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 answer a question from one of our accounting clients regarding the tax withheld by overseas-based company. Can they recover this cost?

In theory, the tax withheld by another country should be a tax credit to the Thai company, but only if the company makes profit and will have to pay tax, then this tax credit will lower the amount of tax check it has to pay to the Revenue Department.

Hence, to use the withholding tax as tax credit, the company needs the following documents to prove it:

1. The withholding tax certificate issued by the client overseas, and has to attach its Thai translation too.
2. The proof of payment for the service on the transaction.

Know more about Thailand withholding tax and how it works. Contact MSNA for your Thailand accounting and tax questions.

Today, we talk about the entertainment expenses or those expenditures incurred to entertain a client, customer or staff as part of generating income for the business as well as how to treat it as add-back portion according to Thai tax laws.

The Revenues and Expenses are the two vital items in an Income Statement report; the difference between these two items is called the Net Income. Revenues are the income received by a Company usually from sale of goods and services while expenses are the itemized deductions or costs incurred by the company during its course of business. In the Accounting point of view, all the relevant expenses incurred in carrying and doing the business is considered deductible, but in the Tax Laws’ point of view some or a percentage of these expenses are not considered deductible. One good example for this kind of expense is the Entertainment Expense.

The actual entertainment an expense is to be deducted from gross income. However, in the Thai Tax laws, the total deduction of entertainment expenses in an accounting period shall not exceed 0.3 % of total gross revenue or gross sales, or of the paid-up capital, whichever is greater. In addition, the total entertainment expenses allowed for deduction shall not exceed Baht 10 million.

Hence, if Company A incurred entertainment expense amounting to 10,000, total revenue of 100,000 and a shared capital of 200,000, the total add-back portion added to the accounting net income/loss to arrive for the total taxable net income/loss will be the difference between the entertainment expense allowed by law which is 0.03% of the shared capital or the total revenues whichever is higher. In such case it is 200,000 less 10,000 actual entertainment expense incurred per book or 4,000.

Contact MSNA for your Thai accounting and tax questions.

Today, one of our accounting clients has asked us about any tax implications of reimbursing phone and car expenses to their employees.

Question:

As a company policy, we have to reimburse phone bills of our employees provided that their personal phones are used in doing their jobs. When we pay our employees for such expense, do we have to withhold any tax? Please advise.

Answer:

Normally, when the company provides mobile phone allowance to employees, this benefit will be part of their income and therefore subject to personal income tax. But since it is in your company policy to pay phone bills to your employees who used their personal phones for the company’s business, this is not considered as employee’s benefits and therefore, is not subject to withholding tax. However, you just have to make sure that phone expenses were related to your company’s business and the employees provide the original bill. Phone expenses are to be reimbursed on an actual basis, but should not exceed THB 1,000.

Contact MSNA for your Thailand accounting and tax questions.

Private company, public company, juristic partnership, foundation and association or any other legal entity with accounting period ended 31 December 2013 are required to file the annual corporate incom tax (Por Ngor Dor 50, Por Ngor Dor 52, Por Ngor Dor 55) on this Friday, 30^th May 2014 (within 150 days from the accounting period ending date). For online filing, the due date will be extended for 8 days, and since it falls on a government holiday, the last day for online filing is on Monday, 9^th June 2014.

Please make sure that you file the tax forms correctly and accurately. Contact MSNA for your Thailand accounting and tax questions.

The Director-General of the Revenue Department has recently proposed some tax measures to the Minister of Finance. Such measures are as follows:

1. Extension of 7% standard rate of VAT for an additional year after the current reduction (from 10%) expires on 30 September 2014;
2. Extension of 20% corporate income tax rate for an additional year after the rate expires at the end of the 2014 accounting period.

Once it got approved by the Ministry of Finance, the proposals will be passed to the Cabinet for review.

Contact MSNA for your Thai accounting and tax questions.

Is there such thing as house tax in Thailand? If so, what is the tax rate? How about the land where the house is situated?

Answer:

In Thailand, the rate of tax is 12.5% of the actual or imputed annual rental value of the property of owners of land or house and buildings, used for any purpose, with the exception of owner-occupied residences.

If houses or buildings on the land are owned by a person other than the owner of the land, the owner of the buildings is liable for the tax.

Damaged buildings are subject to a reduced valuation in proportion to the extent of the damage. Reductions also made pro rata where buildings have become unoccupied during the year.

Exceptions to the house and land tax are as follows:

(a) Royal palaces owned by the Crown

(b) Buildings owned by the government and which are utilized for public purposes

(c) Public hospitals and educational institutions not operated for profit

(d) Religious buildings

(e) Buildings unoccupied for a period of 12 months or more

(f) Buildings used as the personal residence of the owner

The taxpayer is required to file a tax return within February of each year at the municipal or district office where the land and buildings are located. Tax must be paid within 30 days after notification of the tax assessment.

In case of failure to file a tax return, there will be a penalty of Baht 200.

Furthermore, a penalty of 2.5% of the tax liability will be imposed if the tax is paid during the first month following the due date for payment, rising to 5% for the second month, 7.5% for the third month and 10% for the fourth month. After the fourth month, the authorities have the right to seize and sell the property in order to collect the arrears.

Contact MSNA for your Thai accounting and tax questions.

Is there any exemption from personal income tax in Thailand?

Answer:

Yes, there are certain types of income that are exempt from personal income tax in Thailand. In respect of income from employment, money derived in the form of per diem, traveling expenses and certain fringe benefits such as medical treatment are tax exempt. The exemptions also cover the share of profit obtained from a non-juristic body of persons, maintenance income derived under moral obligation, corpus of a legacy or inheritance, income of a mutual fund or from the sale of investment units in a mutual fund, etc.

Contact MSNA for you Thai accounting and tax questions.

Small and medium enterprises in Thailand with fixed assets but not including land, with a value of no more than Baht 200 million and with no more than 200 employees, are entitled to the following special depreciation methods:

1. Machinery and equipment may initially be depreciated at 40% of cost and the remaining balance will be depreciated at the maximum rate of 20%.
2. Computer hardware and software may initially be depreciated at 40% and the remaining balance will be depreciated within three accounting periods.
3. Factory buildings may initially be depreciated at 25% and the remaining balance will be depreciated at a maximum rate of 5%.

SMEs with a paid-up capital at the closing date of the accounting period of not exceeding Baht 5 million and earning income from the sale of goods or provision of services of not exceeding Baht 30 million during the accounting period are entitled to depreciate machinery acquired during the accounting period are entitled to depreciate machinery acquired during the period from 1 January 2012 to 31 December 2013 at 100% of cost.

Contact MSNA for your Thai accounting and tax questions.

Today, we talk about the penalty and surcharge for late filing of personal income tax returns or in the event of wrong declaration of tax in the returns.

A penalty is imposed to a taxpayer by the assessment officer in the event of filing a wrong return or failure to file the return. The rate of penalty is 100% in the case of an inaccurate return and 200% for failure to file a return. The penalties may be reduced by 50% if the taxpayer submits a request in writing and the assessment officer is of the opinion that the taxpayer did not intend to evade tax and cooperated with the officer during the tax audit.

Hence, any person who fails to pay or remit tax within the due date is liable to pay a surcharge of 1.5% per month, or fraction thereof, of the amount of tax to be paid or remitted subject to a maximum equal to the amount of tax to be paid or remitted.

Contact MSNA for preparation and filing of your personal income tax returns in Thailand.