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Posts by Thailand BOI expert

Can a Foreign Lawyer Work in Thailand?

There are certain occupations that are prohibited to non-Thai nationals as prescribed by the Ministry of Labour. If you are a professional lawyer in your home country and would like to practice your profession in Thailand, you should be aware that foreigners are prohibited to work and provide services in legal counselling, litigation and others such as representing as a lawyer in all types of cases, acting on behalf of clients in legal matters, drafting contracts or making legal documents.

However, there are some exceptions depending on the situation. Foreign lawyers can be allowed for the following works:

  1. To perform duties of an arbitrator in an arbitration case;
  2. To provide assistance or representation in the arbitral proceedings in the event that the law applicable to the dispute being considered by the judge is not Thai law. This includes the following:
  3. Liaison for cases, research, compile and provide opinion on facts and legal issues to the arbitral tribunal or the parties;
  4. Notetaking during the hearing using shorthand or other techniques in the same manner;
  5. Presentation of opinions as an expert
  6. Works involving special technology used in recording sound, images and evidence produced in the hearing

Know more about your options when applying for a ThailandWorkPermit. Contact us for expert advice of English-speaking Thai Lawyers.

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Value Added Tax on Online Services

In accordance to the Revenue Code Amendment Act (No. 53) B.E. 2564 of the Revenue Department, non-residents or foreign online service providers and online platforms who earned more than THB 1.8 million per year from providing online services to non-VAT registered customers in Thailand must register for VAT, submit VAT returns and pay VAT by computing output tax without deducting input tax starting from 1 September 2021. Hence, the online service providers and online platforms are not required to issue a tax invoice or keep an input tax report.

Online services refers to service including incorporeal property which is rendered over the Internet or any other online network services that is impossible to deliver without information technology. Examples of online services includes:

  • Digital products such as mobile applications
  • Software programs
  • Digital images, videos and financial data
  • Digital music, films and games
  • Distance teaching via pre-recorded medium such as online courses
  • Electronic data management such as website supply, web-hosting, automated and digital maintenance of programs
  • Providing or supporting a business or personal presence on an electronic network
  • Search engine such as customized search-engine services
  • Listing services for the right to put goods or services for sale on an online market or auction house
  • On-demand streaming services where there is no interaction with the content provider
  • Advertising services on intangible media platform
  • Support services performed, via electronic means for arranging and facilitating the completion of transactions which may not be digital in nature such as commission fees to intermediaries, service fees to consumers and merchants for sale of products through the online marketplace

Meanwhile, the following are not categorized as an online service:

  • Telecommunication services
  • Payment channel or money transfer services
  • Electronic voucher delivered to the customer by email or SMS to be redeemed for a meal, a hotel stay or a theme park entrance
  • Live teaching services whereas the content of the course is delivered by a teacher over the Internet or an electronic network
  • Professional services involving human intervention and the nature of which is not essentially automated such as consulting services where advice from the consultant is communicated via email or video call.

On the other hand, online platform refers to market, channel or any other procedures that service providers use to deliver their services to the customers. It serves as an intermediary between the service providers and customers and facilitates the service transactions. It can be in the form of website, mobile applications or other channels.

Such online service providers and online platforms are required to register in the Simplified VAT System for E-Service (SVE). This system allows users to register for VAT, file VAT returns, and pay VAT and request for VAT refund electronically.

Make sure you are filing Thailand taxes correctly. Consult with MSNA’s Thai tax experts now.

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Credit Card for Companies in Thailand

The authorized directors of the company can open a business bank account for their company in Thailand right after they have registered the company. At MSNA Group, we are asked about credit card application for the company very often. In this post, we talk about opening a credit card account for business owners who are non-Thai nationals.

The conditions and requirements for the business owner to apply for a credit card depends on the issuing banks where they want to submit their application. In general, a business owner must provide the following:

  1. A copy of valid passport with visa and work permit
  2. Company registration documents
  3. Company Affidavit updated not more than 3 months from the date of application
  4. Shareholders list updated not more than 6 months from the date of application
  5. Personal Thai bank account statements updated from the last 6 months
  6. Company bank statements updated from the last 6 months

Thus, a foreigner can apply for a credit card under the company provided that he has obtained a visa and Thailand Work Permit to work as an authorized director of the company. ThaiLawyers are expert in registering a company, opening a corporate bank account and assisting in business credit card application. Contact us now for your best options.

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Thailand Personal Income Tax for Married Couples

Previously, our Thai Tax Expert talked about the changes made by the Revenue Department in the Thai tax laws, particularly in the Personal Income Tax rule for married couples. In this post, we want to give more information about the allowed deductible expenses, allowances and filing options for married couples.

