One of our accounting and tax clients consulted with us regarding a Thai company making payments to its vendors overseas.

In response, we explain that when a company in Thailand wants to make payments to overseas, one needs to consider 3 things:

1. If it is for services, in most cases, the company will need to withhold some taxes from the payment and submit it to the Thai Revenue Department.
2. For paying an overseas vendor, the Thai company will have to submit 7% Value Added Tax (VAT) to the Revenue Department on behalf of the overseas vendor. To give an example, when a Thai company makes payment to a company in Singapore, VAT must be submitted with Form PP.36 by the 7^th of the following month.

Moreover, one must also take note of VAT and withholding tax when getting services from overseas.

• When a company in Thailand wants to make a money transfer to overseas, it is required to fill out some bank forms and provide them some kind of documents supporting the purpose of the transfer, e.g. a copy of the invoice from the overseas vendor, a copy of the loan agreement etc.

MSNA’s team of English speaking accountants can help you with your company’s Thai accounts, tax planning, audit and other matters regarding doing business in Thailand. Contact us now for initial consultation.

One of the questions our clients ask us the most is how much tax rate to use when calculating Corporate Income Tax in Thailand.

The corporate income tax rates depends on the amount of capital and its net income during the year. To explain it further:

1. If the company has less than THB 5 million capital and has less than THB 30 million income, the tax rates to be used are as follows:-

Tax Rate

First THB 300,000 = 0%

300,001 – 3,000,000 = 15%

Over 3,000,000 = 20%

2. If the company has more than THB 5 million capital and even if they decrease it later, it is fixed to 20% every year as long as the company is existing.

3. If the company has more than THB 30 million income and if the income decreases next year, it is also fixed to 20% as long as the company is existing.

Make sure your accounting and taxes are done properly and be mindful of the deadline for submission of corporate income tax and audited financial statements. Contact MSNA for consultation on Thai taxes and filing of requirements for your company in Thailand.

One of our accounting and tax clients wants some clarification regarding how withholding taxes in Thailand work particularly the withholding taxes on software license transactions.

Question:

Could you kindly confirm whether the 3% withholding tax rate applies universally to all software license orders? And in the event that we are required to pay the withholding tax at 3% rate for any type of software, are there any provisions or exceptions that would allow us to reduce the withholding tax rate to 1%?

Answer:

The 3% withholding tax rate is standard across all software licenses bought or paid for usage in Thailand. When you buy a software from overseas, you will need to submit the withholding tax (rates depending on the country) and 7% VAT on behalf of the overseas vendor(s) too.

Additionally, the Thai tax laws require buyers or users of software to withhold 3% tax. In your case, you should withhold it from the payment when you pay your vendors. You should not pay the withholding tax from your pocket. Anyway, you can check with us before making any payment to your new vendors to make sure you withhold the right amount accordingly.

MSNA can provide consultation on Thai taxes and accounting. And if you use our monthly services, our fees include consultation with our directors on tax and accounting issues. For instance, some vendors do not want you to withhold tax, we can discuss with you on what to do for withholding taxes from vendors in Thailand.

In Thailand, businesses are required to submit its audited financial statements annually with the Department of Business Development and the Revenue Department.

For the Revenue Department, the audited financial statements must be submitted with the Corporate Income Tax Return (PND. 50) within 150 days since the end date of accounting period.

For the Department of Business Development, the audited financial statements must be submitted within 1 month since the date of the company’s Annual General Meeting (AGM) or within 5 months since the end of accounting period. Aside from the audited financial statements, updated Shareholders List (BOJ. 5) and Form for submitting Financial Statements (Sor Bor Chor 3) must be submitted altogether.

Failure to submit on time, the company will have to pay penalty to the Department of Business Development and Revenue Department.

Contact MSNA for your business needs particularly on accounting, tax and audit to ensure that you file your taxes and audited financial statements on time.