Today we got a question about making payment to a Singapore company from Thailand. The invoice is for research services rendered in Singapore for use in Thailand. For this we look into the double taxation treaty between Thailand and Singapore. The vendor does not have a permanent establishment in Thailand, so in this case Singapore, not Thailand, should get the tax from the business profits. Therefore when the Thai company makes payment to the Singaporean company, it does not have to withhold tax to submit to the Thai Revenue Department.
The next thing to really consider is whether the Thai company has to submit VAT on behalf of the Singaporean company. Since the research services were rendered in Singapore and the result of the work was to be used in Thailand, VAT must be submitted with Form PP36 by the 7th of the month following the payment. If the Thai company is VAT registered, it can use the receipt of PP36 as one of its input tax invoices and claim back the amount of VAT in the Form PP30 of the same month as PP36 submission.
Looking for a great team of Thai accountants who speak fluent English at reasonable prices? Contact us today.
Here we want to talk about writing off debts by companies which can happen when the creditors are related to the company (shareholders, group companies, etc). Thai accountant should know how to treat writing off debts by companies on the accounting books. You have to recognize the amounts as the company’s income. They are part of the profit to calculate corporate income tax for the year.
When you are closing down a Thai limited Company, most likely the company still has liabilities in its accounting books. You need to send a registered mail to each creditor to let them know you have decided to close down. This is so that if they have money owed by the company, they will know where to contact the liquidator. If you do not pay any of the debts, it will become an income. The treatment is the same as writing off debts by companies.
Do you need to pay VAT on the income recognized from writing off debts? Thai Tax Law does not impose VAT on revenue from forgiven debts as it is not compensation from selling goods or services. To summarize, when writing off debts by companies, you need to consider how much corporate tax the company will pay. In case of closing down the company, if you choose to leave the liabilities on the books, the Thai revenue department will make you recognize them as incomes which may make the company have a profit, thus pay tax, anyway.
For accounting, audit, closing down companies, etc., contactMSNA Group now.
Foreigners having business in Thailand should beware of Thai nominee shareholders stealing from the company. Many want to set up their business in the Kingdom, but cannot own their company 100% because Thailand Foreign Business Law does not allow foreigners to do so. It allows only a few activities, like exporting products from Thailand, having a manufacturing plant to produce goods to export or sell them in Thailand, etc. Most businesses need to have Thai majority ownership and many unethical lawyers would provide some Thai names to hold the 51% shares for the foreigner. Or the foreigner may have a Thai employee to hold shares on their behalf. Thai nominee shareholders stealing from the company is not the only risk you have. Using nominee shareholders is breaking the Foreign Business Law. Penalty can be a big fine and a jail term.
Here are some cases we see from Thai nominee shareholders stealing from the company. Thai employees who hold majority shares for the foreigner will demand millions from you in order for them to give back the ownership later. Many of them are also authorized directors of the company and they sign checks to themselves. One of our clients is a property developer and bought a lot of land in Chiang Mai. The Thai director (who is also the nominee shareholder) told them that the Land Department needed the company to have only Thai shareholders and Thai directors. So the company took of the foreign director who is the real owner of the company and the money. Later our client learned that the Thai director actually bought the land in her own name and refused to transfer the land to the company. She even sold some land and did not return all the proceeds to the company. We hope that these cases of Thai nominee shareholders stealing from the company will open the investors’ eyes. Do not practice nominee shareholding. Talk to us, we have solutions for you. If you need to have Thai shareholders, you need to protect your investment. Use good lawyers who will provide your protection so you do not have Thai nominee shareholders stealing from the company later.
MSNA Groupof companies have helped foreigners setting up their business in Thailand for 25 years. We have seen it all. You may be eligible to have Board of Investment promotion(see List of Business Activities Eligible for Thailand BOI Promotion). You may be able to obtain a Foreign Business License to operate your business as a foreign company, or to get the protection of the Treaty of Amity if you are American. Save yourself from Thai nominee shareholders stealing from the company. Talk to us now for all your business needs in Thailand. We are a one stop shop who can help you from setting up your new company, payroll outsourcing, accounting, tax filing, auditing, or even due diligence for your next merger and acquisition.
At MSNA Group, we get quite often an inquiry about a work permit for working anywhere in Thailand.
In each work permit, it shows the name of your employer company, your work position and a brief job description. In addition, it says the province where you work, which is the province where your employer’s registered address is.
As a foreign employee, you need to be able to show your work permit to a police officer or a Labor officer when asked for. The Alien Working Act B.E. 2551 (2008) says you have to have your work permit on your possession or at the place where you are working, during work hours, otherwise, you may need to pay a fine of up to Baht 10,000.
