When an employee of a Thai company incurred expenses for an overseas business trip which can be refunded from the organizers abroad, the Thai company can payback its employee for the expenses incurred and reimbursed it from such overseas based company through the following:
All official receipts must be issued to the Thai company. Those receipts will be treated as expenses of the company so that when it issues an invoice to the overseas based company, such amount will be treated as income of the Thai company, which 7% VAT has to be added in the invoice; OR
All receipts (amount of expenses and VAT) will be recorded as Account Receivable from overseas based company so that when it issued an invoice to the overseas based company, it should use the wording “reimbursement at cost”. In this way, all the receipts that the company cannot claim back the 7% VAT will also be reimbursed. There is no need to add 7% VAT in the invoice because the company is reimbursing the whole amount plus VAT that appears on the receipts.
In Thailand, individual and corporate investors have different tax rates on interest based on profits from investment in debt instruments.
For domestic investors, withholding tax rate for individuals is 15% and they can choose not to include it in their annual filing of personal income tax. For companies or juristic partnerships, withholding tax rate is 1%.
For foreign investors, withholding tax rate is 15% for both individual and company or juristic partnership with exception to countries having Double Taxation Agreement (DTA) with Thailand, which may be subjected to a lower tax rate.
Contact MSNA for your accounting and Thailand tax questions.
Our monthly accounting and tax services include preparation of the compulsory input VAT and output VAT reports for the clients. We deliver everything as promised within the agreed upon deadline and make sure that the client’s accounts are prepared accurately. Thus, whenever we send the report to the clients, we ask them to check the report that we prepared because there have been cases where:
1. The clients go back and change the amount in some tax invoices and fail to inform us and send us the updated version
2. The clients did not send us all the tax invoices they issued during the month and assumed that they sent everything to us already then, the issue arises when some tax invoices where not included in the Sale VAT report which resulted to huge amount of Value Added Tax to pay to the Revenue Department
We therefore learned that we must get the clients to confirm that the monthly VAT report has the correct details of all the tax invoices issued during the month and the amounts are the same as the original invoices.
With our extensive knowledge and expertise in the Thai accounting and tax laws, we ensure that we provide valuable source of advice and solutions to our clients. If you are looking for an international standard professional services providers at reasonable prices, MSNA is your right partner.
One of our tax clients asked us on how to revalue the land and houses in Thailand. Normally, land ownership is not possible to foreigners but there are certain ways on how foreigners can own land in Thailand. Our client has set up a Thai majority owned company.
If the company is engage in the business of real estate (buy and sell of land and houses), the land and houses are treated as inventory so the appreciated amount will be income to the company. Thus, when the company revalues the land and houses, it has to book the gain/loss into the company’s profit and loss statement, whereas there are taxes to be paid in case of profits.
However, if the company is not selling real estate, the land is just a normal fixed asset. In summary, if you get the revaluation report and it shows that the land’s value has appreciated and you want to book the appreciated amount in the company’s accounting, it will be booked in the shareholders’ equity section of the Balance Sheet, not as an income in the Profit and Loss Statement. That means no tax to pay yet.
To explain it further, according to the Thai Revenue Department’s Revenue Code Section 65 Bis, value of assets other than value of stock on the last day of an accounting period shall be calculated in accordance with the cost or market price, whichever is lower, and such value shall be deemed to be the value of stock carried forward into the new accounting period, shall use the normal purchase price of such asset and in the case of appreciation in the value of the asset, such appreciation shall not be included in the calculation of net profit or net loss. If any item of assets is entitled to depreciation or depletion, depreciation and depletion shall be deductible in the calculation of net profit or net loss in accordance with the rules, procedures, conditions and previous rates applicable before the appreciation in the value of assets by deducting and only the remaining period and remaining cost of capital of the assets shall be deducted.
MSNA provides accounting, tax, due diligence, payroll and related business services. Contact us now for initial consultation.
