Why do we have to maintain our accounting even though our company is in dormant status?

Answer:

Even though your Thai company looks inactive, you have to pay rent and service fees to vendors, like MSNA or the contractors. You will have to withhold taxes and submit them within 7^th of the following month. Also once you are in the VAT system, you will have to file the VAT return every month. And when you have any transactions at all, you will need to talk to MSNA experts to give you guidance and advice. It is in your best interest to deal with a professional accounting firm who can communicate with you very well, like the English speaking accountants of MSNA.

Contact MSNA for your Thai accounting and taxation needs.

In Thai personal income tax computation, there are several types of income that the taxpayer shall not include or may not choose to include such income to the assessable income.

1. Income from sale of immovable property

A taxpayer shall not include income from sales of immovable property acquired by bequest or by way of gift to the assessable income when calculating personal income tax. However, if the sale is made for a commercial purpose, it is essential that such income must be included as the assessable income and be subject to personal income tax.

2. Interest income

The following forms of interest income may at the taxpayer’s selection, be excluded from the computation of PIT provided that a tax of 15% is withheld at source:

a. Interest on bonds or debentures issued by a government organization;

b. Interest on saving deposits in commercial banks if the aggregate amount of interest received is not more than 20,000 Baht during a taxable year;

c. Interest on loans paid by a finance company;

d. Interest received from any financial institution organized by a specific law of Thailand for the purpose of lending money to promote agriculture, commerce or industry.

3. Dividends

A taxpayer, who resides in Thailand and receives dividends or shares of profits from a registered company or a mutual fund which tax has been withheld at source at the rate of 10%, may opt to exclude such dividend from the assessable income when calculating personal income tax. However, in doing so, taxpayer will be unable to claim any refund or credit.

Contact MSNA for your Thai accounting and tax questions.

In forming a company in Thailand, company promoters are responsible for registering the company with the Ministry of Commerce (MOC). The promoters must be individuals, not juristic persons and must be available to sign documentation during the registration process.

For a private limited company, there must be a minimum of 3 promoters and at least 15 promoters for a public limited company. The promoters of a private limited company must be 12 years of age or older while for a public limited company, the promoters must be 20 years of age or older.

Each promoter of a private limited company is required to be among the company’s initial shareholders immediately after the company’s registration and is required to hold a minimum of one share upon the company’s registration. They are generally free to transfer those shares to existing shareholders or third parties, thereafter, if they wish. It is not required for the individuals serving as promoters to reside in Thailand.

The promoters of a public limited company must also be among the company’s initial shareholders immediately after the company’s registration. All promoters must subscribe for shares, which must be paid up in an aggregate amount equal to or not less than five percent of the registered capital. Said shares may not be transferred before the expiration of 2 years from the date of the company’s registration, unless specifically approved at a meeting of shareholders. Nevertheless, it is required that one-half of the individuals serving as promoters have their domicile in the Kingdom of Thailand.

Promoter’s potential legal liability is generally limited to the par value of the shares they will hold after registration is completed. The promoters are also responsible for paying expenses associated with the company’s registration. After registration, however, the company may choose to reimburse the promoters for those expenses.

Interested in forming a company in Thailand, contact ThaiLawyers for more information.

Question:

We are selling domestic animal feeds and decided to put up a signboard just outside our shop. Are we liable for any taxes? Please advice.

Answer:

Yes, in Thailand, owners of signs or billboards, which display a name, trademark or product to promote, advertise or provide information about a business, are subject to the annual signboard tax. The rate of tax varies according to the size of the signboard and the language written on the board.

Owners of signboards are required to file signboard tax return (Phor Phor 1) with the Revenue Department office in your area on or before 31 March of each year and tax must be paid within 15 days from the date of:

1. The installation of such taxable signboard after March of each year;
2. The changes made to the existing signboard;
3. Receipt of an assessment order.

An appeal against the assessment order may be filed within 30 days.

