Can a company providing R&D activities apply for BOI promotion in Thailand?

Thai companies providing research and development business can apply for BOI promotion. Qualifying R&D activities are defined as follows:-

1. Basic research – involves theoretical or operational activities that are conducted to explore new knowledge from basic natural phenomena and factual observation, without initially considering the application.
2. Experimental development – involves a systematic operation based on the knowledge from research and/or experience with the objective of producing new materials, products or inventions; to install new procedures, systems and services; or to substantially improve the existing products.
3. Applied Science – involves research to explore new knowledge with an objective to put it in practice for specific use.

Interested in getting Thailand BOI, contact ThaiLawyers for application requirements and procedures.

Stamp duties are taxed on instruments and not on transactions or persons. For the purposes of stamp duty, an instrument is defined as any document chargeable with duty under the Revenue Code.

The instruments liable to stamp duty include the following:

– transfers of land,

– a lease,

– inter alia,

– power of attorney,

– promissory notes,

– letters of credit,

– travelers cheques,

– stock transfers,

– debentures,

– mortgages,

– life assurance policies,

– annuities

Who are liable to stamp duty?

1. Only instruments listed in the stamp duty schedule are subject to the stamp duty and the persons liable to pay stamp duty are those listed in column 3 of the schedule. They are for example, the persons executing the instrument, the holders of the instrument or the beneficiary such as landlord, contractor, lender, insurer, etc.
2. If an instrument liable to duty is executed outside of Thailand, the first holder of the instrument in Thailand shall pay the duty by stamping at the full amount and cancelling within 30 days from the date of receiving the instrument. If he does not comply as such, the instrument shall not be deemed duty stamped.

If he does not comply with the provisions of Paragraph 1, any holder of the instrument shall pay the duty by stamping at the full amount and cancelling and then he shall be able to submit the instrument for collection, endorsement, transfer or claiming of benefit.

Any holder who acquires possession of the instrument in accordance with this Section before the expiration of the time limit specified in Paragraph 1 may pay the duty by stamping at the full amount and cancelling and he has the right of recourse against the previous holders.

3. If a bill submitted for payment is not duty stamped, the recipient of the bill may pay the duty by stamping at the full amount and cancelling and may either have the right of recourse against the person liable to duty or deduct the amount of duty from the payment due.

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

From the day the company has registered in the VAT system of Thai Revenue Department, the company director and the staff member have to always ask for an official receipt from the vendor when buying goods or services for company’s use otherwise, such expense cannot be used to reduce the company’s profit and may end up having to pay more tax. Even when buying goods or services from individuals (who are not companies), they still can issue a receipt or some kind of documents to prove that they received money from the company director or staff member. In this way, the company can have legitimate receipts that are tax deductible.

When asking for an official receipt, if the vendors (companies or individuals) are registered in the VAT system, they normally will ask to charge 7% VAT and because they charge VAT, they will also have to issue a tax invoice for you. It is important to know the information about Thailand VAT and tax invoice.

The company also needs to withhold taxes from vendors. Please read this article about withholding taxes from vendors for better clarifications.

Contact www.msnagroup.com for your Thai accounting, taxation and other business needs.

The new law regarding tax invoices will take effect from 1 January 2014. According to this new law, the tax invoice has to have the items on it as follows:

1. Under the address and contact number of the company, one must add:

– Headquarters (or in case of a branch office in Thailand, has to add the branch number too so that it can be specified whether the head office or the branch office is the one who issues the tax invoice.)

– Tax ID number, which should be near the company name and address) is the same number as the company’s registration number.

2. Under the address of the customer, add:

– ( ) Headquarters ( ) Branch Number………………..

– Tax ID No.: …………………………………

This is because when a tax invoice is issued to a company in Thailand, the issuer will have to check mark to indicate if the buyer of the goods/service is the headquarters or the branch of that company and need also to specify their Tax ID number which is the same as their company registration number.

Reminder if you are the customer:

From 1 January 2014, when you get a tax invoice from a vendor, please make sure you see their Tax ID number and that they specify headquarters or branch number near their company name on top of the tax invoice. Also, near your company name and address, it must specify headquarters (or branch) and your company’s Tax ID Number.

Know more about this new law regarding tax invoices and Thai taxation related matters. Contact MSNA for your accounting, tax and other business needs.

Today, we got a question from one of our accounting clients whom we also assisted in getting BOI promotion for their software business in Thailand.

Question: As you may have already known, our sister company (which is not BOI promoted) has proposed to develop an application that will enable users to download e-books in exchange for payment on a monthly basis. Would this activity be considered as sales of goods which I believe are VAT-exempt or will this be qualified for zero rate VAT in case our customer downloaded and used the e-book abroad.

Answer:

We verified it with the Thai Revenue Department and according to them, downloading of e-books is not categorized as sales of newspaper, magazine and textbook but it should be treated as a service which is subject to VAT. Hence, the zero rate VAT applies if such service is used overseas.

Contact MSNA, English speaking Thai accountants for your Thai accounting and tax questions.

There are certain requirements in order to extend a visa or permit of stay of a foreigner working in Thailand. Today, we talk about the required company papers in order to extend the permit of stay of a non-B visa holder in Thailand.

Aside from application forms set by government authorities and applicant’s personal documents, the employer or applicant have to prepare and provide these documents to the Immigration officials:

1. Value-added tax (VAT) returns and salary withholding tax returns from the last three months certified by and obtained from the Revenue Department Area Office;
2. Financial Statements and the Corporate Income Tax Return (PND.50) of the previous year certified by and obtained from the Regional Office of Revenue Department;
3. Social security submission forms from the last three months certified by and obtained from the Social Security Office in your area;
4. Company affidavit, list of shareholders and financial statement submission form (Sor Bor Chor 3) certified by and obtained from the Ministry of Commerce;
5. Latest Personal Income Tax Return of the applicant certified by and obtained from the Main Office of Revenue Department

Because the above documents were filed at different government authorities, you have to plan in advance and make sure that documents are certified before your permit of stay expires. If you rely on your staff but they are not familiar with the process, they may not know where to go and how to contact each authority. Thus, MSNA can help you obtain the certified documents in a timely manner and file the application to extend your permit of stay to one year. Contact us now for your Thai visa and work permit needs.

