Business people frequently have problems concerning the Thai taxation and cannot find the answers in the Revenue Code. Therefore, it is necessary for them to consult with the revenue department of Thailand. In some cases, you can ask an official verbally to get answers. However the best way is to write a letter detailing the tax question to the Revenue Department. The answer obtained with this process is called ‘’ruling’’.

Ruling is a letter written by people who have tax problems for consulting with Revenue Department to get their official answers. The following is how to get a Revenue Department’s ruling.

1. The letter should be addressed to the Director-general of the Revenue Department.
2. You should describe the problem clearly with the details and attach it with supporting documents.
3. If possible, you should ask the question in reference to the Revenue Code by specifying sections or terms in the code because the answer will refer to the terms and sections of the law.
4. You should keep a copy of the answer from the Revenue Department (ruling) and a copy of your letter for future reference.

However, ruling is only a legal opinion given by the legal team of the Revenue Department. It is not the law. Taxpayers are not obliged to follow it.

Contact MSNA for any tax and accounting needs in your doing business in Thailand.

Today, we got this inquiry regarding the expenses of a branch office in Thailand.

Question:

For the expenses of our Thailand branch office, can it only be paid from our branch office account or the head office can pay on its behalf and then invoice the branch office later for reimbursement?

Answer:

Expenses incurred by the branch office can be paid by anyone. The head office can pay expenses on behalf of the branch but please make sure the branch get all invoices and receipts from the vendors in its official name and address. Also, the branch must withhold taxes where applicable. Thus, then the branch has to pay back to the head office, you can just send a memo or an invoice.

Contact MSNA for your accounting and tax questions.

With regard to the recently issued Announcement of the Board of Investment No. 1/2557, the Thailand BOI is encouraging both BOI-promoted and non-BOI promoted manufacturers to invest additionally for the improvement of production efficiency. This improvement is to be achieved through 3 measures as follows:-

The announcement includes 3 measures as follows:

1. A measure to promote energy conservation, alternative energy utilization, or reduction of negative environmental impact. The investor must submit an investment plan detailing proposed upgrading of machinery to save energy, a plan to introduce alternative energy into the project or a plan to reduce damaging environmental impact according to the stipulated criteria.
2. A measure to promote investment to upgrade manufacturing technology and machinery to increase production efficiency. Investors must submit an investment plan detailing replacement or modification of machinery used in automated production lines.
3. A measure to promote investment in research and development to upgrade manufacturing technology and advanced engineering designs for improving efficiency. Investors must submit an investment plan for research and development or implementation of advanced engineer designs that conform to the stipulated criteria. Investors with large projects must invest no less than 1% of their total revenue for the first three years from the date of application submission in research and development or advanced engineering designs. For SMEs, projects must invest no less than 0.5% of their total revenue for the first three years from the date the application is submitted in research and development or advanced engineering designs.

Interested investors for incentives under these measures must operate businesses of a type that is specified on the BOI list of businesses that are eligible for promotion. The minimum capital investment requirement for each project must not be less than 1 million Baht, excluding land cost and working capital. For Small and Medium Enterprise (SME) projects, the BOI requires an investment value of Baht 500,000, excluding the cost of land and working capital.

The incentives given to approved projects in all zones include exemption from import duty on machinery and a three-year corporate income tax exemption based on the revenue of an existing project, and will not exceed 50% of the total investment value under this measure, excluding land cost and working capital. Project applications must be submitted by December 31, 2017 and the projects must be completed within three years from the date the promotion certificate is issued.

The investment promotion measures to improve production efficiency are in accordance with the National Economic and Social Development Plan No. 11 which outlines a strategy for restructuring the economy to ensure quality and sustainable growth, with the focus on improving manufacturing production efficiency and promoting the use of advanced science, technology and innovation while also furthering the use of clean energy and alternative energy.

Know more about Thailand BOI promotion and its benefits for your business. Consult with ThaiLawyers for getting BOI certificate, Thai company registration, visa and work permit application.

