Today, a client whom we helped register a 100% Myanmar owned export company in Thailand asked us if it is necessary for them to be registered in the VAT system. Here is our response:

Normally, a company is required to register into the VAT system if the gross sale has reached 1.8 million Baht in a year or the company hires foreigners and needs to apply for a work permit because the VAT registration certificate is one of the documents requested by the Thai immigration bureau. Anyway, the company may choose to register into the VAT system before that. And once you are registered into the VAT system, you have to submit your monthly VAT returns (PP.30) with or without sale transactions. You can decide to apply for VAT refund from the Revenue Department later but keep in mind that the tax officer will request to see all supporting documents before giving you the refund.

Thai Lawyers can help you register the company into the VAT system. MSNA Group can handle bookkeeping, accounting, tax filing and consultation on Thai taxes. We will ensure that you’re your documents are properly kept in files for easier reference when tax authorities request to see them. We can also assist you in representing your company with the Revenue Department especially when you apply for VAT refund. However, we will not be responsible to speed up the process because it is up to the tax officials when they can finish checking your documents and consider your application to claim VAT. You may find helpful information on what to do once a company is registered in the VAT system, and how withholding taxes in Thailand work.

In Thailand, when a VAT registered company is in the business of selling goods (wholesale or retail), the value added tax (VAT) point occurs when you deliver the goods or when you get paid whichever comes first. VAT point determines when to issue a tax invoice. For more clarification:

1. When you deliver goods, even when you have not received payment, you need to issue a tax invoice.
2. If a customer just makes a deposit, though you have not delivered the goods, you need to give them a tax invoice (and a receipt) for the amount you got.

Now, for service businesses, when to issue a tax invoice? The VAT point occurs when you receive payment, whether or not you have rendered the service. So make sure you issue a tax invoice and a receipt for the amount of money you receive. If you just send an invoice to your client asking them to pay you, you don’t have to prepare a tax invoice yet.

Please note that not everyone can register in the VAT system. Some business activities are exempt from VAT. Others can register in the system, but if they have not reached Baht 1.8 M in gross sales, they may choose not to be in the VAT system yet.

If an individual or a company is not registered in the VAT system, they cannot issue a tax invoice and they cannot claim the 7% VAT they pay to vendors.

Contact MSNA Group for tax planning, accounting and tax compliance services.

Normally when you (as a company) rent an office space, you need to deal with rent withholding tax of 5% (to submit to the Revenue Department in the following month). You will pay the landlord only 95% in cash amount and prepare a withholding tax certificate for the amount of 5% that you withhold and give it to the landlord. If the landlord is a company, they may not have any problem receiving the amount of 95% from you in cash and 5% in a withholding tax certificate because they can use the withholding tax certificate as a proof of their prepaid corporate income tax at the end of their accounting year. However, when the landlord is an individual, many of them normally do not report their rental income on their personal income tax return. They will demand 100% rent amount from their corporate tenants. They will make you submit the rent withholding tax from your own pocket. If you do not accept it, they will probably not want to rent their space to you. Of course, they are wrong. You are just doing what the Thai tax law requires you to do. Most individual landlords whose properties are in high demand will not care. They want their rent in full amount or else you should find another place to set up your shop or office. It is your choice to see what they will do if you give them only 95% payment and a certificate showing the rent withholding tax of 5% . Most tenants will give in because they have already spent a lot of money renovating the space to suit their business needs and cannot afford to move to a place whose owner will accept that they need to pay tax on their rental income. Some individual landlords specify in the rental agreement that the tenants will pay for any taxes, including withholding taxes. In that case the tenants know from the beginning that the 5% rent withholding tax will come from their own pocket.

Talk to Thai accounting and tax experts at MSNAGroup today for the best advice.

Does the nature of your business involve industrial chemicals? Are you planning to take your operation to Asia or specifically to Thailand? Do you wonder if this is possible? The answer is YES and we can assist you to make it happen. Your industrial chemicals business can benefit from Thailand BOI company registration as long as your products are not paint, cleaning products, automobile lubricants, compound chemical fertilizers, insecticides, herbicides or cement based adhesives.

There are the advantages of enlisting your business under BOI (Board of Investment) in Thailand.

• Corporate tax amnesty for 3 years
• No import tax for machinery
• No import tax for raw materials for one (1) year (can be extended according to BOI rules & eligibility)
• Other non-tax incentives

Read Thailand BOI benefits here.

Don’t worry even if your industrial chemical products are similar to those mentioned above. You can still operate your factory here without Thailand BOI.

Sounds interesting and beneficial for your industrial chemicals business? Drop us an email info@MSNAgroup.com. Get an advice from the experts in Thailand BOI company registration. MSNA Group of companies are experts in providing consulting to foreigners wishing to set up their business operation is Thailand at very reasonable prices for world class services.