Deductible Expenses

The expenses are divided equally among the spouses as the joint income proportion.

Allowances

Each spouse can use these allowances to calculate their income tax as follows:

  1. Child allowance – each spouse can use Baht 15,000 (if the child is studying at the qualified level, each spouse can use Baht 17,000)
  2. Home Loan Interest Deduction – each spouse is entitled up to Baht 100,000 of interest deduction. However, if they entered into a loan agreement together, each of them is entitled to Baht 50,000 of interest deduction.

Filing Options

A married couple may have 5 options in submitting their tax returns:

  1. Each spouse files his/her tax returns separately;
  2. They file their returns jointly, combining the wife’s income with the husband’s income and submit the tax returns under the husband’s name;
  3. They file their returns jointly, combining the husband’s income with the wife’s income and submit the tax returns under the wife’s name;
  4. They file their returns jointly but the husband files his Section 40(1) income separately;
  5. They file their returns jointly but the wife files her Section 40(1) income separately.

Need help in filing your Thailand personal income tax returns? Contact MSNA now.

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Types of Tax Clearance Certificate in Thailand

In one of our previous posts, we talked about Tax Clearance Certificate, which is a certificate issued by the Revenue Department to a non-Thai tax resident who is departing Thailand to indicate that he has already paid taxes or that he has provided a guarantor or securities as guarantee for tax liabilities and tax payable. In this post, we want to give more information about the types of tax clearance certificate in Thailand.

There are 2 types of Tax Clearance Certificate:

  1. P. 3 Tax Clearance Certificate

This is issued to a foreigner who is temporarily departing Thailand. It is valid for a single departure and must be used within 15 days from the issuance date. If he/she could not depart Thailand within the specified period, P.3 Tax Clearance Certificate becomes invalid unless he/she renewed it before the expiry date.

  • P.3.1 Tax Clearance Certificate

This is issued to a foreigner who enters and leaves Thailand on a regular basis due to his/her business or profession. It is valid for multiple departure within the specified period in the Tax Clearance Certificate but not exceeding 180 days from the issuance date. P.3.1 Tax Clearance Certificate cannot be renewed.

Consult with MSNA how to get a Tax Clearance Certificate.

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Covid-19 Subsidy Scheme for SMEs

As part of Covid-19 subsidy scheme to small and medium enterprises, the Thai government is giving three-month subsidies to SMEs registered in the Social Security system. Such SMEs are the companies with not more than Baht 5 million capital and their gross income has never reached more than Baht 30 million in any accounting year. The subsidy will be at a rate of THB 3,000 per employee per month for 3 months from November 2021 to January 2022.

In order to qualify for this subsidy, SMEs must register to join the scheme from now until November 20, 2021. However, if the company has not registered with SSO e-Service yet, they have to be registered in the system first before they can register to join the scheme. SSO e-Service is the online system of the Social Security Office whereas the company can also add new Thai employees when they join the company or remove their names once they resigned.

Know more about this subsidy and check out if your company can apply for this scheme.  MSNA Group has vast knowledge and experience in Thai accounting, tax and payroll matters. Contact us now for consultation.

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Representative Office in Thailand Wants to Earn Income

What do we mean by “Representative Office in Thailand wants to earn income”? Many foreign companies first started their operation in Thailand as a representative office. They thought they only wanted to do the business activities that do not involve earning incomes, which are one or more of the below. Later they want to start selling their products/services in the country.

The activities that are allowed to be engaged by a Representative Office:

1) To report the business movements in Thailand to the head office or affiliated company or the group company;

2) To give advice on various aspects pertaining to the goods distributed by the head office or affiliated company or the group company to the distributors or the users;

3) To seek for the supply source of goods or services in Thailand for the head office or affiliated company or the group company;

4) To inspect and control the quality and quantity of the goods that the head office or affiliated company or the group company purchased or hired to manufacture in Thailand;

5) To disseminate the information in relation to the new goods or services of the head office or affiliated company or the group company.

When the head office overseas wants to change its course in Thailand, they need to apply for a foreign business license to operate their income earning activities. Then they need to cancel their representative office status. A representative office cannot be transformed into a branch office. This is because a representative office does not need to obtain a foreign business license. It just needs to notify the Department of Business Development who will issue a document called “Certificate of the Identification Number of the Juristic Person established under foreign laws which operates in Thailand”. However, a branch office of a foreign company, to operate their business in the Kingdom, needs to apply for a foreign business license.

