Just recently, several duty exemption measures were announced by the Thai Cabinet to help manufactures whose companies were affected by flooding and located within declared disaster areas. Briefly, these duty exemption measures cover the following categories and apply to imports made during the period 25 October 2011 to 30 June 2012.

1) Machinery, components and parts, including related tools and equipment, that are imported to replace or repair machines damaged by the floods, subject to the following conditions:

i) The eligible business operator must be located in a declared disaster area.

ii) The eligible business operator may import itself or assign another party to import on its behalf. In such instance, the assigned party must present an approval letter to the Customs Department at the time of import entry.

iii) The machinery, components and parts, including related tools and equipment must be new.

iv) The Ministry of Industry will issue an approval letter authorizing the import and the importer must present this approval letter at the time of entry.

2) Completely built-up (CBU) passenger vehicles under HS 87.03 and CBU pick-ups under HS 87.04 with engine size not exceeding 3,000 cc, subject to the following conditions:

i) The eligible business operator must be an automobile manufacturer whose plant operations cover the complete vehicle production process, including
body-making, painting and vehicle assembly. They must also be located in a
declared disaster area. Manufacturers of vehicles assembled with used parts are
therefore excluded.

ii) Those models of CBU vehicles imported must not currently be manufactured at other local plants. Further details of terms and conditions of this exemption to be issued by the Office of Industry Economics.

iii) The eligible importer must be the automobile manufacturer itself.

iv) The Office of Industry Economics will issue an approval letter authorizing the import and the importer must present this letter at the time of entry.

3) Spare parts for vehicles that are imported for local production:

i) The eligible business operator must be a vehicle parts manufacturer that is located in a declared disaster area.

ii) The eligible business operator may import itself or assign other local vehicle
parts manufacturers to import on its behalf for further assembly. However, the
operator cannot assign to a used parts vehicle manufacturer. If the right to
import is assigned to another party, written notification must be made to the
Customs Department at the time of entry.

iii) The spare parts imported must be new, have never been used and be of the same type that the eligible business operator was producing prior to the flooding; moreover, the imported parts must be used for local assembly of vehicles or vehicle parts.

iv) The Office of the Economics Industry will issue an approval letter authorizing the import and the importer must present this letter at the time of entry.

Remark: Further details on rules/regulations relevant to these measures have yet to be announced.

Today, THAI ACCOUNTANT answers a question from one of our payroll clients regarding the options to buy stocks of a parent company by employees of a Thai affiliate company.

As employees of a Thai affiliate company of an overseas parent company in the USA, it is stated in the terms of our employment that we have an option to purchase stocks of the parent company at a price lower than the market price. When we use this option to buy the stocks, will we be required to pay for tax?

Answer:

An option to purchase stocks of the parent company at a price lower than the
market price is considered assessable income derived from employment within Thailand (income under Section 40 (1) of the Revenue Code), and considered as income derived from the posts in Thailand under Section 41, first paragraph. Therefore, you shall include the benefits received from the purchase of stocks at a price lower than market price as your assessable income for personal income tax purpose. The assessable income of Thai employees derived from the purchase of stocks of a parent company (these are shares which are not publicly traded in the Stocks of Exchange of Thailand) is calculated from the market value of the stock less the exercise price of the stocks on the day ownership is
transferred to the employees.

Furthermore, any contributions the Thai affiliated company made to the purchase of stocks in the parent company as part of the scheme are considered as benefits from the employment under Section 40 (1) of the Thai Revenue Code, and are thus required to be included as assessable income for the purpose of calculating personal income tax.

More to consider:

Gains derived from the sale of shares on a stock exchange in the USA are assessable income under Section 40 (4) (b) and are regarded as overseas sourced income, and therefore subjected to Thai income taxes if you are considered to be a Thai tax resident and the proceeds are brought into Thailand in the same year they were received, in accordance with Section 41, second paragraph.

When you received dividends on the shares acquired from the exercise of the stock options, it is also considered as overseas sourced income, according to Section 41, second paragraph, and therefore subjected to Thai income taxes if you are considered to be a Thai tax resident and the income was brought into Thailand in the same year the dividend was paid.

Learn more about personal income tax and Thailand taxation. Contact MSNA for further information.

This post about “RMF and SSF – Personal Income Tax Saving Strategy” was updated in 2021.

RMF stands for Retirement Mutual Fund.