In case of failure to file a tax return, a surcharge at the rate of 10% to 24% of signboard tax payable will be imposed.

Contact MSNA for your Thai accounting and tax questions.

A client recently asked MSNA a question about fines for late filing of tax returns.

I understand that taxes must be filed within the deadline. If the last day of filing falls on a holiday or weekends, does it mean we have to file taxes before the due date? And if we file it after deadline, how much penalty do we have to pay?

Answer:

Yes, you have to file your Thai taxes within the due date. Failure to file tax returns and remit tax within the prescribed due date shall be subject to surcharge and penalty as follows:

I. Surcharge

1. Surcharge is 1.5% per month or a fraction thereof of the tax payable, but in no case shall the surcharge exceed the amount of tax payable for late filing of the following tax returns:

– Personal Income Tax,

– Corporate Income Tax (not including mid-year tax),

– Withholding Income Tax,

– Value Added Tax (VAT), and

– Specific Business Tax (SBT)

2. For Mid-Year Corporate Income Tax, surcharge is 20% of the tax payable or the deficient tax as the case may be.

3. House and Land tax for the year paid after the due date shall be subject to a surcharge of up to 10% if made within four months after the due date. If the tax is overdue for more than four months, the District Officer is empowered to attach the property on which the tax is due for the purpose of selling it by auction and applying the proceeds from sale for settlement of the tax due.

4. Municipal Tax for the year paid after the due date shall be subject to a surcharge at the rate of 10% to 24% of the tax due.

5. Signboard Tax for the year paid after the due date shall be subject to a surcharge at the rate of 10% of the tax due.

6. With regard to Social Security Fund, remittance of the contribution for the month after the due date is subject to a surcharge at the rate of 2% per month of the contribution amount due.

II. Penalties

1. For Corporate Income Tax, the maximum penalty of 200% of the tax due shall be imposed only in the case of tax assessment following the audit by the Revenue Department.
2. For Value Added Tax and Specific Business Tax, penalties will be:
   1. Up to 200% of tax due in case of failure to file a tax return
   2. Up to 100% of the shortfall in the tax due following an inaccurate tax return.

NOTE: The above penalties may be waived or reduced according to the regulation prescribed by the Director-General with the approval of the Minister of Finance.

III. Fine

Failure to file a return will be subject to a fine of not exceeding Baht 2,000.

However, in the event that the deadline of filing a tax return falls on a weekend or an official holiday, you can file and pay taxes on the next working day. This would not be regarded as late filing.

Contact MSNA for your Thai accounting and tax needs. As your tax agent, our well-experienced English speaking accountants will make sure that your taxes are prepared and filed accordingly.

One of the topics of training that we provide for our accounting clients’ staff is the invoice, receipt and tax invoices. Today, we talk about when to issue a tax invoice if you are a company engage in service business.

Normally when you invoice your clients for your services or deposits, you give them only an invoice. Because you are a service business, you do not need to issue a Tax Invoice until you are paid. So some companies combine their receipt and tax invoice into one document.

Some of your clients may be demanding, especially the bigger ones. They may ask that you submit a Tax Invoice at the same time as invoicing them. This is normally the case that they want to force their service providers to give them the Tax Invoice before they pay because sometimes when they pay, the vendors may give them a receipt but not a tax invoice, or the tax invoice may not be 100% correct and the clients find it too hard to follow up with the vendors to reissue the tax invoice. If some of your clients demand that you also send them the Tax Invoice at the time you invoice them, we think you want to comply with them even though the Thai tax law does not say so. However, you will have to submit the VAT to the Revenue Department within the 7^th of the following month after you issued the tax invoice.

Contact MSNA for your Thailand accounting, tax and business needs. Our Thai accounting and Thai payroll services include consultation with our English speaking accountants in terms of Thai accounting and tax laws, labor issues and other related matters.

When you want to change your official company address, you have to submit the forms together with the required documents to the respective government offices. Today, we talk about the required documents from the company and the landlord when changing the official company address with the Department of Business Development and the Revenue Department.