Many foreigners think that they can work anywhere in Thailand when they have a work permit. Or they can work legally in different jobs to earn more incomes because of having just one work permit. No, it is not that simple. Your work permit can have more than one job or one employer. That means, all of the jobs and all of the employers need to be listed on your work permit. Now, it is not going to happen that easily. You will find that many employers are not able to sponsor your work permit. This is because each employer needs at least Baht 2M paid up capital and 4 Thai employees, both per expat employee they hire. Only BOI promoted companies may have different ratio, but then you cannot add a BOI company as one of your employers. If you get caught working where you do not have a work permit, you could face up to 5 years jail term or a fine of Baht 2,000 to 100,000 or both. Plus, you may be deported.
Now, let’s talk about working for the only employer listed on your work permit. Most likely the area you can work is the same province where your employer’s official address is. Some companies have branches in different provinces. If your work permit lists those provinces as the areas you will be working in, then you are okay. Section 52 of Foreigner Working Act, B.E. 2551 (2008) stipulates a fine of not more than Baht 20,000 if a Thailand work permit holder works in jobs or places other than at his official employer. So please make sure, if you are sent to work in different places, that they are listed in your work permit book.
Talk to us at MSNA Group. We can assist you with all your work permit needs. Whatever your scenarios are, we will have a solution for you.
The money you receive for your goods or services as a deposit is not an income per Thai accounting law. A deposit received is treated as a liability on your books because it is an unearned income. Once you have delivered the goods or rendered the services, the deposit amount has become “earned”. Thus, it will be moved from being a liability in the statement of financial position to income in the profit and loss statement. However, per tax laws, the value added tax incurs when you receive money or when you deliver goods, whichever comes first. When you receive a deposit, you need to issue a tax invoice and submit the output VAT on the deposit in the VAT return of the month that you receive the deposit.
Deposits received is a reason why your total income reported in the accounts is different from the total income reported in the VAT returns throughout the accounting period. After you close the year’s accounts, your accountant should prepare a reconciliation of the revenues per books against the total revenues reported in the VAT returns of the same period. The Thai Revenue Department may ask to see it.
Contact MSNA Groupfor your tax and accounting needs in Thailand.
In Thailand, when a VAT registered company is in the business of selling goods (wholesale or retail), the value added tax (VAT) point occurs when you deliver the goods or when you get paid whichever comes first. VAT point determines when to issue a tax invoice. For more clarification:
When you deliver goods, even when you have not received payment, you need to issue a tax invoice.
If a customer just makes a deposit, though you have not delivered the goods, you need to give them a tax invoice (and a receipt) for the amount you got.
Now, for service businesses, when to issue a tax invoice? The VAT point occurs when you receive payment, whether or not you have rendered the service. So make sure you issue a tax invoice and a receipt for the amount of money you receive. If you just send an invoice to your client asking them to pay you, you don’t have to prepare a tax invoice yet.
Please note that not everyone can register in the VAT system. Some business activities are exempt from VAT. Others can register in the system, but if they have not reached Baht 1.8 M in gross sales, they may choose not to be in the VAT system yet.
If an individual or a company is not registered in the VAT system, they cannot issue a tax invoice and they cannot claim the 7% VAT they pay to vendors.
Contact MSNA Group for tax planning, accounting and tax compliance services.
Normally when you (as a company) rent an office space, you need to deal with rent withholding tax of 5% (to submit to the Revenue Department in the following month). You will pay the landlord only 95% in cash amount and prepare a withholding tax certificate for the amount of 5% that you withhold and give it to the landlord. If the landlord is a company, they may not have any problem receiving the amount of 95% from you in cash and 5% in a withholding tax certificate because they can use the withholding tax certificate as a proof of their prepaid corporate income tax at the end of their accounting year. However, when the landlord is an individual, many of them normally do not report their rental income on their personal income tax return. They will demand 100% rent amount from their corporate tenants. They will make you submit the rent withholding tax from your own pocket. If you do not accept it, they will probably not want to rent their space to you. Of course, they are wrong. You are just doing what the Thai tax law requires you to do. Most individual landlords whose properties are in high demand will not care. They want their rent in full amount or else you should find another place to set up your shop or office. It is your choice to see what they will do if you give them only 95% payment and a certificate showing the rent withholding tax of 5% . Most tenants will give in because they have already spent a lot of money renovating the space to suit their business needs and cannot afford to move to a place whose owner will accept that they need to pay tax on their rental income. Some individual landlords specify in the rental agreement that the tenants will pay for any taxes, including withholding taxes. In that case the tenants know from the beginning that the 5% rent withholding tax will come from their own pocket.
Why someone got a BOI promotion for their business and want
to sell it? We have some foreign clients who came to Thailand to apply for BOI
so that they can own their business 100% without Thai nominee shareholders.
Even though we work quickly with the clients to prepare the BOI application,
sometimes, the BOI people have too many cases on their hands and they cannot
approve a business project within 40 business days as promised on their
website. Some applicants wait for 10 months or one year before they finally get
the approval letter from the BOI.
