Stamp duties are taxed on instruments and not on transactions or persons. For the purposes of stamp duty, an instrument is defined as any document chargeable with duty under the Revenue Code.

The instruments liable to stamp duty include the following:

– transfers of land,

– a lease,

– inter alia,

– power of attorney,

– promissory notes,

– letters of credit,

– travelers cheques,

– stock transfers,

– debentures,

– mortgages,

– life assurance policies,

– annuities

Who are liable to stamp duty?

1. Only instruments listed in the stamp duty schedule are subject to the stamp duty and the persons liable to pay stamp duty are those listed in column 3 of the schedule. They are for example, the persons executing the instrument, the holders of the instrument or the beneficiary such as landlord, contractor, lender, insurer, etc.
2. If an instrument liable to duty is executed outside of Thailand, the first holder of the instrument in Thailand shall pay the duty by stamping at the full amount and cancelling within 30 days from the date of receiving the instrument. If he does not comply as such, the instrument shall not be deemed duty stamped.

If he does not comply with the provisions of Paragraph 1, any holder of the instrument shall pay the duty by stamping at the full amount and cancelling and then he shall be able to submit the instrument for collection, endorsement, transfer or claiming of benefit.

Any holder who acquires possession of the instrument in accordance with this Section before the expiration of the time limit specified in Paragraph 1 may pay the duty by stamping at the full amount and cancelling and he has the right of recourse against the previous holders.

3. If a bill submitted for payment is not duty stamped, the recipient of the bill may pay the duty by stamping at the full amount and cancelling and may either have the right of recourse against the person liable to duty or deduct the amount of duty from the payment due.

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

From the day the company has registered in the VAT system of Thai Revenue Department, the company director and the staff member have to always ask for an official receipt from the vendor when buying goods or services for company’s use otherwise, such expense cannot be used to reduce the company’s profit and may end up having to pay more tax. Even when buying goods or services from individuals (who are not companies), they still can issue a receipt or some kind of documents to prove that they received money from the company director or staff member. In this way, the company can have legitimate receipts that are tax deductible.

When asking for an official receipt, if the vendors (companies or individuals) are registered in the VAT system, they normally will ask to charge 7% VAT and because they charge VAT, they will also have to issue a tax invoice for you. It is important to know the information about Thailand VAT and tax invoice.

The company also needs to withhold taxes from vendors. Please read this article about withholding taxes from vendors for better clarifications.

Contact www.msnagroup.com for your Thai accounting, taxation and other business needs.

Today, we got a question from one of our accounting clients whom we also assisted in getting BOI promotion for their software business in Thailand.

Question: As you may have already known, our sister company (which is not BOI promoted) has proposed to develop an application that will enable users to download e-books in exchange for payment on a monthly basis. Would this activity be considered as sales of goods which I believe are VAT-exempt or will this be qualified for zero rate VAT in case our customer downloaded and used the e-book abroad.

Answer:

We verified it with the Thai Revenue Department and according to them, downloading of e-books is not categorized as sales of newspaper, magazine and textbook but it should be treated as a service which is subject to VAT. Hence, the zero rate VAT applies if such service is used overseas.

Contact MSNA, English speaking Thai accountants for your Thai accounting and tax questions.

Today, we got a question from one of our accounting clients.

Question:

We registered the company into the VAT system because I need it for my work permit application. However, are we obliged to charge VAT even though we only do export activities in Thailand? If so, what rate? Please advice.

Answer:

Under the value-added tax (VAT) system of Thailand, you are allowed to export goods and services tax-free, in short; you are entitled to a zero VAT rate. This means that you are not required to charge VAT and therefore, can claim back the input VAT (VAT that you paid). However, it takes time before you can refund your VAT because the Revenue Department usually does VAT audits to ensure that your claim is true and each transaction paper qualifies as an “export” activity per Thai VAT law.

Contact MSNA for your Thai accounting and tax questions.

Today, one of our prospective clients has asked us about registering a company that will deal with either manufacturing or importing of products in Thailand.

Question:

We want to register a Thai company with our Thai partners but we are not sure yet if we will just manufacture our own food products or import the food products from our suppliers overseas in order to sell them locally. Do we need to get a license from any government department after we register the company?

Answer:

In Thailand, the Food Control Division of Food and Drug Administration (FDA) is responsible for regulating food control activities before and after you start the operation. Here, we outline how FDA will control your activities before you start the operation.

