We got asked a lot of times about the difference between being a tax resident and a non-tax resident in Thailand when filing the Thai personal income tax returns.

Taxpayers in Thailand are classified into resident and non-resident. A tax resident is any person living in Thailand for a period of more than 180 days in any tax calendar year. A tax resident of Thailand has the duty to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand.

However, there are cases where foreign-based income is not subject to Thailand taxes even if the taxpayer is a tax resident of Thailand.

A non-tax resident on the other hand means any person not living in Thailand but has income from sources in Thailand. He/she has the duty to pay tax only on income sourced in Thailand.

Contact MSNA for assistance in filing your Thai personal income tax returns in Thailand.

For filing of Thai personal income tax returns with the Thai Revenue Department, these are the cases where foreign-based income is not subject to Thai taxes.

1. If foreign-sourced income derived before 1^st January 2024 and remitted into Thailand in a later tax year
2. Foreign-sourced income is derived by a foreigner who is NOT a Thailand tax resident but later remitted such income into Thailand

A foreigner is considered a tax resident of Thailand if he/she has stayed in Thailand for at least 180 days during the calendar year and has derived income either within Thailand or outside Thailand.

Moreover, foreigners must include both income sourced within and outside Thailand in the filing of his/her Thai personal income tax return. Taxable income shall be an aggregate amount of Thai-sourced income earned during the tax year and foreign-sourced income remitted to Thailand during the tax year. Hence, if foreign-sourced income is remitted partially, the taxable amount shall be apportioned accordingly.

MSNA can help Thai tax residents compute and submit their personal income tax returns. Contact us now for getting tax ID card, filing the tax returns and obtaining Tax Residence Certificate or Income Tax Payment Certificates.

For real estate properties in Thailand, the Department of Lands has set its criteria for payment of Specific Business Tax as follows:

1. The term “sale” for specific business tax collection includes agreements to sell, sales with buy-back, exchanges, gifts, hire-purchase agreements, or transfers, with or without compensation.
2. The following types of registered real estate transactions are considered as sales for commercial or profit-making purposes and are subject to specific business tax:
   1) Sale of real estate by those with a license for land allocation under land allocation control laws.
   2) Sale of condominium units by business operators who registered the building in accordance with the Condominium Act.
   3) Sale of buildings constructed for sale, including the land on which such building stands.
   4) Sale of real estate that does not fall under (1), (2), or (3), specifically in cases where it is divided or separated for sale for making roads or other public utilities or promise to provide such things.
   5) Sale of real estate held by corporations or juristic persons for business purposes as per Section 77/1 of the Revenue Code.
   6) Sale of real estate not covered under (1), (2), (3), (4) or (5) if the sale occurs within five years from the date of acquisition of such real estate.
3. Registration of sale of real estate that is not subject to specific business tax is as follows:
   a. Sale not covered under item 2 and occurring more than five years from the acquisition date of the real estate.
   b. Sale or expropriations under real estate expropriation laws.
   c. Sale of inherited real estate.
   d. Sales of real estate used as the primary residence, with the seller listed on the house registration for at least one year before the sale. If land and building were acquired at different times, the five-year period applies to the latest acquisition. For instance, if foreigners have their names in the yellow house registration book for more than one year, they will not need to pay the 3.3% specific business tax, similar to Thai people)
   e. Transfer of ownership or possession of real estate to biological children (excluding adopted children) without compensation.
   f. Inherited property transfers to legal heirs or will beneficiaries who are legal heirs.
   g. Transfer of ownership or possession of real estate to government agencies or government organizations without compensation as per Section 2 of the Revenue Code.
   h. Exchange of ownership or possession of real estate with government agencies or organizations under Section 2 of the Revenue Code, where no compensation other than real estate exchange is given.
4. Sellers of real estate are required to pay specific business tax at a rate of 3.3% based on either the appraised property value for registration fee purposes under the Land Code or the actual sale price, whichever is higher.

MSNA group of companies can assist you in property acquisition and taxation matters. Contact MSNA for your tax concerns and Thai Lawyers for buying properties in Thailand.

The government has recently issued a Ministerial Regulation to amend the assessable income tax rates that are exempt from being included in the computation of income tax for severance pay received by employees under the Labor Protection Act in consideration of rising inflation rates and the general consumer price index, which will alleviate the income tax burden for employees who have been laid off.

The Ministerial Regulations no. 394 (B.E. 2567) issued under the Revenue Code on Tax Exemptions was published in the Royal Gazette on July 17, 2024 shall apply to assessable income received from 1 January 2023 and onwards. The compensation received by an employee under the Labor Protection Act, but does not include compensation received by an employee due to retirement or termination of employment contract. This shall include compensation not exceeding the wages for the last 400 days of employment, but not exceeding Baht 600,000.

Need help with your personal income tax filing in Thailand? Contact MSNA for further assistance.

Recently, we registered a company engaged in export business. They asked us how they can claim back the VAT that they will pay. This is our answer.

Once the company is registered in the VAT system and you buy anything, please always remember to ask the vendors to issue a Tax Invoice in the company name with the correct address. 

At month end, your accountant will gather all the tax invoices issued by your vendors and make an input VAT report and the accountant will also gather all your tax invoices that you issued to make an output VAT report. Then the difference of the VAT amounts (the input VAT in excess of the output VAT) will be claimed back from the Revenue Department through these methods:

1. You roll forward the excess VAT amount to the following months until you have a big enough amount then you click to claim the big amount at once.

