Question: We are renting a car under the company’s name for business purposes. Can we put the rental costs under the company’s expenses?

Answer:

Yes, you can use the rental cost of a passenger car or a bus with seats for no more 10 passengers as a deductible expense for tax purposes in the amount not exceeding Baht 36,000 including VAT per month per car for monthly or yearly rental or not exceeding Baht 1,200 including VAT per day per car for daily rental.

Know more about the allowed deductible expenses for tax computation. Consult with MSNA’s accountants and tax advisors for your accounting and taxation needs.

The recently approved Ministerial Regulation No. 292 amended the personal income tax exemptions on income such as money or any benefits received from the Provident Fund.

Before the amendment, the exemption was available only upon the death of the income recipient. Now it applies where an employee retires at the age of 55 or older, or where an employee retires before reaching 55 years old, but the money is retained in the fund when he/she reaches age 55.

As assessable income is exempted from inclusion for computation of income tax payment, this amendment will ensure support of an employee after retirement.

Contact MSNA’s tax advisors for personal income tax preparation and submission.

Deductible expenses are personal expenses that may be deducted to calculate the Thai personal income tax depending on the category of assessable income of a taxpayer as follows:

• For the income under the categories of assessable income (1), (2) and for copyright under (3), a deduction of 40% is allowed subject to a maximum of Baht 60,000.
• For the income under the category of assessable income (3), other than for copyright and under (4), no deductions are allowed.
• For the income under the category of assessable income (5), the rates of deduction vary from 10% to 30% depending on the type of rented property.
• For the income under the categories of assessable income (6), (7) and (8), the rates of deduction vary from 30% to 85% depending on the type of income or type of business.

Moreover, the deduction of expenses in relation to assessable income under categories (5) – (8) may be made on an actual basis only if satisfactory evidence of the expenditure can be provided to the tax authorities.

Consult MSNA for Thai personal income tax computation.

For the purpose of Thai personal income tax computation, residents and non-residents taxpayers are taxed on their assessable income. This assessable income can be in any form of cash or in-kind benefits derived from employment or business carried on in Thailand or assets located in Thailand regardless of whether such income is received in or outside Thailand. Any income derived from outside Thailand will be subject to Thai personal income tax only if the income is remitted or brought into Thailand in the year in which the income is derived.

Assessable income is classified into 8 categories as follows:

1. Income from personal services rendered to employers such as salaries and wages (including income from stock options, other equity or work-related compensation and other fringe benefits);

2. Income from hire of work, office of employment or services rendered;

3. Income from goodwill, copyright, franchise, patent, other rights, annuity or income in the nature of annual payments derived from a will, juristic act or judgment of the Court;

4. Income in the nature of dividends, interests (including interest on bank deposits in Thailand), shares of profits or other benefits from a juristic company, juristic partnership or mutual fund, payments received as a result capital reduction, a bonus, an increased capital holdings, gains from amalgamation, acquisition or dissolution of juristic companies or partnerships and gains on transfer of shares or partnership holdings;

5. Income from lease of property, breach of hire-purchase contracts and installment sale contracts;

6. Income from liberal professions such as law, medicine, engineering, architecture, accountancy and fine arts;

7. Income from construction and other contracts of work whereby the contractor provides essential materials other than tools; and

8. Income from business, commerce, industry, agriculture, transport and any income other than as specified in (1)-(7) above.

Since different types of income have different rates of standard deductions, taxpayers may choose to itemize expenses instead of taking the standard deductions specified by law. Consult with MSNA for further information and expert advice on Thailand personal income tax computation.

One of our accounting clients has asked us about issuing invoice to reimburse the expenses that they initially paid on behalf of their clients and whether they need to charge VAT on top of the amounts.

As our response, we advised our client that there are two ways to issue invoice for reimbursement of expenses. One is that they need to keep all the receipts of expenses paid on behalf of their client and as their accountant, they should let us know about it before we prepare the monthly accounting so that we will not claim back the VAT for them and we will book them as accounts receivable and not as expense, then when they invoice their client to reimburse the amounts, they do not have to charge VAT.

Another way is that if it is not practical to get all the receipts of the expenses paid on behalf of their clients, they need to charge VAT when they invoice for the reimbursement.

Need help on accounting? Contact MSNA for your accounting, tax and other business needs.

