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.

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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.

When we have a branch office in Thailand, are we liable to pay taxes to the Thai government on overall income?

Answer:

No, branches of foreign companies in Thailand are liable to pay income tax at the normal Corporate Income Tax rate on locally earned income only. Hence, branch incomes that are remitted to the head office overseas are subject to an additional tax of 10%.

Branches of foreign commercial banks however are exempt from this tax in respect of their profits derived from the “out-out business”.

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In Thai personal income tax computation, there are several types of income that the taxpayer shall not include or may not choose to include such income to the assessable income.

1. Income from sale of immovable property

A taxpayer shall not include income from sales of immovable property acquired by bequest or by way of gift to the assessable income when calculating personal income tax. However, if the sale is made for a commercial purpose, it is essential that such income must be included as the assessable income and be subject to personal income tax.

2. Interest income

The following forms of interest income may at the taxpayer’s selection, be excluded from the computation of PIT provided that a tax of 15% is withheld at source:

a. Interest on bonds or debentures issued by a government organization;

b. Interest on saving deposits in commercial banks if the aggregate amount of interest received is not more than 20,000 Baht during a taxable year;

c. Interest on loans paid by a finance company;

d. Interest received from any financial institution organized by a specific law of Thailand for the purpose of lending money to promote agriculture, commerce or industry.

3. Dividends

A taxpayer, who resides in Thailand and receives dividends or shares of profits from a registered company or a mutual fund which tax has been withheld at source at the rate of 10%, may opt to exclude such dividend from the assessable income when calculating personal income tax. However, in doing so, taxpayer will be unable to claim any refund or credit.

Contact MSNA for your Thai accounting and tax questions.

Question:

We are selling domestic animal feeds and decided to put up a signboard just outside our shop. Are we liable for any taxes? Please advice.

Answer:

Yes, in Thailand, owners of signs or billboards, which display a name, trademark or product to promote, advertise or provide information about a business, are subject to the annual signboard tax. The rate of tax varies according to the size of the signboard and the language written on the board.

Owners of signboards are required to file signboard tax return (Phor Phor 1) with the Revenue Department office in your area on or before 31 March of each year and tax must be paid within 15 days from the date of:

1. The installation of such taxable signboard after March of each year;
2. The changes made to the existing signboard;
3. Receipt of an assessment order.

An appeal against the assessment order may be filed within 30 days.

In case of failure to file a tax return, a surcharge at the rate of 10% to 24% of signboard tax payable will be imposed.

Contact MSNA for your Thai accounting and tax questions.

A client recently asked MSNA a question about fines for late filing of tax returns.

I understand that taxes must be filed within the deadline. If the last day of filing falls on a holiday or weekends, does it mean we have to file taxes before the due date? And if we file it after deadline, how much penalty do we have to pay?

Answer:

Yes, you have to file your Thai taxes within the due date. Failure to file tax returns and remit tax within the prescribed due date shall be subject to surcharge and penalty as follows:

I. Surcharge

1. Surcharge is 1.5% per month or a fraction thereof of the tax payable, but in no case shall the surcharge exceed the amount of tax payable for late filing of the following tax returns:

– Personal Income Tax,

– Corporate Income Tax (not including mid-year tax),

– Withholding Income Tax,

– Value Added Tax (VAT), and

– Specific Business Tax (SBT)

2. For Mid-Year Corporate Income Tax, surcharge is 20% of the tax payable or the deficient tax as the case may be.

3. House and Land tax for the year paid after the due date shall be subject to a surcharge of up to 10% if made within four months after the due date. If the tax is overdue for more than four months, the District Officer is empowered to attach the property on which the tax is due for the purpose of selling it by auction and applying the proceeds from sale for settlement of the tax due.

4. Municipal Tax for the year paid after the due date shall be subject to a surcharge at the rate of 10% to 24% of the tax due.

5. Signboard Tax for the year paid after the due date shall be subject to a surcharge at the rate of 10% of the tax due.

6. With regard to Social Security Fund, remittance of the contribution for the month after the due date is subject to a surcharge at the rate of 2% per month of the contribution amount due.

II. Penalties

1. For Corporate Income Tax, the maximum penalty of 200% of the tax due shall be imposed only in the case of tax assessment following the audit by the Revenue Department.
2. For Value Added Tax and Specific Business Tax, penalties will be:
   1. Up to 200% of tax due in case of failure to file a tax return
   2. Up to 100% of the shortfall in the tax due following an inaccurate tax return.

NOTE: The above penalties may be waived or reduced according to the regulation prescribed by the Director-General with the approval of the Minister of Finance.

III. Fine

Failure to file a return will be subject to a fine of not exceeding Baht 2,000.

However, in the event that the deadline of filing a tax return falls on a weekend or an official holiday, you can file and pay taxes on the next working day. This would not be regarded as late filing.

Contact MSNA for your Thai accounting and tax needs. As your tax agent, our well-experienced English speaking accountants will make sure that your taxes are prepared and filed accordingly.

Today, we got a question from one of our avid readers regarding written off fixed assets in Thailand.

What is the accepted method of writing off assets like computers, office equipment, etc., in Thailand? Is it straight line depreciation over a fixed period?

Answer:

Most fixed assets are written off over 5 years.

Computers can be depreciated 40% on the acquired date. The rest of 60% will be depreciated over 3 years.

Leasehold improvement must be depreciated over 20 years, in general.

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The Revenue Department has recently set the condition for a Specific Business Tax exemption on certain businesses. Under the Royal Decree no. 571, such conditions are as follows:

On Employees Loan

– Interests from loans to employees by policy of a provident fund or other similar funds which give loan to employees for the company or registered ordinary partnership.

On Inter-company Loan

– Inter-company loans between companies not carrying on business of commercial banks, finance companies including payment for bills of exchange issued by or deposits made to financial institutions under the law on the financial institution in return for normal interest rate.

Contact MSNA for your Thailand accounting and tax questions.