2. You click to claim back the excess VAT amount every month.

Note that the Revenue Department will ask for so many documents to make sure that all the VAT you claim back is legitimate, so we suggest not to claim back every month. Some companies do it every quarter of every half year. You can engage MSNA group to do your accounting and tax filing. We can also meet with the Revenue Department on your behalf, if necessary. However, we cannot help to speed up the VAT refund process.

When a foreigner who is a tax resident of Thailand pays tax on his income abroad, the amount of paid tax can be credited against the tax payable in Thailand. This is applicable only if the country has a Double Tax Agreement (DTA) with Thailand. In this case, there will be no double taxation for tax residents of Thailand.

The amount of tax that can be credited should not be higher than the amount of Thailand’s tax liable to the foreign-sourced income.

To use this foreign tax relief, the Revenue Department may require documents and evidence to prove sources of income and to claim foreign tax credit under DTA. Such documents must be in English or Thai. For the supporting documents to claim foreign tax credit, Tax Payment Certificate issued by the foreign tax authority is recommended.

Contact MSNA for personal income tax computation, filing of tax returns and getting Income Tax Payment Certificate or Tax Residence Certificate in Thailand.

One of our accounting and payroll clients asked us about their employee claims.

Question:

We understand that the staff claims without original copy or receipts/tax invoices will be deemed non-deductible expenses when we submit yearly tax. Can you explain more on this so we can implement necessary steps?

Answer:

Normally, a company can claim expenses that have original receipts and tax invoices issued in the company name. And if the nature of the expense is one that has no receipt, like taxi fares, then the claim should be accompanied with a little explanation of the expense, like from where to where and for what business.

For expenses without original receipts/tax invoices, like when your employees buy things but did not ask the vendors for them, you have to book the expenses as non-tax deductible. Thus, please remind them to request for an official receipt/tax invoice every time. For example, when they buy things from a supermarket, they need to tell the supermarket to issue a receipt in the company name. For the case of buying things or ordering food through online applications (e.g. from Grab, Lineman or Foodpanda), you may use the e-receipts which are in the company name to be the accounting transaction supporting documents. However, because it is for food, if you pay for food for your employees, you need to add the amount to their monthly income to calculate personal income tax too. But if it is to entertain clients, then you may book it as an entertainment expense.

For air tickets and hotel stay for business purposes, you have to remind them also to request receipt/tax invoice in the company name otherwise, it will be recorded as non-tax deductible expenses.

If you need payroll, accounting or tax services, contact MSNA for assistance. We are the official accountant of the American Chamber of Commerce in Thailand and has been serving the international business community for over 25 years now.

There is a Double Tax Agreement (DTA) between Thailand and Myanmar. Currently, Thailand has concluded tax treaty agreements with 61 countries, including Myanmar. The other countries are:

• Armenia, Australia, Austria
• Bahrain, Bangladesh, Belarus, Belgium, Bulgaria
• Canada, Cambodia, Chile, China Peoples Republic, Cyprus, Czech Republic
• Denmark
• Estonia
• Finland, France
• Germany, Great Britain and Northern Ireland
• Hong Kong, Hungary
• India, Indonesia, Ireland, Israel, Italy
• Japan
• Korea, Kuwait
• Laos, Luxembourg
• Malaysia, Mauritius
• Nepal, the Netherlands, New Zealand, Norway
• Oman
• Pakistan, the Philippines, Poland
• Romania, Russia
• Seychelles, Singapore, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland
• Taiwan, Tajikistan, Turkey
• Ukraine, United Arab Emirates, United States of America, Uzbekistan
• Vietnam

MSNA provides consultation on Thai taxation and tax filing services. We also assist individual taxpayers prepare and submit their Thai personal income tax returns and obtain a Tax Residence Certificate, if needed.

One of our clients that is engaged in trading business has recently registered its branch into the VAT system with the Revenue Department. Now, they have 2 VAT registration certificates, one for the main office and another one for its branch. Today, they asked us which one to use and when it should be used.

Our reply:

When you buy things for the head office, you need to tell the supplier to issue their tax invoice to your head office. And when you buy things for your branch, then the supplier should issue their tax invoice for the branch.

The tax invoice issuer should put the word “head office” or “Branch No.1” on the tax invoice for you.

Contact MSNA for accounting and tax filing needs. Thai Lawyers can help you register your company and your branches into the VAT system.

Once promoted by the Thai Board of Investment, the company must follow the conditions as specified in the BOI promotion certificate in order to be granted with tax and non-tax incentives.

For non-tax incentives, the BOI can grant the following:

• Majority or 100% foreign ownership of the company (100% foreign shareholding)
• Right to own the land to operate the promoted business
• Visa and work permit to expat employees
• Exemption of import duty on machinery used for R&D and training services
• Permission for taking out or remitting money overseas in foreign currency
• Permission for foreign nationals to enter Thailand for the purpose of studying investment opportunities

For tax incentives, the Revenue Department provides the following as specified on the BOI promotion certificate:

• Exemption of corporate income tax on the net profit and dividends derived from the promoted activity
• Reduction of personal income tax for expat employees
• Exemption or reduction of import duties on machinery
• Exemption of import duties on materials imported for R&D purposes
• Reduction of import duties for raw or essential materials
• Exemption of import duty on raw or essential materials imported for use in production for export

We at MSNA together with our BOI expert team can guide you to fully understand the BOI incentives that can be granted to your promoted project. We can also assist you in complying with the BOI conditions as specified in your BOI promotion certificate.