A taxpayer who made charitable donations other than to support educational projects may be entitled to a deduction. Such qualified charitable donation must be made to one of the following institutions:

1. Temples
2. Public hospitals
3. Thai Red Cross Society
4. Public or private educational institutions
5. Government agencies (such as for the donation to the nation’s natural disaster victims)
6. Charitable institutions, government employee welfare or funds, etc. as prescribed by the Ministry of Finance

The qualified amount is:

1. The actual amount you donated;
2. The maximum amount is 10% of the amount after deducting allowances and contribution to educational projects.

Need help in filing your Personal Income Tax in Thailand? Contact MSNA for consultation.

There are a few changes being made to the tax laws in 2012, notably the Personal Income Tax rule for married couples.

Previously, Sections 57 Ter and 57 Quinque of the Revenue Code stipulated that if your marriage existed throughout the tax year, you and your spouse must file a joint tax return with the opinion that a wife may select to file her employment income, Section 40(1) income, separately.

However, on 4 July 2012, the Constitutional Court ruled that Sections 57 Ter and 57 Quinque of the Revenue Code are in breach of the constitution. Consequently, those two sections are no longer applicable. Hence, the government passed an Emergency Act to change the rules for married couples as follows:

1. You and your spouse can file a tax return jointly as before, for all types of income or
2. You and your spouse can file a tax return jointly, however either you or your spouse may select to file income from employment (Section 40 (1)) separately from the joint income by using PND.91 tax form or
3. You and your spouse can file separate tax returns for all types of income received and pay personal income tax separately. In the case where certain income cannot be clearly identified as yours or your spouse’s, the following rules shall apply:

• Sections 40(2) – 40(7) income must be proportioned equally between you and your spouse.
• Section 40(8) income can be proportioned equally or as agreed between you and your spouse. When you and your spouse agree on a proportion, you must notify the tax officer and pay income tax on that amount accordingly.

Note: If you and your spouse choose to file tax return jointly as in a) or b), you and your spouse are responsible for any tax payable incurred together. On the other hand, if you and your spouse choose to file tax return separately, each of you is responsible for any tax incurred separately as well.

Contact MSNA for preparation and filing of personal income tax returns in Thailand.

According to Section 4 quarter of the Thai Revenue Code, NOT all foreigners are required to obtain a Tax Clearance Certificate in Thailand. Those who are not required to apply for a Tax Clearance Certificate are as follows:

1. A foreigner traveling across Thailand, or entering or residing in Thailand for a period or period aggregating not more than 90 days in a tax year without earning assessable income;

2. A foreigner as prescribed by the Director-General with the Minister’s approval;

3. A foreigner departing Thailand except for the 3 cases described as required to obtain Tax Clearance Certificate

Contact MSNA for your accounting, tax and other business needs.

A Tax Clearance Certificate is a certificate issued by the Director-General of the Thai Revenue Department or the Provincial Governor or the delegated authority to a foreigner who is leaving Thailand to indicate that he has already paid taxes or that he has provided a guarantor or securities as guarantee for tax liabilities and tax payable.

According to Section 4 quarter of the Revenue Code, a foreigner leaving Thailand shall apply for a Tax Clearance Certificate in the form prescribed by the Director-General within 15 days before leaving the country, whether or not there is any tax payable.

A foreigner leaving Thailand is required to file an application for Tax Clearance Certificate (Form P.1) and supporting documents if:

1) He is liable to payment of tax or tax arrears before leaving Thailand.

2) He has duty to file a tax return and pay tax on behalf of a company or juristic partnership incorporated under foreign laws and has been carrying on business in Thailand.

3) He has taxable income whether or not in Thailand from being a “public performer” in Thailand. (The word “public performer” means a drama, movie film, radio and television performer, singer, musician, professional sportsperson or performer of any kind of entertainment).

Departing Thailand? Consult with MSNA Tax Advisors to know if you are required to get a Tax Clearance Certificate.

In view of the increase in the minimum daily wage which took effect on January 1, 2013 nationwide, the Thai government has recently approved tax relief measures for the affected small-and-medium enterprises (SMEs). These measures are expected to help SMEs with annual income not exceeding Baht 50 million a year.

Under these measures, the income tax exemption limit for SMEs will be raised from Baht 150,000 to Baht 300,000 a year. SMEs declaring income between Baht 300,000 and Baht 1 million will be taxed at 15% and those with over Baht 1 million profit will pay tax at 20% on the difference.

The withholding tax rates for SMEs will also be cut from 3% to 2% and they will be allowed to claim 100% depreciation on machinery for the first year of purchase until the end of 2013, an extension of one year from the year end of 2012.

Contact MSNA for your accounting, tax and other business needs.

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.