If you are a visitor to Thailand, you shall be qualified to a VAT refund on goods that you purchased from retailers participating in the VAT refund scheme provided that you meet all the eligibility criteria and conditions as stated below.

Before departing Thailand, travelers will be eligible for a VAT refund if the following conditions are met:

• You are a non-Thai resident and not staying in Thailand up to 180 days in a current tax year;
• You are not a pilot or a cabin crew of any airline departing Thailand on duty;
• You purchased goods from stores displaying “VAT Refund for Tourists” sign;
• VAT refund only applies to goods taken out of Thailand with the eligible traveler within 60 days from the date of purchase; and
• You leave Thailand via an international airport.

If you wish to claim a refund of the tax paid on eligible goods, a proof of export is required. To claim for a VAT refund, contact Customs officials at the airport before checking in. The following documents must be available for inspection by Customs officials:

1. A valid passport;
2. VAT Refund Application Form (VAT Form 10);
3. An original receipt/tax invoice;
4. Goods that go with the original receipts.

If the declarations for VAT refund are correct, Customs officials will sign and stamp the VAT Refund Application Form, affix a sticker to the luggage containing the eligible goods, and return everything to you. After clearing Immigration for a VAT refund, the VAT Application Form approved by the Customs must be presented to the Revenue Department officials. If a claim is for small and expensive items such as jewelry, gold, watches, pens, glasses, etc, these items must be available for inspection at the VAT Refund Office again.

Thai Customs also remind travelers to allow extra time at the airport to have application stamped and eligible goods verified, keeping in mind that other passengers are also requesting these services. You should arrive at the airport even earlier than the time recommended by your airline to be at your boarding gate on time.

Contact MSNA, Tax Advisors for consultation on Thai taxation and further information about Tourist VAT Refund.

The Thai government has recently approved a new personal income tax structure which reduces the existing maximum rate of 37% to 35%. The new rates will take effect in the 2013 tax year.

The recently approved starting tax rate is 5%-10%. For more information, the new tax rates are summarized as follows:

Yearly net income (Baht) Personal Income Tax rate

Existing rate NEW rate

• 0-150,000 Exempt Exempt
• 150,001-300,000 10% 5%
• 300,001-500,000 10% 10%
• 500,001-750,000 20% 15%
• 750,001-1,000,000 20% 20%
• 1,000,001-2,000,000 30% 25%
• 2,000,001-4,000,000 30% 30%
• 4,000,001 upward 37% 35%

Please note that implementation of the above new tax rates are yet to be announced by the Thai Revenue Department. Old existing tax rates will still be applied until further notice. Contact MSNA Tax Advisors for Personal Income Tax computation and submission.

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.

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.

Life insurance premium is one of the specific allowances that are allowed to use as deduction for computation of a taxpayer’s personal income tax in Thailand.

Life insurance premiums actually paid by taxpayer or his/her spouse on the taxpayer’s own life in amount not exceeding Baht 100,000 are allowed as a deduction for the calculation of personal income tax as long as the insurance policies are for a minimum period of 10 years and the insurer’s life insurance business is registered in Thailand.

For life insurance policies carried out from 1 January 2009 on wards, the amount of any health or accident premiums enclosed will not be deductible. Additionally, if the policy includes savings plan which provides an annual return to the policy holder exceeding 20% of the annual premium, the whole amount of insurance premium will be non-deductible.

However, qualified pension life insurance premiums paid to a Thailand based insurer from year 2010 on wards are allowed as a deduction in an amount not exceeding 15% of total taxable income with a maximum of Baht 200,000. Nevertheless, such allowance along with the contribution to a registered provident fund, the welfare fund, the investment in a retirement mutual fund, long term equity fund and the civil servant pension fund should not exceed Baht 500,000 in the same tax year.

Moreover, a life insurance premium paid for the taxpayer’s spouse who does not earn income is also allowed as deduction provided that their marital status still exists throughout the tax year and the amount paid is up to a maximum of Baht 10,000.

Consult with MSNA, English speaking accountants for your accounting and taxation needs.

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.

Today, one of our accounting clients asked us some questions about tax refund.

We have some VAT receivables for this month. We would appreciate if you could advise us when we can get back the VAT refund from the Thai Revenue Department. We also need to know how you calculate VAT payable and whether all VAT that we paid for are refundable. Thanks.

Answer:

VAT payable is derived from Output VAT (Sales VAT) minus Input VAT (Purchase VAT).

You can claim a refund but usually, the process will take time before the Revenue Department decides to give it back to you. Normally they will need to see every supporting details, receipts, tax invoices, etc. to assess and check whether those taxes are real and you are applicable for a refund. In general, instead of applying for refund, most companies can also use this VAT receivable to offset with the VAT payable in the following months. In short, each month that your input VAT exceeds output VAT, you can claim a refund either by cash or tax credits to be used within the next months.

VAT refund can only be claimed within three years of the filing date. However, not all VAT receivables can be claimed back. Certain Input VAT such as VAT in entertainment expenses and petrol for company (4-door vehicles) cars cannot be used to get a VAT refund but can instead be used as deductible expenses against Corporate Income Tax (CIT).

Contact MSNA for Thai tax and accounting services.

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.