A taxpayer’s personal income invested in one or more RMF’s (which are in compliance with Thailand Securities and Exchange Act) (combined with contribution to provident fund and/or government pension fund) is tax exempt up to 30% of his income in the year, but not more than Baht 500,000 when combined with other retirement funds for example SSF and provident fund. The following conditions apply to RMF:

1. The taxpayer has to buy RMF at least once a year and he must not cease buying RMF for more than one year continuously.
2. The taxpayer has to hold the RMF for at least 5 years from the date of the first purchase and redeem it when he is at least 55 years old unless the redemption is due to disability or death. And when the taxpayer has hold the RMF for more than 5 years and is at least 55 years of age, he can stop buying RMF, or if he wants to buy more RMF, he does not need to comply with no. 1 above any more.
3. The taxpayer must not receive dividends or any other money from the RMF during the holding period and must get the investment and all benefits back only on redemption.
4. The taxpayer must not get a loan or take money from the RMF fund that he has invested in.
5. The taxpayer must attach to his personal income tax return the certificate of RMF purchase issued by the company that manages the RMF.

SFF stands for Super Savings Fund.

Super Savings Fund is any mutual funds to promote long-term savings. A taxpayer’s personal income invested in one or more SSF’s which are in compliance with Thailand Securities and Exchange Act is tax exempt up to 30% of his income in the year, but not more than Baht 200,000. The following conditions apply to SSF:

1. The taxpayer has to hold the SSF for at least 10 years from the purchase date.
2. The taxpayer may use the SSF tax exemption during the years 2020 to 2024.

Contact MSNA, a Thai accounting company in Bangkok, for any tax or accounting questions.

THAI ACCOUNTANT answers a question about corporate tax refund in case of an entire
business transfer by one company to another company.

Our company in Thailand transferred its entire business to another Thailand based
company. The transfer includes all assets, liabilities, rights and obligations.
However, in the appendix of the business transfer agreement, it says that we,
the transferor, shall have the rights to a corporate tax refund that we were
waiting to get from the Thai Revenue Department prior to the business transfer.
Moreover, we informed the Revenue Department of the business transfer and that we
retained the right to the tax refund. Now, our company, the transferor, has
completed the liquidation process and they said that we cannot get the tax
refund. What is your opinion?

Answer:

First you have to understand that upon the completion of the liquidation process, the
transferor’s status as a juristic person and the liquidator’s authority are
terminated. Therefore, claimable rights arising out of the business transfer including
the rights to a tax refund, will belong to the transferee.

Contact MSNA for your accounting and tax questions. We can also help you on company registration or dissolution matters.

In Thailand, there are many rates of withholding taxes to be considered when making a
payment. It is the duty of every company or other business entities to withhold
taxes when paying for salaries, transportation, advertising, rent or most other
kinds of services and remit the tax to the Revenue Department. Even when you
make payment to overseas vendors, you have to submit withholding taxes if the
transactions meet the criteria.

Today, THAI ACCOUNTANT discusses the withholding tax when paying for the service fee of a bank.

For instance, when a company requested a bank to issue a check to its supplier to
settle a service fee on its behalf, the bank would then charge the company for
both service fee for the issuance of the check and stamp duty for which the
bank is liable (whether the bank charged it separately or as part of their
service fee). In this situation, the Revenue Department requires the party
making the payment to deduct withholding tax of 3 % on the sum of the service
fee and the stamp duty, regardless of whether they are paid separately or
together.

Another example is when a bank issued a bank guarantee for a company, and in return
charged the company a service fee and the stamp duty for which the bank is
liable (either charged separately or as part of the service fee) the company is
also required to deduct 3% withholding tax on the sum of the service fee and
the stamp duty, regardless of whether they are paid separately or together.

Contact MSNA for your questions on Withholding Tax and Thai taxation.

Specific Business Tax (SBT) – a kind of tax you need to know in case your company has an interest income.

Today, THAI ACCOUNTANT discusses a case of Thailand Specific Business Tax (SBT) on interest income received from guarantee deposits.

A company providing commercial, industrial, marketing and management
consultancy services was required to put cash with its client as a guarantee for
possible damages and liabilities that may arise in the course of providing the
services to the client. In return, the client will pay an interest on the
amount and in the event of damages, the client has the right to make deduction
from the guarantee deposit and related interest. Under this circumstance, such
interest income received by the company is considered as revenue subject to
Specific Business Tax. When the company gets paid for the interest, it has to
submit 3% of the interest received as SBT using Specific Tax Return (form SBT
40) within the 15^th of the following month. In doing so, another 10%
on top on the SBT has to be included in the SBT return as a municipal tax. In short,
the company has to submit 3.3% of the interest receipt.

Contact MSNA for your accounting and tax questions.

An MSNA’s accounting client has asked us a question about the VAT on purchase of
goods from a company overseas.

