filed within the deadline. If the last day of filing falls on a holiday or weekends, does it mean we have to file taxes before the due date? And if we file it after deadline, how much penalty do we have to pay?

Answer:

Yes, you have to file your Thai taxes within the due date. Failure to file tax returns and remit tax within the prescribed due date shall be subject to surcharge and penalty as follows:

I. Surcharge

1. Surcharge is 1.5% per month or a fraction thereof of the tax payable, but in no case shall the surcharge exceed the amount of tax payable for late filing of the following tax returns:

– Personal Income Tax,

– Corporate Income Tax (not including mid-year tax),

– Withholding Income Tax,

– Value Added Tax (VAT), and

– Specific Business Tax (SBT)

2. For Mid-Year Corporate Income Tax, surcharge is 20% of the tax payable or the deficient tax as the case may be.

3. House and Land tax for the year paid after the due date shall be subject to a surcharge of up to 10% if made within four months after the due date. If the tax is overdue for more than four months, the District Officer is empowered to attach the property on which the tax is due for the purpose of selling it by auction and applying the proceeds from sale for settlement of the tax due.

4. Municipal Tax for the year paid after the due date shall be subject to a surcharge at the rate of 10% to 24% of the tax due.

5. Signboard Tax for the year paid after the due date shall be subject to a surcharge at the rate of 10% of the tax due.

6. With regard to Social Security Fund, remittance of the contribution for the month after the due date is subject to a surcharge at the rate of 2% per month of the contribution amount due.

II. Penalties

1. For Corporate Income Tax, the maximum penalty of 200% of the tax due shall be imposed only in the case of tax assessment following the audit by the Revenue Department.
2. For Value Added Tax and Specific Business Tax, penalties will be:
   1. Up to 200% of tax due in case of failure to file a tax return
   2. Up to 100% of the shortfall in the tax due following an inaccurate tax return.

NOTE: The above penalties may be waived or reduced according to the regulation prescribed by the Director-General with the approval of the Minister of Finance.

III. Fine

Failure to file a return will be subject to a fine of not exceeding Baht 2,000.

However, in the event that the deadline of filing a tax return falls on a weekend or an official holiday, you can file and pay taxes on the next working day. This would not be regarded as late filing.

Contact MSNA for your Thai accounting and tax needs. As your tax agent, our well-experienced English speaking accountants will make sure that your taxes are prepared and filed accordingly.