Thai Government imposes a duty exemption measure to help manufacturers in declared disaster areas whose plants and factories were inundated by the floods.

In summary, eligible flood-affected operators can be exempted from import duty upon meeting the criteria as follows:

1. The business operator has plants in declared disaster area.
2. The business operator imports the goods itself.
3. The imported goods are brand-new and have never been used.
4. The imported goods are the same or similar to those were produced by the business operator at its plants before being inundated by the floods.
5. The imported goods must be pre-approved for import by the Ministry of Industry or other authorized government agency.

The exemption covers imports commencing 1 January 2012 to 30 June 2012.

Further details on the implementation of the above mentioned measures and associated regulations have yet to be announced.

Contact MSNA for your Thailand tax and accounting questions.

The Thai Revenue Department (RD) has recently released a Departmental Regulation which allows a VAT operator to issue and deliver tax invoices electronically.

It can be noted that in the past, the RD does not accept the issuance and use of electronic tax invoice whereas a VAT operator is therefore required to deliver original tax invoice in hard copy to its customer. Thus, the delivery of tax invoice electronically via the internet or email does not comply with the VAT requirements.

Although still subject to the approval of the Director-General of the RD, this recently announced regulation can allow a VAT operator to prepare, deliver and keep its tax invoices or receipts in an electronic form. In this respect, a VAT operator can decide to use the electronic tax invoices for all its activities or only for selected activities as the VAT operator sees fit. The selected activities must be clearly identified in the VAT operator’s application submitted to the RD for approval.

In the case of recipients of electronic tax invoices who have already notified and undergone inspection by the RD for the purpose of maintaining their documents in electronic form in accordance with the Department Instruction No. Paw. 121/2545, they are no longer required to maintain the hard copy of the electronic tax invoices.

Required qualifications:

– Government agency or a limited company or public company which has a paid-up capital of THB 10 million or more on the day that the application is submitted.

– The applicant has a secure and reliable status, such as a good track record of tax payment, no prior tax evasion record or with net assets greater than net liabilities etc.

– Accounting records connecting the issuance of electronic tax invoices must be in electronic form.

– The applicant has good internal control and reliable process to prove that the electronic tax invoices and electronic receipts will contain the same accurate details when they are created, delivered and received. When an amendment has been made, the system must show all amended information to indicate the information prior to and after amendment.

For the RD’s consideration, the applicant’s accounting software system would need to be appropriately configured with the RD’s electronic tax invoice software since the implementation of the electronic tax invoicing system requires the use of secure and reliable system. Prior to submitting an application, a VAT operator who is interested to apply for and implement this electronic tax invoicing process should approach the Bureau of Electronic Processing Administration team to discuss the general technical requirements in further details.

Contact MSNA for your accounting and tax questions.

The Revenue Department of Thailand has recently announced a new regulation whereby tax payers will be required to use a new 13-digit Tax ID, instead of the current 10-digit numbers. Guidelines given are as follows:

1. Personal income tax payers are to use the Identification Number issued by the Ministry of Interior as their Tax ID number.
2. Juristic persons incorporated or licensed by the Ministry of Commerce are to use the registration number issued by the Ministry of Commerce as their Tax ID number.
3. Other tax payers are to use a 13-digit Tax ID number issued by the Revenue Department.

Use of the 13-digit Tax ID numbers is effective from 1 February 2012, and is to be used for tax return filing, tax payment, withholding deduction and remittance, and in all other contact with the Revenue Department and tax documentation. However, withholding tax certificates, tax invoices, receipts and invoices which have already been prepared using a 10-digit Tax ID number can continue to be used until 31 January 2013.

Contact MSNA for your Thailand taxation and accounting questions.

Today, THAI ACCOUNTANT answers a question about VAT Refund for Exporters.

Question:

I would like to make sure that if we export goods and can work with a 0% VAT, it doesn’t necessarily mean that we cannot claim recoverable VAT right? I mean the VAT we pay when purchasing goods?

Answer:

When you export goods, whatever it is, you don’t have to pay VAT (because VAT on export is 0%) and you can claim back your purchase VAT. However, it may take months before the Thai Revenue Department refunds the purchase VAT to you (assuming that all the purchase VAT amounts that you have are refundable).

Contact MSNA for your Thailand tax and accounting questions.

As of January 2012, below is the summary of tax relief measures which the Thai government has implemented for flood-affected persons and companies:

I. Personal income tax allowance for expenditure on repair of damage to houses and cars due to flooding;

II. Additional expense deduction for expenditure on replacement of machines due to flooding and a special depreciation method, for corporate income tax purposes.