We just ordered some products from a US-based company. This US Company contracts a
Thailand-based manufacturer to produce these products and directly deliver to
us on behalf of them. Is there any VAT to be accounted for? How should we
recognize it?

Answers by THAI ACCOUNTANT:

Sales of goods between a Thailand-based company and a company based overseas with the
goods being manufactured and delivered in Thailand by a Thai manufacturer would
be considered as sales of goods in Thailand (under Section 77/2(1) of the Thai
Revenue Code) that is subject to 7% VAT.

For your case, since you ordered from a non-Thai company (US-based), you would be responsible to self assess the VAT on the gross payment, file a VAT remittance return (Form Por Por 36), and remit the VAT to the Revenue Department by the 7^th day of the following month in which the payment was made. Thus, a receipt issued to you by the
Revenue Department after you paid for the VAT can be used as your company’s input
tax invoice which is creditable against your output tax in the tax month when
VAT is remitted.

In the event that you did not account for VAT, both you and US-based Company would
be both liable to pay for the VAT deficit and a surcharge of 1.5% per month on
the tax deficit. Both of you will also be subject to a fine for not submitting
VAT.

Contact MSNA, Thailand Accountant, for your accounting and tax questions.

Today, THAI ACCOUNTANT got an inquiry about Thailand VAT on reimbursement for toll fees .

I own an agency for travel & tours around Thailand. We hire the vans and
driving services from another company. It is specified in our transport rental
agreement that we are responsible to pay for toll fees but in practice, their
drivers pay for the toll fees first whenever we have tours and we reimburse those
fees to them later. Should this reimbursement of toll fees be included in their
service fee and we have to pay VAT on it?

Answer:

As long as there is an evidence or proof that you are reimbursing the toll fees to
the vendor company based on the toll fees receipts, the toll fees are not
considered as part of the service fees and thus, not subject to VAT.

Contact MSNA for your Thailand accounting and tax questions.

Here are Corporate Income Tax and VAT questions from MSNA’s accounting client who owns his business in Bangkok, Thailand, about expenses on improvement of leasehold
property. Read on for the answers from THAI ACCOUNTANT.

We prepared ourselves for the flood. In fact, we improved pavements on the
vicinity and neighboring properties of our office and even constructed a wall
to protect our office from floodwaters. However, we are just leasing this
factory building. Can we include the expenses as deduction for our CIT
computation? How about the VAT for the building materials that we bought?

Answers by THAI ACCOUNTANT:

When you build a wall and improve private pavements and connecting pavements on your company’s rented plot of land, you have made an improvement of the company’s leasehold
property from which the benefits cover more than one accounting period; however,
expenses incurred for such improvement are not tax deductible (under Section 65
ter (5) of the Revenue Code). Such expenses would constitute capital
expenditure that is subject to depreciation (see Section 65 bis (2) of the
Revenue Code and Clause 4 (5) of the Royal Decree No. 145). Meanwhile, for
expenses incurred to improve the sections of the pavements that are not owned or
leased by the company, it is not considered as tax deductible expense as it was
not exclusively used for the company’s business according to Section 65 ter
(13) of the Revenue Code.

As for VAT, any input VAT paid by the company for purchasing materials and
services involved in the building of the wall and the improvement of company’s pavements can be offset against the company’s output VAT. However, any VAT paid on purchasing of materials and services involved in the improvement of the sections of the pavements that
are not owned or leased by the company, cannot be offset against the company’s
output VAT since it is not an expense incurred exclusively for the business of
the company.

For Thailand accounting and tax question, contact MSNA.

Staffing can be described as the recruitment, careful selection, development and providing proper compensation of personnel to perform their assigned roles in the workforce. Staffing solutions’ main purpose is to achieve the supply of skilled and qualified candidates and meet the organization’s business plans and visions. Thus, continuous staffing is essential for a business organization due to the promotions and career moves that occurs.

As part of MSNA’s services, we are assisting our clients by providing innovative solutions in building their productive accounting team.

We can provide, if required, on-the-job training for selected candidates and focus
on the essence of awareness, competence and professionalism in the areas of bookkeeping, accounting, audit, taxation and English communication in becoming an effective Accounting staff and Accounting Managers to meet the client’s needs and
expectations.

In some cases, prospective candidates will be screened and recommended through the following procedures:

1. Selection of possible candidates

2. Initial interview in Thai and English

3. Evaluation of ability and skills

4. Reference and background check

5. On the job training, if required by the client

6. Introduction to English communication skills (depending on client’s preference)

7. Assessment of over-all performance

8. Recommendation

For your accountant staffing needs, please contact MSNA to know more details on how we can help you.