Aside from company registration papers, the following will be required from the authorized director of the company:

1. 2 sets of passport copy, duly signed (in case of a Thai national, 2 sets of signed Thai ID card copy)
2. 2 sets of location map of the new office address
3. 2 sets of photos of office showing the:

– Company name and house number

– Outside photo of the whole office or building

– Inside photo of the office

The following will be also required from the landlord:

1. Signed copy of House Registration of the place, 2 sets
2. Signed copy of letter of consent from the real owner of the place that says he gives permission to the company to use it as the official address, 2 sets
3. Signed copy of the documents showing the ownership of the place by the real owner, i.e. copy of the ownership paper issued by the Land Department (same with the sale agreement stating the name of the owner as the buyer of that place which is the document issued by the Land Department when he bought the place), 2 sets
4. Signed copy of the owner’s ID card and his house registration, 2 sets

If you are moving to a new office and would like to change the official address accordingly, MSNA can assist you in preparing the required documentation and submit the application with the respective government offices. And since most of the above mentioned documents from the landlord are in Thai language, we normally request for the contact information of the landlord so we can coordinate with them directly. Contact us now for further discussion.

Today, we got a question from one of our avid readers regarding written off fixed assets in Thailand.

What is the accepted method of writing off assets like computers, office equipment, etc., in Thailand? Is it straight line depreciation over a fixed period?

Answer:

Most fixed assets are written off over 5 years.

Computers can be depreciated 40% on the acquired date. The rest of 60% will be depreciated over 3 years.

Leasehold improvement must be depreciated over 20 years, in general.

Contact MSNA for your Thai accounting and tax questions.

Are foreigners allowed to open foreign currency bank account in Thailand? How about a bank account in Thai Baht currency?

Yes, foreigners or non-residents may open and maintain foreign currency bank accounts with authorized banks in Thailand without limit. The accounts can be freely credited with funds coming from abroad. Payments from Thai residents or borrowing from authorized banks can be deposited subject to supporting evidences. Moreover, balances on such accounts may be freely withdrawn.

Non-residents may also open Thai Baht accounts with authorized banks in Thailand as follows:

1) Non-resident Baht Account for Securities (NRBS): The account may be debited or credited for the purpose of investment in securities and other financial instruments such as equity instruments, debt instruments, unit trusts, derivatives transactions traded on the Thailand Futures Exchange and the Agricultural Futures Exchange of Thailand;

2) Non-resident Baht Account (NRBA): The account may be debited or credited for general purposes (i.e. other than investment in securities) such as trade, services, foreign direct investment, investment in immovable assets and loans.

The total daily outstanding balances for each type of account shall not exceed THB 300 million per non-resident. However, transfers between different types of accounts are not allowed.

Contact MSNA if you need assistance in preparing the requirements to open a bank account in Thailand.

One of our accounting clients has asked us about the preparation of inventory report.

Question:

Is it mandatory for all Thai companies to prepare the inventory report? Do you provide this service?

Answer:

Sorry, but we do not prepare inventory movement report for our clients. It is the responsibility of every VAT registered Thai company that produce, import or sell products.

The Revenue Code of the Thai Revenue Department specifies that VAT registrants must not only keep in input VAT and output VAT reports but also stock or goods and inventory records. Since your company sells products, you need to print out and prepare the inventory movement report in the format set by the VAT law (it is like a stock card, each model one report). Even though you never keep stock, you need to prepare this report.

Each model has to have a stock card in the format set by the Thai tax law. Apart from the header of the report, each stock card contains the following columns:

Date, Document Number, Quantity In, Quantity Out, Balance

And when you import it or sell your product, you need to fill out this report within 3 days. If the Revenue Department comes to check your company, they will ask to see this report. And if they see that you do not have it, or it is not correct, they will fine you.

Contact MSNA for your Thai accounting and tax questions.