Waiting to enter the market in Thailand for too long, many
investors have changed their business expansion plan. Many of them do not want
to open their BOI company here anymore after they got the certificate.
This is why once in a while, we have a BOI company for sale. If you do not have time to wait that long in order to operate your business and enter the Thai market, check with us. Contact MSNA Group now for a chance to buy a BOI company that has never been in operation.
When you buy a BOI company from us, we understand that you
trust us. We will guarantee that the company you buy will not have any
The Thai Board of Investment (BOI) provides both
Thai and foreign investors opportunity to obtain investment promotion for a variety
of businesses under applicable policies and criteria. Those businesses under
the BOI promotion will be receive incentives depending on their business
activities and merits to the country.
Currently, Trade and Investment Support Office
(TISO) is a promoted business activity (category 7.7) on the BOI promotion
list. To apply for TISO, the business must meet the two main conditions:
1. Annual sales and administrative expenses must be
at least 10 million baht.
2. The business plan and scope of business must be
one of the followings:
2.1 Monitoring and/or servicing associated enterprises including providing or letting office or factory building to company’s associated enterprises
2.2 Advisory services on business operations, except those engaged in buying and selling securities and foreign currency exchange. Accounting, legal, advertising, architecture and civil engineering businesses must obtain business licenses from the Department of Business Development or related government agencies prior to submitting the investment promotion application
2.3 Information services on goods sourcing.
2.4 Engineering and technical services, except those related to architecture and civil engineering services.
2.5 Business activities related to machinery, engines, tools and equipment, such as: – Importing for wholesaling – Training services – Installation, maintenance and repair – Calibration
2.6 Wholesaling products manufactured in Thailand.
2.7 International business process outsourcing whose services are provided through telecommunication networks, such as administrative services, finance & accounting services, human resource services, sales & marketing services, customer services, data processing, etc.
The incentives for TISO cover only the non-tax
incentives. That is to say, the business under this category will receive no corporate
income tax exemption.
Regarding to aforesaid fact, this type of promotion
will mainly benefit foreign investors. With these non-tax incentives the
promoted business will receive:
Permission to own land;
Permission to take out or remit money abroad
in foreign currency;
Permission to bring in skilled workers
and experts to work in investment promoted activities; and ultimately
Permission for 100% foreign ownership of
the promoted business.
If you are interested in setting up your business in Thailand, we highly suggest you to get an experienced agent like MSNA Group to assist you, to deal with the complicated process of business set up and make a plan for your next move.
Contact MSNA Group for your business need in Thailand.
Over the past five years, not only the number of companies
under the BOI investment promotion has significantly grown, but also the number
of foreign expatriates working with those companies. It is clear that a work
permit to be granted under the BOI investment promotion is one of the channels
for a foreigner to stay and work in Thailand.
However, the fact is people, from time to time, change their employer due to many factors: job incentives, salary, position, etc.
To change employer from a BOI-promoted-company to another,
the following steps are for an employee holding a work permit under BOI to take.
Step 1. Suitability and
Similar to applying for a work
permit in the first place, for changing employer, such foreign employee must be
well-suit for the new position in the new company with supporting biographic,
education background, work experiences and qualifications.
Step 2. Approval of position
in the Single Window System
Unless the company has an
available approved position in their Single Window System, the company will
have to get its new position to be approved by the BOI by uploading all required document as well as providing
position details namely: position title, scope of work, qualification for the
position and work duration, and so on, into the system.
Step 3. Removing the employee
from the existing position
The current employer then has
to remove the employee from the existing position as well as to cancel the current
work permit and visa via the Single Window system. The work permit holder
should make sure that the current employer will process the cancellation of his
work permit and Visa in a way that it will take effect not less than 15 days from
the day they submit the notification online. This way, the new employer will
have enough time to process the new work permit.
Step 4. Application for the
placement in to the new position with the new employer
Since the employee can use
his/her existing Non-Immigrant “B” visa to get
a new work permit under the BOI promoted business of the new employer, the
process from this step will be similar to applying
for a work permit under a BOI company the first time. Pursuant to the approval
of the Step 3, the new employer will have to
submit all necessary documents through the Single Window system (such as bio
data form, a copy of passport and a copy of certificate of the employee, etc.
Step 5. One Stop Service Center and Digital Work Permit
the approval of step 4, the employee will go to One-Stop Service Center to pick
up his Work Permit and extend his Permit of Stay to a longer term.
The keys of the success of changing employers are timing and precision. If any of the steps falls behind the schedule or is done incorrectly, the employee’s visa will expire before the placement is done causing him to leave Thailand and, once again, to apply for a new Non-Immigration “B” visa. This is why you need an expert like MSNA Group to assist you with each step. Contact MSNA Group for your business needs in Thailand.