MSNA Group has been helping foreigners set up their branch office, representative office, Thai limited company and BOI promoted company for 25 years. Consult with us for your business needs today.

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As a Shareholder, How Much Are You Liable for the Company’s Debts?

We have a client who asked the question “As a shareholder, how much are you liable for the company’s debts?” Here is the detail of the question and our answer:

Question:

I bought the company (with Baht 4 M registered and paid up capital) from someone years ago. Now the business is not going well and I do not have THB 4 M to pay the company’s creditors. Should I reduce the capital of the company to 1M, or should I do anything?

Answer:

Your company’s capital has been fully paid up. You bought the shares from the old shareholders who had already paid up their shares. Therefore, as a shareholder you will not have to pay anymore into the company.


Your company’s registered capital has nothing to do with how much you (as shareholder) have to be liable if the company does not have enough to pay the creditors. If all the company’s shares have been fully paid up, the shareholders are not liable any more to pay the creditors of the company.

Look at how much liabilities on the company’s balance sheet are. They are the amount the company has to pay to the creditors. Then you need to look at the assets of the company and see how much you think you can get from them. The money you will get from all your assets is the amount you will have available to pay off your liabilities. If you can get less money from your assets than the amounts you owe others, then you will not be able to pay all the creditors. However, your creditors will be the one to take the company to the bankruptcy court. This is because the bankruptcy procedures in Thailand can be started only by a creditor against a debtor who is regarded insolvent and owes more than 2 million Baht in the case of a company (or more than 1 million Baht in the case of an individual). Please read here for the translation of Thailand Bankruptcy Act.

Consult with MSNA Group for accounting and tax services.

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Sick Leave for COVID 19 Cases

During this pandemic, our clients asked questions about sick leave for COVID 19 cases. How many days can employees take off if they are sick? Normally the Thai labor law allows employees to take up to 30 days of sick leave per year. What can they do if they are sick more than 30 days a year? Here is the question from one of our clients:

Question: Is there any government regulation to give more sick leave if an employee is contracted with Covid-19? For example, if an employee is found to be COVID positive and if the person does not have any sick leave balance, can he use the annual leave to cover and can the company deduct no pay leave if they have used up all their sick leave?

Answer: The company cannot make him use his annual leave for his COVID sick leave after he has used all his yearly allowable 30 days of sick leave. You may deduct his salary based on the number of sick leave days in excess of 30.

In this COVID era, the employee may file a form with the Social Security Office for a compensation for his loss of income. The company will have to issue a letter confirming he has used up his 30 days of sick leave allowed by law attached with his sick leave request form.

Contact MSNA Group for your questions regarding Thai Labor Law.

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Changing Accounting Year-End

When your company considers changing accounting year-end, for example from 31 August to be 31 December of every year, you need to get approval from both the Revenue Department and the Department of Business Development. Mostly, the documents you need for changing accounting year-end are as follows:

1. Copy of company affidavit;

2. Copy of Minute of Statutory Meeting (This is the document you made when you registered the company. It says whether or not the company has adopted Articles of Association) or copy of the company’s Articles of Association (which most likely says when the accounting year-end is);

3. Minute of shareholders’ meeting with the resolution to change the accounting year-end;

4. Copy of the latest Corporate Income Tax Return and audited financial statements

5. Others

For the Revenue Department you will need to write a letter explain why you want to change your company’s accounting year-end and say what your first accounting period will be once they approve your new accounting year-end. After the RD has checked all your documents, they will approve it and send a letter to the company within a few weeks/months.

After you got the letter of approval from the RD, you will submit online some forms with more or less the above set of documents for changing accounting year-end to the DBD.

Once the DBD approves, you will be able to change your accounting year-end. However, no set of accounts will be for more than 12 months. From the example, if your current accounting year-end is 31 August and you have been approved to change it to 31 December of every year, here are what you will do (now is September 2021):

1. The financial year ended 31 August 2021 – you need to submit the audited financials and corporate income tax return to the Revenue Department within 150 days from 31 August 2021. However, for the Department of Business Development, you need to hold an AGM to approve the audited financials within 31 Dec 2021 and submit it within one month from the AGM date.

2. For the following accounting period, because the DBD’s approval comes out before 31 December 2021, then you will have to close the accounts as of 31 December 2021 within about 5 months about end of May 2022.

Note that if the DBD’s approval comes out after 31 December 2021, then you will close the accounts as of 31 August 2022, then 31 December 2022.

Consult with MSNA Group, your trusted Thai accountants who speak fluent English and have been in the business servicing international business community for over 25 years.

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