I. Here is the summary of personal income tax allowance for expenditure on repair of damage to houses and cars due to flooding-conditions:

1. For immovable properties, including buildings, condominiums, and assets attached to such properties damaged by flooding (‘The properties’)

1.1 Eligible expenses

• Expenditure on repairing buildings, condominiums and assets attached to such properties, including on equipment and materials used for repair
• The properties above must have been damaged by the flooding between 25 July 2011 and 31 December 2011 and located in flood-affected areas as announced by the government.

1.2 Tax allowance

• THB 100,000

1.3 Eligible persons

• Owner, lessee or person using such properties for residential or business purposes or other benefit, who made payment of such expenses between 25 July 2011 and 31 December 2012.

1.4 Conditions

• If payment was made for repair of property in more than one place, the tax allowance can be claimed for expenditure on all properties, but in total is capped at THB 100,000.
• In cases where damage is covered by property insurance, the tax allowance is granted for expenditure in excess of the compensation received from the insurance company, but in total is capped at THB 100,000.
• The right to the tax allowance must be exercised in the tax years 2011 or 2012, or both, but in total is capped at THB 100,000.

2. Cars under Motor Vehicle Act damaged by flooding

2.1 Eligible expenses

• Expenditure on car repair, including on equipment and materials used in the repair.
• The cars must have been damaged by the flooding between 25 July 2011 and 31 December 2011.

2.2 Tax allowance

• THB 30,000

2.3 Eligible persons

• Owner or lessee under the hire purchase agreement for the repaired car, who resides in a flood-affected area as announced by government agencies and makes payment of such expenses between 25 July 2011 and 31 December 2012.

2.4 Conditions

• If payment was made for repair of more than one car, the tax allowance can be claimed for expenditure on all cars but in total is capped at THB 30,000.
• In cases where damage is covered by property insurance, the tax allowance is granted for expenditure in excess of the compensation received from the insurance company, but in total is capped at THB 30,000.
• The right to the tax deduction must be exercised in the tax years 2011 or 2012, or both but in total is capped at THB 30,000.

II. Meanwhile, additional expenses deduction for expenditure on replacement of machines due to flooding and a special depreciation method for corporate income tax purposes-conditions are as follows:

a. Additional tax deduction for machine replacement costs

– Tax exemption at 25% of amount paid to acquire machines used for manufacturing or providing subcontract manufacturing services

– The newly acquired machines must have been available for use between 25 July 2011 and 31 December 2012

– The newly acquired machines are to be depreciated over as period of at least 5 years.

b. Special depreciation method for the replacement machines

– Companies or partnerships affected by flooding between 25 July 2011 and 31 December 2011 and located in flood-affected areas as announced by the government, that buy or receive transfer of ownership in machines for use in their business can deduct 40% of the value of the machines on the date of acquisition

– The residual value is to be deducted in accordance with the conditions of the tax code. Hence, 52% of the value will be deducted as depreciation in the first year and 12% in each of the second to fifth years.

– Such machines must have been available for use between 25 July 2011 and 31 December 2012.

Note that the tax measures under a. and b. above are not available to taxpayers who are already entitled to other tax privileges.

Further details of rules/regulation relevant to these measures should be sought.

Contact MSNA for your accounting and tax questions.

Tax on Monthly Pension in Thailand received from overseas by foreigners living in Thailand.

Question:

I am residing here in Thailand with a retirement visa. I receive monthly pension from my home country. Am I required to file my taxes here in Thailand given the fact that this pension has already been taxed in my country?

Answer by THAI ACCOUNTANT:

The money earned overseas is considered as personal income subject to income tax in Thailand only:

1. if you lived here for at least 180 days in the year and;

2. the income was earned and brought into Thailand in the same year.

If you brought the part of income earned in 2011 into Thailand in 2012, that money will not be subject to Thai income tax. So if you put your entire monthly pension in a saving account and only bring some when needed, that is a good way to do it. If you happen to be checked by the Thai Revenue Department, you just need to be able to prove that the income was brought in on first-in first-out basis. Basically, during 2012, you should bring in the money that was earned before 2012.

Contact MSNA for your Thailand tax and accounting questions.

As a part of an initiative to promote competitiveness, below is the summary of the recently enacted Royal Decree No. 530 by the Thai government in relation to the Thailand’s Corporate Income Tax Reduction.

