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.

One of the measures to boost energy efficiency in Thailand has just been approved by
the Thai Cabinet which is income tax exemptions of up to 25 % on acquisition of
certain assets. Such measures are summarized as follows:-

– Qualified persons are natural persons, limited companies, public limited companies and juristic partnerships.

– The tax exemption applies to expenditures on purchase of assets such as materials,
equipment or machinery which results in energy saving.

– The measures applies on the acquisition of assets made between 1 January 2011 and
31 December 2012 in accordance with rules, procedures and conditions to be
prescribed by the Director-General of the Revenue Department.

– Expenditures for vehicles and materials, equipment or machineries which are to be used with vehicles are not applicable for income tax exemption.

In addition to these measures, the assets must have the following criteria:-

– The assets must be unused.

– The assets must be purchased in a ready for use condition between 1 January 2011
and 31 December 2012.

– The assets must be certified as materials, equipment or machinery which results in
energy saving by the Department of Alternative Energy Development and
Efficiency within 31 December 2012.

– The assets must not be the types disqualified under this prescribed Decree. (Such
details have yet to be made known).

Moreover, deduction of depreciation of the assets must be made over a period of not less
than 5 years from the date that the assets are ready for use.

Thailand tax and accounting questions? Contact MSNA.

If your company in Thailand gives a loan to the director(s) of the company, or to another company or individuals, it is considered as regularly conducting lending activities in a way that is similar to commercial banks. Your company is subject to Specific Business Tax (SBT) on interest income received on the loan. If you use a cash basis in computing SBT, the SBT amount will be computed based on the actual interest income received. In the
event that a borrower failed to pay the loan, the lender is not responsible to
pay SBT on the accrued interest income of the defaulted loan amount. Read more
on Thailand specific business tax.

What if you do not charge interest on the loan? The Revenue Department upon auditing your accounts will assess the interest income for you using the market rate, or at least the rate that you should have got from a fixed deposit account at a commercial bank had you not loaned the money to the people. However, if your company has a loan from someone else or a bank, the interest to be assessed will be at least the rate you have to pay your creditor for the loan you got from them.

Interest income, recognized by you or assessed by the Revenue Department is part of operating income and it makes your net profit (if any) higher and thus your corporate income tax higher.

Contact MSNA for your questions on Specific Business 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.

In addition to the recently approved flood relief loans by the Thai Cabinet, the
Thailand Board of Investment (BOI) has offered tax relief measures to its
promoted companies operating in Industrial Zone 1, Zone 2 and Zone 3 which were
really affected, might be affected or were not affected by the present flooding.

1. For flood-affected BOI-promoted companies

General measures particularly the corporate income tax (CIT) exemptions/reductions are
being granted to BOI-promoted companies that have been affected by floods and for
those who wish to invest in temporary manufacturing facilities or in new
projects to restore their businesses in Thailand. Such tax relief incentives
for each Industrial Zone are as follows:

Customs duty exemption on imported machinery is also being granted to BOI-promoted
companies in all zones. Companies must submit their applications to the BOI
within the year 2012.

2. For new or existing BOI promoted companies not affected by the floods.

In order to maintain and gain more investors, tax incentives are also being
granted to new or existing BOI-promoted companies not affected by the flooding
and who wish to invest in new projects or expand current investment projects in
Thailand. Such corporate income tax (CIT) exemptions/reductions for each Industrial Zone are as follows:

Exemption on customs duty for imported machinery is also being granted for all zones. Companies must submit their applications to the BOI within the year 2012.

3. For specific businesses affected by the flooding

Automotive manufacturers in all zones are exempted from corporate income tax for 5 years with the tax exemption equal to 100% of investment (excluding land and working capital).

Meanwhile, for “eco car” manufacturers, the current corporate income tax exemption scheme already grants the maximum tax incentives and so there is no change.

For other industries, the BOI board will consider relief measures on a case-by-case basis.

4. For BOI promoted industrial estates/industrial zones operators affected by flooding

The BOI-promoted industrial estates/industrial zones operators wishing to invest in flood prevention infrastructure in the future, whether in current areas or zone extensions, will be granted a corporate income tax exemption equal to 200% of the investment (excluding land and working capital), valid for eight years.

Certain types of businesses are subject to Specific Business Tax (SBT) rather than Value Added Tax (VAT). Businesses subject to SBT must pay VAT on their purchases of goods and services but are not entitled to a VAT credit. The SBT ranges from 2.5 – 3.0 per cent on monthly gross receipts. When a monthly return is filed and SBT is paid, an
additional amount of 10% of the SBT payable is levied as a municipal tax.

Businesses that are subject to SBT

• Banking, financial and similar business
• Life Insurance
• Pawn Brokerage
• Real Estate
• Any other business specified by the Royal Decree i.e. business engages in repurchasing agreement (REPO) and factoring

Activities of certain entities are exempted from SBT such as:

• Activities of Bank of Thailand, Government Savings Bank, Government Housing Bank and Bank for Agriculture and Agricultural Cooperatives
• Activities of the Export-Import Bank of Thailand, the Industrial Finance Corporation of Thailand, Asset Management Corporation, Small Industrial Finance Cooperation and Secondary Mortgage Corporation
• Activities of National Housing Authority, Government Pawn Brokerage and Pension Fund
• Activities of selling securities listed in the Stock Exchange of Thailand

Specific Business Tax Base and Rates

Filing Specific Business Tax Return and Payment

SBT taxable period is a calendar month. SBT return (Form SBT 40) must be filed (and payment must be submitted) on a monthly basis by the 15^th of the following month
whether or not the business has income.

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.

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.