The Thai Immigration has recently announced the new regulations for extension of temporary stay in Thailand. Under the Order of Royal Thai Police No. 327/2557 which has been effective since 29 August 2014, the regulations that have been changed are as follows:

1. Foreign nationals of certain countries entitled for Visa Exemption for tourism purposes and permitted to stay in the Kingdom for 30 days upon arrival according to the Interior Ministerial Announcements, shall be granted extension of stay for one time and not exceeding 30 days from the expiry date.
2. In case that the application for extension of temporary stay is not approved due to incomplete qualifications and the foreigner has been granted extension of stay for 7 days in order to leave the Kingdom, such foreigner is not able to appeal for reconsideration of non-permission.
3. For the reason of study in a private educational institution particularly for Non-school system (such as Language School etc.) each permission of stay shall be granted for not longer than 90 days but the total permitted period of stay for this reason consecutively shall not exceed one year from the date of entry into the Kingdom.
4. For the reason of performing duties in a public charity organization, a foundation, a non-government organization, an association, a foreign chamber of commerce, the Federation of Thai Industries, in case of no certification letter by the relevant government department, each permission of stay shall be granted for not longer than 90 days but the total permitted period of stay for this reason consecutively shall not exceed one year from the date of entry into the Kingdom.

Contact ThaiLawyers for your visa and work permit questions.

Thailand BOI has recently approved the seven-year draft investment promotion strategy which will commence from 2015 to 2021. The new investment strategy will shift from broad-based to focused and prioritized investment promotion that will lead to the restructuring of the Thai economy. It will also move the country forward to become a higher-income economy with sustainable growth in the long run.

The new strategy will still offer promotional privileges to seven groups of industries: agro-industry and agricultural products; mining, ceramics and basic metals; light industry, metal products, machinery and transport equipment, electronics industry and electrical appliances; chemicals, paper and plastic; and services and public utilities although greater emphasis will be placed on high technology, high added value, research and development or design and environmentally friendly activities.

There are two types of incentives to be offered: (1) activity-based incentives and; (2) merit-based incentives. For instance, basic incentives will be offered in accordance with the types of activities. Additional incentives will also be provided for projects that will benefit the country, such as research and development, high-skill development, and the distribution of wealth to regional areas.

Meanwhile, the previous zoning policy, whereby Thailand was divided into three zones for investment purposes, will be revoked. It will be replaced by the promotion of new regional clusters in order to create new investment concentration in each region and stronger value chains.

Moreover, the new strategy will attach importance to both inbound and outbound investment promotion. This will help ease constraints in terms of domestic resources. It will also enable the country to seek new business opportunities for the Thai private sector, especially when the ASEAN Economic Community (AEC) goes into full effect and Thailand plays a greater role in the international arena.

In this regard, the first target countries include Indonesia, Myanmar, Vietnam, Cambodia and Laos. The second ones are China, India and other ASEAN nations, while the third group includes Central Asia, South Asia and Africa.

Contact MSNA for company setup, BOI promotion, Foreign Business License, factory license, visa and work permit application in Thailand.

One of our tax clients is planning to purchase a condominium unit in Bangkok. He asked us if there is any tax to be paid to the authorities. Today, we answer his question based on two scenarios: if the condominium will be purchased under his name or the company’s name.

1. When he buys it in his name, he needs to hold it for 5 years otherwise, he has to pay for Specific Business Tax (SBT) 3.3% of the selling price when he sells it on top of the 2% transfer fee and his personal income tax because it will be considered as purchasing a condo for business purpose. However, if he sells the unit after 5 years, he doesn’t have to pay for SBT of 3.3% although he needs to pay for the transfer fee and income tax.

2. When the purchase is done in company’s name, the company has to pay the transfer fee plus Specific Business Tax 3.3% of the selling price whether he sells it before 5 years or after. Although we are not yet sure how much corporate income tax the company has to pay in the future, tax will be based on the net profit of the company, part of which is the profit from selling the condominium. Furthermore, if he use it personally, when the Revenue Department comes to check the condominium and they know that he is staying there, they will make the company charge him for rent and this will be part of company’s income. The company can also use the depreciation of the condo as company’s expenses.

Contact MSNA for your accounting, tax and other business needs in Thailand.

Today, we outline the two sections of the Revenue Code which talk about the assessment of corporate income tax from gross income and why a Thai company may be liable to submit income tax on behalf of its oversea-based parent company.

