Private company, public company, juristic partnership, foundation and association or any other legal entity with accounting period ended 31 December 2013 are required to file the annual corporate incom tax (Por Ngor Dor 50, Por Ngor Dor 52, Por Ngor Dor 55) on this Friday, 30^th May 2014 (within 150 days from the accounting period ending date). For online filing, the due date will be extended for 8 days, and since it falls on a government holiday, the last day for online filing is on Monday, 9^th June 2014.

Please make sure that you file the tax forms correctly and accurately. Contact MSNA for your Thailand accounting and tax questions.

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.

Question:

We would like to operate a factory in the industrial estate. How do you usually process the application for a factory license, say in Chonburi area? How long will it take to complete the application?

Answer:

As our company policy, we will require the first payment of our fees then, we will send to you the list of preliminary documents that we need in order to prepare the application.

It should take us 3-5 business days to finish the application after getting all information and documents from your side.

After submitting the application to the Industrial Estate Authority of Thailand (IEAT), the official will contact you to have a meeting to visit the factory site within 1-2 weeks if all documents are complete, which we will work with you for the most convenient time for the appointment of the meeting and the visit by the official. We will also consult with you and provide all support on the phone. If necessary, we will send our team to Chonburi to liaise with the IEAT officials.

It may take the IEAT official up to a few weeks (in most cases, shorter than that) for finish the evaluation of the project. Then the IEAT will notify us of its approval and we will request for the fees to pay to the IEAT before the licenses are issued.

Once we obtain the license, we will need 2 business days to translate it for you.

Contact MSNA for company registration, BOI promotion application and factory license application in Thailand.

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.

We want to setup a Thai company and engage in hotel business. Can we be eligible for BOI promotion? What are the benefits if we got promoted?

Answer:

Yes, you can be eligible for BOI promotion provided that you meet the criteria and conditions set by the Board of Investment. For each hotel that you will build, there must have at least 100 rooms in it. Also, the minimum investment, not including cost of land and working capital, should not be less than Baht 500 million.

Once you got promoted, you can receive BOI privileges depending on your hotel location:

1. If it is located in Zone 1, Zone 2, Hat Yai district of Songkhla or Muang district of Chiang Mai, you will be granted only non-tax incentives.
2. If it is located in Zone 3, you will receive only an exemption of import duty on machinery and other non-tax privileges.
3. If it is located in the provinces of Kalasin, Nakhon Phanom, Narathiwat, Nan, Buri Ram, Pattani, Phayao, Phrae, Maha Sarakham, Yasothon, Yala, Roi Et, Si Sa Ket, Sakon Nakhon, Satun, Surin, Nongbualamphu, Chaiyaphum, Nongkhai, Ubon Ratchatani, Udon Thani and Amnat Charoen, you will receive the rights and benefits according to the BOI Announcement No. 1/2543 dated August 1, 2000.

Interested in getting BOI promotion for your company in Thailand, contact ThaiLawyers for more information.

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.

Contact MSNA for you Thai accounting and tax questions.

When applying for a factory license in Thailand, the Ministry of Industry has the power to issue regulations for all of the categories regarding:

1. Description, category, or type of machinery and equipment to be used in the operation of the factory business
2. Location, environment, interior and description of the factory;
3. Requirements for workers who have specific knowledge to carry out any duties in the factory;
4. Process of manufacture and provision of equipment to prevent, stop or alleviate danger, damage or disturbances that may occur to the public or property in the factory or nearby premises;
5. Standards and procedures for the control or release of waste, pollution or anything else arising from factory operations which may affect the environment;
6. Provision of necessary data and documents by the factory operators to ensure compliance with the law
7. Provision of anything that may affect the safety of work operations.

If there is an inspection of a factory or machinery to ensure compliance with the Act, a private body may carry out the inspection and report in place of government officials, provided the private persons follow the regulations concerning the Act as per the Government Gazette.

Licenses granted are valid until the end of the fifth calendar year from the year in which the business starts operations, except in the case of the relocation of the factory or of the dissolution of the operation in the factory business (which also refers to the event that the factory is transferred, leased or subjected to hire purchase). In these cases, the license is regarded as having expired on the date of issuance of a license to the factory’s new operators, or on the date of dissolution of factory business.

Applications for renewal of license must be submitted prior to the date of expiration, along with a fee of 100,000 Baht. Following submission, renewal is considered to have been extended unless there is a specific order otherwise. If the application is submitted within 60 days of the expiration date, it will be processed normally, but an additional fine of 20,000 Baht will be levied. Once the expiry date is reached, an application for a renewal must be made within 60 days. Upon expiration of the sixty-day period, the application will be treated as if it were a new application.

Contact MSNA for getting factory license for your business in Thailand.

Small and medium enterprises in Thailand with fixed assets but not including land, with a value of no more than Baht 200 million and with no more than 200 employees, are entitled to the following special depreciation methods:

1. Machinery and equipment may initially be depreciated at 40% of cost and the remaining balance will be depreciated at the maximum rate of 20%.
2. Computer hardware and software may initially be depreciated at 40% and the remaining balance will be depreciated within three accounting periods.
3. Factory buildings may initially be depreciated at 25% and the remaining balance will be depreciated at a maximum rate of 5%.

SMEs with a paid-up capital at the closing date of the accounting period of not exceeding Baht 5 million and earning income from the sale of goods or provision of services of not exceeding Baht 30 million during the accounting period are entitled to depreciate machinery acquired during the accounting period are entitled to depreciate machinery acquired during the period from 1 January 2012 to 31 December 2013 at 100% of cost.

Contact MSNA for your Thai accounting and tax questions.

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”.

Contact MSNA for your Thai accounting and tax questions.