Such activities include issuance of Manufacturing License and Importation License to manufacturer and importer respectively; registration of controlled food products before marketing; approval of food additives to be used in foods, labeling and advertising approvals.

In obtaining a Manufacturing License, plant lay-out is to be submitted for approval and plant inspection by food inspector is required before and manufacturing license is issued. This license is to be renewed every three years.

Meanwhile, if you want to import food products, a license is required in order to import food into Thailand. A licensed importer may import various kinds of food providing that they are approved by the Thai FDA. The designated storage or warehouse has to be inspected and approved by the Thai FDA before a license is issued. An importation license is to be renewed every three years, as well.

In the event that a food product, either you manufactured or imported is categorized as Specific Controlled Food, it must be registered. Analysis of the product as well as details of the process and ingredients is required for the registration process and the standard of these food products have to meet the standard specified in the Ministerial Notification.

If you intend to manufacture or import some products such as dietary supplement, that product is required to bear labels containing Thai language and subject to be approved by the Thai FDA before you sell it in the Thai market. Hence, food products in general must be labeled in accordance with the Notifications of the Ministry of Public Health No. 194 (B.E. 2544).

Moreover, if you plan to promote your product to the public, any form of advertisement for food through any media is also subject to Thai FDA’s approval. Whether you manufacture or import your products, please note that false or deceptive advertisement on the quality or benefits of your food products is prohibited.

Interested in setting up a manufacturing or importing company in Thailand? Contact ThaiLawyers for company registration, obtaining business license, BOI promotion and maintaining Thai work permits and visas of foreign expats.

Conditions for Trade and Investment Support Offices

1. Projects must be approved by relevant government agencies.

2. Annual operating expenses must not be less than Baht 10 million.

3. Must have a business plan and scope of business as approved by the Board as follows:

3.1 Monitoring and/or servicing affiliates including providing or letting office or factory building to company’s subsidiary

3.2 Advisory services on business operations except those engaged in buying and selling securities and foreign currency exchange. As for accounting, legal, advertising, architectural and civil engineering businesses, business licenses must be obtained from the Department of Business Development or related governmental agencies prior to submitting an investment promotion application

3.3 Information services on goods sourcing

3.4 Engineering and technical services, except those related to architecture and civil engineering

3.5 Testing and certifying standards of products, production and services that do not qualify for investment promotion under activity 7.21

3.6 Export trading

3.7 Business activities related to machinery, engines, tools and equipment such as:

(1) Importing for wholesaling

(2) Training services

(3) Installation, maintenance and repairs

(4) Calibration that does not qualify for investment promotion under activity 7.22 of the list of promotional activities attached to this Announcement

3.8 Software design and development that does not qualify for investment promotion under software activity

3.9 Wholesaling of products manufactured in Thailand

Rights and benefits

Only non-tax incentives shall be granted, which are as follows:

• Permit for foreign nationals to enter the Kingdom for the purpose of studying investment opportunities.
• Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities.
• Permit to own land.
• Permit to take out or remit money abroad in foreign currency.

Interested to register a TISO in Thailand, contact MSNA for consultation.

The Thailand Board of Investment may grant promotion to the investment project which incorporates appropriate measures for the prevention and control of harmful effects to the quality of the environment in the interest of the common good of the society and for the protection of mankind and nature. The BOI may also grant promotion to the investment project which is economically and technologically sound. Consideration will be given to:

(1) The existing number of producers and production capacity in the Kingdom and the size of production capacity to be created under promotion compared with demand estimates;

(2) The prospect for which such activity will expand the market for the products or commodities produced or assembled in the Kingdom and will encourage the production or assembly in the Kingdom;

(3) The quantity and proportion of the resources available in the Kingdom including the capital. Raw or essential materials and labor or other services utilized;

(4) The amount of foreign currency which may be saved or earned for the Kingdom;

(5) The suitability of the production or assembly processes;

(6) Other requirements which the Board deems necessary and appropriate.

Interested in Thailand BOI company registration, contact us for expert advice today.

Software industry continues its strong growth in Thailand due to strategic government policies, an increasingly high-technology infrastructure and an expanding technical labor force. The Thai government offers many benefits for firms engaged in software development, data center management and the production of animation and games. Inventors benefit from the country’s central location in Southeast Asia with competitive labor costs, educated and experienced workforce and domestic market with high growth potential.