Section 71 – Assessing tax from gross income

In the case where:

(1) a company or juristic partnership does not file particulars necessary for tax calculation under the provisions of this Part or does not keep a book of account or does not follow requirements prescribed under Sections 17 and 68 Bis or does not bring books of account, documents or other evidence to an assessment official for interrogation under Section 19 or Section 23, the assessment official shall have the power to assess tax at the rate of 5 per cent of gross income before deduction of any expenses or gross sales before deduction of expenses of the accounting period, whichever is higher. If gross income before deduction of expenses or gross sales before deduction of expenses cannot be determined, the assessment official shall have the power to assess by comparing with the gross amount of the previous accounting period. If the amount of the previous accounting period cannot be determined, he shall assess as he deems appropriate.

(2) If any company or juristic partnership does not record particulars or records incompletely or does not record accurately within an account as prescribed under Sections 17 and 68 Bis resulting in paying no tax or less tax, an assessment official shall have the power to assess missing tax at the rate specified in Section 67 and may order that person to pay surcharge of two times of the amount of missing tax.

(3) If any company or juristic partnership does not comply with the Director-General’s order which is exercised under Section 17, an assessment official shall have the power to order that company or juristic partnership to comply with the Director-General’s order within thirty days from the date of receiving the order of such assessment official or he may order it to provide a person to comply with the Director-General’s order at the office of the assessment official within the above time period. If the company or juristic partnership does not comply or complies incompletely, the assessment official shall have the power to assess tax at the rate and procedures as mentioned in (1).

The provisions of this Section does not prevent the rights of an assessment official to assess tax payment under the provisions of other Sections.

The assessment under the provisions of this Section may be appealed.

Section 76Bis – A company incorporated under foreign laws which shall be deemed to be carrying on business in Thailand

For a company or juristic partnership incorporated under foreign laws which has an employee, an agent or a go-between for carrying on business in Thailand and as a result receives income or profits in Thailand, such company or juristic partnership shall be deemed to be carrying on business in Thailand and the person who acts as an employee, an agent or a go-between for the business, whether he is an individual or a juristic person, shall be deemed to be the representative of the company or juristic partnership incorporated under foreign laws and shall have the duty and liability to file a tax return and tax payment in accordance with the provisions of this Part, with respect to only the above mentioned income or profits.

In the case mentioned in paragraph 1, if a person who has the duty and liability to file a tax return and tax payment cannot calculate net profits for tax purposes under the provisions of this Part, the provisions regarding tax assessment under Section 71 (1) shall apply mutatis mutandis.

The assessment under this Section may be appealed.

Contact MSNA for your Thai accounting and tax questions.

Today, we talk about the application for bringing in foreign experts and technicians to work for promoted business under the Investment Promotion Act B.E. 2520.

The Foreign Expert Services Division, Investment Services Center, Office of the Board of Investment, offers services at the One-Stop Service Center for Visas and Work Permits to facilitate the bringing in foreign technicians or experts, as well as their families, into the Kingdom to work for businesses promoted under the Investment Promotion Act B.E. 2520

The procedure has two steps:

STEP 1: The company submits an application at the Foreign Expert Services Division requesting approval of the positions of the foreigners.

This step involves submission of a document describing the company’s objectives and the necessity to bring in foreigners to work in specified positions, the personnel plan of the company showing the number of positions of foreign experts or technicians required and the periods during which foreign technicians or experts are required to work for the company.

Required documents:

1. Form for Requesting Permission to Bring in Technicians (F FR NI 01)
2. The company’s organization chart

The chart must show the organization’s lines of responsibility, specifying the positions for which approval is requested. The positions which have been approved must also be shown on the chart.

1. Form F FR NI 02 (Kor Kor Tor 41)

The following details are required:

– Position titles in English

– Job descriptions, covering all actual jobs required

– Job requirements

– Duration (The periods during which the foreigners are required)

1. A copy of Investment Promotion Certificate

A copy of the main Investment Promotion Certificate is required. In case of multiple certificates, only the ones relevant to the request should be attached.

1. A copy of the License to Commence Operations

In the event the company is not in a position to furnish the License to Commence Operations, a written explanation, stating the reason (s) and the current stage of the company’s business plan shall be required.

1. A copy of the Company Registration Certificate

The document must not be older than six months, as of the submission date.

1. A copy of a list of shareholders

An up-to-date list of shareholders and their shareholdings is required. For public companies, the document provided must contain pages showing the major shareholders and the ratio of Thai to foreign shareholders.

