The National Anti Corruption Commission (NACC) of Thailand has recently issued a notification that directly affects businesses in Thailand that are contractors of Thai government agencies.
Effective from 1 April, 2012, individuals and companies that have projects with Thai government agencies are required to prepare and submit the “Revenue and Expense Accounts” to the Thai Revenue Department according to the Notification of National Anti-Corruption Commission Concerning Principles and Methods of Preparing Revenue and Expense Accounts of Project between Individual/company and Government Agencies B.E.2554 (A.D. 2011).
ThaiLawyers.com has summarized the essence of this notification as follows:
Value of project to be affected by this notification
1 April 2012 – 31 March 2013 => Any projects worth Baht 2 M or more.
From 1 April 2013 => Any projects worth Baht 500,000 or more.
In this notification:
“Contractors” means natural or juristic persons who have projects with government agencies.
“Government agencies” means a ministry, bureau, department, regional administration, local administration, state enterprise, public organization, administrative office of constitutional organization, or other state agency or any office where operates public business by law and funded or financial or asset invested by the government.
“Project” means
- Contract for procurement of goods and services
- Concession agreements,
- Agreements of government agencies for funding of researches
- Agreements of government agencies for funding of any activities.
It includes all memorandums of understanding or annexes or revisions to the essence of the contracts after the Notification becomes effective.
Exceptions of the Notification
- This notification does not affect the projects signed before 1 April 2012 unless there is an amendment on the essence of the contract.
- It does not affect the contracts made between 2 government agencies, except the ones that have to file corporate income tax returns.
- It does not affect the contracts with overseas contractors who are juristic persons established under foreign law with no branch, agents or representative in Thailand and whom the contracting Thai government agency makes payment directly to abroad and the goods or services are delivered in Thailand.
Method of Payment:
Contractors have to receive or make payments via current bank accounts (except payments under Baht 30,000).
How and When to File
Contractors are required to electronically submit the Revenue and Expense Accounts to the Revenue Department within below timeline.
(1) Individual contractors:
(a) In the case where all receipts and payments of the projects are completed in the same tax year, the contractors have to submit the accounts together with Personal Income Tax Return of that year.
(b) In the case where all receipts and payments of the projects are not completed in the same tax year, the contractors have to submit the accounts of each tax year together with Personal Income Tax Return of the year.
(2) Company contractors:
(a) In the case where all receipts and payments of the projects are completed in the same fiscal year, the contractors have to submit the accounts together with Corporate Income Tax Return at the end of that fiscal year.
(b) In the case where all receipts and payments of the projects are not completed in the same fiscal year, the contractors have to submit the accounts of each fiscal year together with Corporate Income Tax Return at the end of the fiscal year.
However, if the contractors have not been approved by the Revenue Department to file taxes online yet, they can submit the Revenue and Expense Accounts together with the paper tax returns.
Contractors are required to submit the Revenue and Expense Accounts to the Revenue Department as per (1) and (2) until the ends of obligations under the projects.
Audit of Revenue and Expense Accounts by the Revenue department
If the Revenue Department finds that the contractors do not submit the accounts, it shall report to the NACC for further appropriate action.
The Revenue Department may audit the accounts of projects during the audit of companies’ annual financial statements or audit of personal income tax or corporate income tax, and if it finds that a contractor may engage in corrupt activities of state officials or does not present the accounts properly or completely, it shall report to the NACC for further appropriate action.
Penalty
The contractors who fail to submit the Revenue and Expense Accounts nor fail to present proper and complete accounts under this Notification will be considered lacking qualifications to be contractors with government agencies. Government agencies are prohibited to enter into any contract or have a project with the contractors who are on the blacklist.
Measures for Government Agencies
- Government agencies that process their procurement via e-Government Procurement (e-GP) are required to record data of their contractors (who are required to submit the Revenue and Expense Accounts) in that electronic system as well.
- Other government agencies that do not process their procurement via e-GP need to report data of their contractors (who are required to submit the Revenue and Expense Accounts) to the NACC and Revenue Department.
Government agencies shall define conditions and qualifications of individuals or companies that wish to engage in their projects as follows:
(1) Individual or company contractors neither fail to submit the Revenue and Expense Accounts nor fail to present proper and complete accounts under this Notification;
(2) Individual or company contractors who engage in e-Government Procurement (e-GP) need to register themselves for e-GP at Thai Government Procurement website; and
(3) Contractors have to receive or make payments via current bank accounts (except payments under Baht 30,000).
What contractors have to do
- Prepare and submit the Revenue and Expense Accounts together with Corporate Income Tax Return at the end of the fiscal year in format annexed to the Notification (Form Bor Chor 1).
- Record the receipts and payments of each project separately (no need to submit).
- Keep the records and supporting documents at the place of business for at least 5 years or until after the audit by the NACC has been completed (in case of getting audited before the 5 year period).
- Receive or make payments via current bank accounts (except payments under Baht 30,000).
- Register in e-Government Procurement (e-GP) at Thai Government Procurement website.
- Register with the Revenue Department to file taxes online (optional).
Contact MSNA for any questions you have concerning your doing business in Thailand.