Today, we got a question from one of our accounting clients.

Question:

We registered the company into the VAT system because I need it for my work permit application. However, are we obliged to charge VAT even though we only do export activities in Thailand? If so, what rate? Please advice.

Answer:

Under the value-added tax (VAT) system of Thailand, you are allowed to export goods and services tax-free, in short; you are entitled to a zero VAT rate. This means that you are not required to charge VAT and therefore, can claim back the input VAT (VAT that you paid). However, it takes time before you can refund your VAT because the Revenue Department usually does VAT audits to ensure that your claim is true and each transaction paper qualifies as an “export” activity per Thai VAT law.

Contact MSNA for your Thai accounting and tax questions.

Today, we got an inquiry from one of the avid readers of our articles.

Question:

Hi, I’m an Asian and one of the foreigners working in Thailand. I have a valid non-B visa and Thai work permit with my employer company which submits my monthly tax and social security contribution to Thai authorities. My question is about my Personal Income Tax particularly the certain types of allowances that I can use as exemption to compute my taxes. Although I am still single at the moment, I have my aging parents back home whom I support financially every month. Can I use parents allowance for the computation of my Personal Income Tax?

Answer:

First of all, thank you for your inquiry. To answer your question, parents allowance is one of the types of allowances that are allowed for the calculation of Personal Income Tax. However, it only applies to Thai citizens. Unless your parents have obtained Thai national ID card and become Thai citizens, you cannot use parents allowance as exemption for your Personal Income Tax. Thus, if you got married and have children, you can use spouse allowance and child allowance regardless of their nationality and whether they stay with you in Thailand or in another country.

Know more about types of exemptions that are allowed for the calculation of Personal Income Tax. Contact MSNA for the computation, preparation and submission of your Personal Income Tax Returns in Thailand.

Today, one of our prospective clients has asked us about registering a company that will deal with either manufacturing or importing of products in Thailand.

Question:

We want to register a Thai company with our Thai partners but we are not sure yet if we will just manufacture our own food products or import the food products from our suppliers overseas in order to sell them locally. Do we need to get a license from any government department after we register the company?

Answer:

In Thailand, the Food Control Division of Food and Drug Administration (FDA) is responsible for regulating food control activities before and after you start the operation. Here, we outline how FDA will control your activities before you start the operation.

Such activities include issuance of Manufacturing License and Importation License to manufacturer and importer respectively; registration of controlled food products before marketing; approval of food additives to be used in foods, labeling and advertising approvals.

In obtaining a Manufacturing License, plant lay-out is to be submitted for approval and plant inspection by food inspector is required before and manufacturing license is issued. This license is to be renewed every three years.

Meanwhile, if you want to import food products, a license is required in order to import food into Thailand. A licensed importer may import various kinds of food providing that they are approved by the Thai FDA. The designated storage or warehouse has to be inspected and approved by the Thai FDA before a license is issued. An importation license is to be renewed every three years, as well.

In the event that a food product, either you manufactured or imported is categorized as Specific Controlled Food, it must be registered. Analysis of the product as well as details of the process and ingredients is required for the registration process and the standard of these food products have to meet the standard specified in the Ministerial Notification.

If you intend to manufacture or import some products such as dietary supplement, that product is required to bear labels containing Thai language and subject to be approved by the Thai FDA before you sell it in the Thai market. Hence, food products in general must be labeled in accordance with the Notifications of the Ministry of Public Health No. 194 (B.E. 2544).

Moreover, if you plan to promote your product to the public, any form of advertisement for food through any media is also subject to Thai FDA’s approval. Whether you manufacture or import your products, please note that false or deceptive advertisement on the quality or benefits of your food products is prohibited.

Interested in setting up a manufacturing or importing company in Thailand? Contact ThaiLawyers for company registration, obtaining business license, BOI promotion and maintaining Thai work permits and visas of foreign expats.

What is double taxation? How to avoid its effects to individuals and business entities?

Answer:

Double taxation is a case where tax is being levied twice from the same amount of income in two or more states, e.g. Thailand and other countries.

In order to avoid or eliminate double taxation, Thailand has entered into Double Taxation Agreement with other countries. Currently, Thailand has agreement with 55 countries whereas both residents of Thailand and the contracting states will benefit from the agreement.

In a double taxation agreement, there are credit and exemption methods. It also covers taxes on income and capital of individuals and juristic entities as well as the petroleum income tax. The petroleum income tax and the local development tax (i.e. Property tax) are covered under some treaties but Value Added Tax, Specific Business Tax and Municipal Tax are not covered under any tax treaties.

Thai double taxation treaties generally place a resident of the Contracting State in a more favorable position for Thai tax purposes than under the domestic law, i.e. the Thai Revenue Code. Thus, in the event that the rate of tax stipulated in the Revenue Code is different from that of a double taxation agreement, the rate which is more beneficial to the taxpayer will be applied.

Thai double taxation treaties in general provide income tax exemption on business profits (industrial and commercial profits) earned in Thailand by a resident of a Contracting State if it does not have a permanent establishment in Thailand. Moreover, the withholding taxes on payments of income to foreign juristic entities not carrying on business in Thailand may be reduced or exempted under the double taxation treaties.

Contact MSNA for your Thai accounting and tax questions and other business needs.