1. A copy of Balance Sheet and Profit & Loss Statement
2. All documents (except the ones issued by the Office of the BOI) must be signed by the authorized directors as specified in the Company Registration Certificate with the company seal affixed, or by a person duly authorized by the directors (with a Power of Attorney clearly specifying the authorized powers and duties and a thirty-baht duty stamped affixed).

Once approved, the company will receive a Letter of Approval for use as a reference in Step 2.

In case it was not approved, a written notification is issued to the company.

STEP 2: The company files an application at the Foreign Expert Services Division requesting approval to bring in foreigner to work. (Filing the approved positions)

The foreigners in question will need a non-immigrant category “B” visa to enter the Kingdom. They need to obtain the visa at a Thai embassy or consulate in a foreign country and to declare the objective of entering the country to work. Upon arrival into Thailand, their non-immigrant category “B” visa will be stamped by immigration. After that, they are required to request an extension of their stay in order to work.

Documents required in Step 2:

1. A company letter containing details and reasons

The letter shall mention the company’s intention to fill the specified positions with details of the individuals (names specified and justifications provided as to why such persons are suitable for the jobs) being proposed to fill the positions.

1. A Bio-data form

Once approved, a written notification is issued to the company, the Immigration Bureau and the Department of Employment

However, in the event that it is not approved, a written notification will be issued to the company.

Interested in obtaining BOI promotion in Thailand, contact ThaiLawyers for BOI application, Thai company registration, visa and work permit application for bringing in foreign experts and technicians to work for your company.

In the case where Thailand Board of Investment grants promotion to any applicant, the BOI may set conditions in the promotion certificate for the compliance by the promoted person in one or more areas as follows:

(1) Amount and source of capital;

(2) Nationality and number of shareholders;

(3) Size of activity including the types of products, commodities or services and the production or assembly processes and capacity thereof;

(4) Amount of local raw materials to be used;

(5) Nationality and number of workers, technicians and experts;

(6) Training and employment of manpower;

(7) Prevention and control of damaging elements to the quality of the environment;

(8) Period of time to commence the implementation of the promoted project;

(9) Period of time to place orders for the purchase of machinery;

(10)Period of time to import machinery into the Kingdom;

(11)Period of time to re-export the imported machinery after the termination of their use;

(12)Extension of time limits under (8), (9) or (11);

(13)Date of commencement of operation;

(14)Report on implementation of the project and operation;

(15)Report on the performance of the training provided by the foreign technicians and experts to the Thai personnel;

(16)Requirements that the products or commodities produced, assembled or exported conform to the standards prescribed either by the Board or other government agencies;

(17)Distribution of products or commodities produced or assembled or services rendered;

(18)Export of products or commodities produced or assembled;

(19)Requirements that the cash, bank guarantee, the Thai government securities or other securities deemed appropriate by the Board, be deposited with the Office for the purpose of guaranteeing the compliance with the conditions stipulated by the Board;

(20)Other matters relating to the provision of facilities to the competent official, granting, exercising or controlling of the rights and benefits under this Act.

Application for Thailand BOI promotion would be easier if you have a partner to guide you in the application process. Contact ThaiLawyers for BOI promotion, company registration, visa & work permit and further Thailand BOI questions.

Question:

We would like to operate a factory in the industrial estate. How do you usually process the application for a factory license, say in Chonburi area? How long will it take to complete the application?

Answer:

As our company policy, we will require the first payment of our fees then, we will send to you the list of preliminary documents that we need in order to prepare the application.

It should take us 3-5 business days to finish the application after getting all information and documents from your side.

After submitting the application to the Industrial Estate Authority of Thailand (IEAT), the official will contact you to have a meeting to visit the factory site within 1-2 weeks if all documents are complete, which we will work with you for the most convenient time for the appointment of the meeting and the visit by the official. We will also consult with you and provide all support on the phone. If necessary, we will send our team to Chonburi to liaise with the IEAT officials.

It may take the IEAT official up to a few weeks (in most cases, shorter than that) for finish the evaluation of the project. Then the IEAT will notify us of its approval and we will request for the fees to pay to the IEAT before the licenses are issued.

Once we obtain the license, we will need 2 business days to translate it for you.

Contact MSNA for company registration, BOI promotion application and factory license application in Thailand.