Thailand is helping companies to grow through sound policies that provide critical infrastructure, ongoing training for IT professionals, and internship experience for recent software and animation graduates and access for financing for investors to undertake capital and labor upgrades.

There are great opportunities for investment in software, animation and gaming and data centers in Thailand due to strong government and private sector support which includes:

1. Business software
2. Animation and computer-generated imagery
3. Web-based applications and interactive applications
4. Entertainment software for mobile platforms, online games or Windows-based games
5. Multimedia video conferencing applications
6. E-learning content via broadband or multimedia
7. Embedded software
8. Data centers

The Thai government is committed to promoting the software, animation and gaming and date center sectors through incentives for foreign investment, direct support of software start-ups, ongoing professional training for developers and engineers and flexible loan programs that allow digital content firms to expand without capital constraints. This includes a range of fiscal and non-tax incentives for investors offered by the Board of Investment of Thailand.

Interested in setting up a software business in Thailand, contact ThaiLawyers Ltd. for Thailand BOI company registration.

Today, Thai Tax Expert answers a question from one of our accounting clients.

Question:

Our Thai company issues Purchase Order to a company overseas but everything will be manufactured in Thailand. In this instance, there will be invoice from overseas company to our Thai company but there will be no physical documentation of shipment from overseas to Thailand. Do we need to pay taxes in Thailand? What are the taxed and tax rates involved?

Answer:

Normally when you buy goods for use or sale in Thailand from an overseas supplier, you will have to import it and pay 7% VAT at the Customs.

In your case, because the goods will be produced in Thailand and sent to you domestically, you will have to submit to the Thai Revenue Department 7% VAT with Form PP.36 within the 7th of the following month. This is to pay VAT on behalf of your overseas vendor. This VAT becomes your input VAT in the month that you submit it and it will be used to offset the Output VAT that you have to submit normally. If your company is not VAT registered, you will still need to submit Form PP.36, but you will not be able to use that VAT. It becomes part of your product cost.

And the producer in Thailand should invoice your overseas vendor for the price of the product plus 7% VAT. However, it will be your concern whether or not they treat the transaction correctly.

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

Treaty of Amity companies operating in Thailand, whether as a branch office of a company incorporated under USA laws or as a Thai limited company with American majority shareholders, incorporated under Thai laws, have to comply with the Ministerial Regulations regarding minimum capital and timeframe to bring the minimum capital into Thailand issued on 30 August 2009 under the Foreign Business Act B.E. 2542.

Minimum Capital Amount

If the Treaty of Amity company operates businesses that are not in the schedules annexed to the Foreign Business Act B.E. 2542 (thus it is not required to obtain a Foreign Business Certificate), the minimum capital is Baht 2 M.

If the Treaty of Amity company operates businesses that are in the schedules annexed to the Foreign Business Act B.E. 2542 (thus it is required to obtain a Foreign Business Certificate before it can operate the businesses), the minimum capital must be no less than 25% of one-year average of the three-year operating expense forecast (that was submitted when applying for the foreign business certificate) and no less than Baht 3 M per business.

Time frame

For the Treaty of Amity companies that started their business operation or received their Foreign Business Certificate before 30 August 2009, they must bring in the required minimum capital in foreign currency to Thailand within 29 August 2019.

For the Treaty of Amity companies that started their business operation or received their Foreign Business Certificate on or after 30 August 2009, they must bring in the required minimum capital in foreign currency to Thailand within 29 August 2024.

Method of Compliance

For the Treaty of Amity companies that operate in Thailand as a branch office of a US company, the way to comply with this regulation is to bring in the capital by sending the money in a foreign currency within the above time frame and inform the Director of Good Governance Office of the Department of Business Development within 15 days from remittance.

For the Treaty of Amity companies that are Thai limited companies incorporated under Thai laws, when they apply for the Foreign Business Certificate, they will get it without reference to the level of their registered capital. The way to comply with this regulation is whenever they wire an amount of money in a foreign currency, intended to be part of the minimum capital per this regulation, they need to increase their registered capital, but they do not have to inform the Director of Good Governance Office of the Department of Business Development. The remittance of the required minimum capital (and thus, increase of the registered capital) must be completed within the above time frame.

Contact MSNA for information about Treaty of Amity companies.