• Companies or juristic partnerships (including companies listed on Stock Exchange of Thailand):

– Accounting period commencing on/after 1 January 2012, tax rate = 23%

– Accounting period commencing on/after 1 January 2013, for the next 2 accounting periods, tax rate = 20%

• Companies or juristic partnerships, with fully paid up capital not exceeding Baht 5 million on the last day of the accounting period and revenue of no more than Baht 30 million from sales of goods or services during the accounting period:

– The portion of net profit of THB 1 – 150,000, tax rate = 0%

– The portion of net profit of THB 150,001-1,000,000, tax rate = 15%

– The portion of net profit over THB 1,000,000: tax rate = 23% for the accounting period commencing on or after 1 January 2012 and 20% for the accounting period commencing on or after 1 January 2013 onwards.

It should be noted that the income tax reduction to 20% for SMEs (companies or juristic partnerships, with fully paid up capital not exceeding Baht 5 million on the last day of the accounting period and revenue of no more than Baht 30 million from sales of goods or services during the accounting period) does not have any limited period as opposed to other companies or juristic partnerships.

In addition, the Royal Decree No. 531 has been enacted to reduce the corporate income tax for the companies listed on the Market for Alternative Investment (MAI), except those for which are still entitled to 20% corporate income tax rate. The applicable corporate income tax rate of 25% on the first Baht 50 million of net profit for the accounting period commencing on or after 1 January 2011 shall be applied to the following:-

(i) The company that has been listed prior to 1 January 2010 and entitled to the tax reduction under the Royal Decree No. 467 (20% corporate income tax rate), and then completed the utilization of the 20% rate for 3 consecutive accounting periods before 31 December 2011;

(ii) The company that has been listed prior to 1 January 2010 and never been entitled to the 20% corporate income tax rate under the Royal Decree No. 467;

(iii) The company that has been listed during 1 January 2010 to 31 December 2011.

Contact MSNA for your Thailand accounting and tax questions.

Today, THAI ACCOUNTANT answer a question from one of our avid readers. How to account restoration expenses of real estate development? See our answer below and how you can account the cost of the company for real estate restoration of your company here in Thailand.

Question:

We have real estate development projects located in the flood affected areas. How should we record project restoration expenses due to floods?

Answer:

Thank you for your inquiry. For the accounting treatment of the restoration expenses, my advice depends on the status of your project as classified as below:

Status 1: If your project has already been sold out, the restoration expenses should be charged to the income statement when incurred.

Status 2: If your project has been partly sold, the restoration expenses should be apportioned between the “sold” part and “unsold” part (inventory). Costs relating to the sold part should be recorded as expenses, while those relating to the unsold part should be recorded as a cost of inventory.

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

A tax incentive to encourage use of trusts for transactions in Thailand’s capital
market has recently been approved by Thailand cabinet. The measure exempts
trust settlers, trustees and trust beneficiaries from income tax, VAT, specific
business tax and stamp duty in income, receipts or instruments executed derived
from transactions performed in relation to an agreement establishing a trust in
accordance with the laws on using trusts for transactions in the capital market
(“in some cases”),

Further details on rules/regulations relevant to the measure have yet to be announced
by the Thai government.

For Thailand accounting and taxation, contact MSNA, Thailand accountant.

Under Section 65 bis (10) of the Thai Revenue Code, dividends received from companies
or mutual funds incorporated under Thai law are exempted from income tax if the
recipient of the dividend is:

(a) A listed company; or

(b) A company holding at least 25% of total shares/units with voting rights in the
dividend payer, provided that the dividend payer does not have a directly or indirectly held shareholding interest in the dividend recipient.

In other case, the recipient of dividends is allowed to treat only one half of the
dividend revenue as assessable income for corporate income tax purposes.

However, the dividend recipient must hold the shares/investment units for at least three
months before and after the date the dividend is received (the so-called 3+3 rule).

Recently the Thai cabinet approved a draft Royal Decree that included dividend income
tax exemption / reduction for new companies formed by amalgamation or transferees
under an entire business transfer scheme.

Under a measure approved by the cabinet, when the dividends are received from new
companies formed by amalgamation or from the transferee under an entire
business transfer scheme, the period of time that the dividend recipient held
shares or units in the amalgamating companies or the transferor of business
before the amalgamation or business transfer can be taken into account in
determining the length of the shareholding.

For Thai taxation and accounting, contact MSNA, Thai accounting company in Bangkok.