Just recently, the Thai government has approved certain tax measures and official fees related to the funds to develop infrastructure projects. Here is a summary of these measures and fees:

1. For the transfer of immovable property registration, either a transferor or transferee, the rate of official fee is 0.01% capped at Baht 100,000;
2. For the registration of mortgage, the rate of official fee for the registrant is 0.01% capped at Baht 100,000;
3. For the lease of immovable property registration whether a lessee, sub-lessee, lessor or sub-lessor, the rate of official fee is 0.01% capped at Baht 100,000;
4. For the property rights with remuneration registration, the rate of official fee is 1%.

Although it has been approved, further details on the implementation of these measures and official fees have yet to be announced. Contact MSNA, English speaking accountants and tax experts for your accounting and tax business needs.

The Thai government has recently implemented Royal Decree No. 289 (B.E. 2012) which grants a 5-year personal income tax exemption for foreign film actors who earn income from foreign movies shot in Thailand and approved by the National Committee for Movie and Video. This exemption is applicable to income derived from 1 January 2011 to 31 December 2015.

It can be recalled that a draft ministerial regulation related to this exemption has been already approved by the government earlier this year in a bid to attract foreign movie producers and promote tourism in Thailand. Hence, a foreign film actor which is considered as a foreign tax resident during the exemption period shall be exempted from personal income tax only if:

1. Such income was derived from performance in a foreign film produced by a company or partnership incorporated under a foreign law; and
2. A filming permit has been granted in accordance with the laws relating to film and video.

Need help in filing your Thai taxes? Contact MSNA, English speaking tax experts for professional advice.

Why should you hire an English speaking accounting firm? We have some reasons for you:

1. Thai accountants who speak a few words of English want a very high salary, higher than a monthly fee you will pay an outsourced accounting firm who can communicate fluently with you in English.

2. With the kind of money you pay to a high quality English speaking accounting firm, which is pretty low, you cannot hire an in-house accountant who has a lot of experience and is knowledgeable enough in the Thai tax law.

3. Thai accountants move between companies easily. A lot of times they do not give you enough time in advance to find a replacement. They just leave a mess behind for the next accountant to clean up after them. With English speaking accounting firms like MSNA, your accounts will be done on time and smoothly. Accounting firms have staff turnover too, but they make sure that the clients’ accounts are uninterrupted.

Now, when you consider hiring an English speaking accounting firm, make sure you do not choose the ones that are very cheap. You know how much experience accountants cost? There is no way accounting firms can keep their good staff if they charge very low fees. The less fee you pay, the cheaper quality you get. (However, this does not mean you should pick the most expensive ones either.) Accounting firms have very high costs like your firms do too. If you are happy with the very low fee they charge you, you will be as unhappy with the quality of work they deliver. Each of their employees is responsible for tens of accounts. They make lots of mistakes and their supervisors do not have time to check their work. You will end up paying much more for tax fines and penalty than the amount you think you save from hiring very cheap Thai accounting firms. So choose wisely.

Contact MSNA for your accounting, audit and tax needs.

The Thai Revenue Department (TRD) has been implementing certain measures to promote investments and support to both local and foreign investors. In his recent statement, Director-General Dr. Sathit Rungkasiri has stated that the TRD has policies to support international investment by establishing a double tax agreement network, reducing corporate tax rates as well as implementing various tax policies to boost competitive capabilities for Thailand. However, TRD still ensures that the country’s benefits with regards to tax collection will be highly prioritized.

Once Thailand enters into ASEAN Economic Community (AEC) in 2015, the business operation from multinational enterprises will definitely increase. These business organizations will normally plan to reduce their tax burden to the least therefore, TRD is preparing to propose on international tax restructuring in order to strengthen Thai economy as well as to protect against improper tax avoidance such as a measurement on either of the following:

– Transfer pricing

– Thin Capitalization

– Controlled Foreign Company, and;

– General Anti Avoidance Rule

In spite of these measures, such policies must not cause too many obstacles in international investment.

Contact MSNA for your Thai accounting and tax questions.

When assets or spare parts were damaged in accidents, their salvage value can be treated as deductible expenses upon sale or disposal. If they are sold, the seller is responsible to collect VAT from the buyer based on the actual selling price, and include the VAT in the monthly VAT computation.

In the event that assets or spare parts are lost and such loss is not covered by insurance or a protection agreement, a company can claim the remaining book value of the lost assets or spare parts as an operational loss. The full amount of the claimed loss can be treated as deductible expenses only if the company is able to provide credible proof of the loss. However, any displacement of assets or spare parts is considered equivalent to a sale of such asset or spare parts, and therefore, VAT must be paid based on market value.

Contact MSNA, Thailand Accounting firm for your accounting and tax questions.