Question: We are renting a car under the company’s name for business purposes. Can we put the rental costs under the company’s expenses?

Answer:

Yes, you can use the rental cost of a passenger car or a bus with seats for no more 10 passengers as a deductible expense for tax purposes in the amount not exceeding Baht 36,000 including VAT per month per car for monthly or yearly rental or not exceeding Baht 1,200 including VAT per day per car for daily rental.

Know more about the allowed deductible expenses for tax computation. Consult with MSNA’s accountants and tax advisors for your accounting and taxation needs.

The recently approved Ministerial Regulation No. 292 amended the personal income tax exemptions on income such as money or any benefits received from the Provident Fund.

Before the amendment, the exemption was available only upon the death of the income recipient. Now it applies where an employee retires at the age of 55 or older, or where an employee retires before reaching 55 years old, but the money is retained in the fund when he/she reaches age 55.

As assessable income is exempted from inclusion for computation of income tax payment, this amendment will ensure support of an employee after retirement.

Contact MSNA’s tax advisors for personal income tax preparation and submission.

Deductible expenses are personal expenses that may be deducted to calculate the Thai personal income tax depending on the category of assessable income of a taxpayer as follows:

• For the income under the categories of assessable income (1), (2) and for copyright under (3), a deduction of 40% is allowed subject to a maximum of Baht 60,000.
• For the income under the category of assessable income (3), other than for copyright and under (4), no deductions are allowed.
• For the income under the category of assessable income (5), the rates of deduction vary from 10% to 30% depending on the type of rented property.
• For the income under the categories of assessable income (6), (7) and (8), the rates of deduction vary from 30% to 85% depending on the type of income or type of business.

Moreover, the deduction of expenses in relation to assessable income under categories (5) – (8) may be made on an actual basis only if satisfactory evidence of the expenditure can be provided to the tax authorities.

Consult MSNA for Thai personal income tax computation.

In Thailand, the employers or companies with 1 or more employees have to register and submit the social security fund to the Social Security Office. To register the employees or insured person into the Thailand social security system, the employers or an authorized person can submit the Registration Forms as follows:

1. The Employer/company Registration Form (SSO 1-01)
2. The Insured Person/employee Registration Form (SSO 1-03)

Note that for the employers whose head offices are in Bangkok, the Registration Forms have to be submitted at the Social Security Office area 1-7. For the employers whose head offices are in the provincial area, the Registration Forms have to be submitted at the Provincial Social Security Office where their head offices are located.

Registration forms must be submitted to the Social Security Office within 30 days from the date on which the employee has started working with the company otherwise an employer shall be liable to imprisonment for a term of not exceeding 6 months or to a fine of not more than 20,000 Baht, or both.

In case the number of employees is increased, the employer has to submit a new employee Registration Form if the employee has never received social security card before. When an employee left the company, the employer has to submit the application to take out his/her name from the social security system. When the employer changed any information such as office address or company name, application to change information must be submitted to the respective Zone Office of Social Security not later than the 15^th day of the following month in which the change has taken place. If any wrong information is given, it can affect the rights and benefits of the registered insured persons.

Contact MSNA for consultation on Thai labor law and assistance in Thailand social security registration.

For the purpose of Thai personal income tax computation, residents and non-residents taxpayers are taxed on their assessable income. This assessable income can be in any form of cash or in-kind benefits derived from employment or business carried on in Thailand or assets located in Thailand regardless of whether such income is received in or outside Thailand. Any income derived from outside Thailand will be subject to Thai personal income tax only if the income is remitted or brought into Thailand in the year in which the income is derived.

Assessable income is classified into 8 categories as follows:

1. Income from personal services rendered to employers such as salaries and wages (including income from stock options, other equity or work-related compensation and other fringe benefits);

2. Income from hire of work, office of employment or services rendered;

3. Income from goodwill, copyright, franchise, patent, other rights, annuity or income in the nature of annual payments derived from a will, juristic act or judgment of the Court;

4. Income in the nature of dividends, interests (including interest on bank deposits in Thailand), shares of profits or other benefits from a juristic company, juristic partnership or mutual fund, payments received as a result capital reduction, a bonus, an increased capital holdings, gains from amalgamation, acquisition or dissolution of juristic companies or partnerships and gains on transfer of shares or partnership holdings;

5. Income from lease of property, breach of hire-purchase contracts and installment sale contracts;

6. Income from liberal professions such as law, medicine, engineering, architecture, accountancy and fine arts;

7. Income from construction and other contracts of work whereby the contractor provides essential materials other than tools; and

8. Income from business, commerce, industry, agriculture, transport and any income other than as specified in (1)-(7) above.

Since different types of income have different rates of standard deductions, taxpayers may choose to itemize expenses instead of taking the standard deductions specified by law. Consult with MSNA for further information and expert advice on Thailand personal income tax computation.

Opening a bank account may not be easy for some foreigners who want to open an account with a local bank in Thailand. Most of the time, foreigners are required to present their passport with valid Thai visa and work permit before they can open a personal bank account. The same condition applies to those foreigners who are authorized directors, branch managers or representative office managers of their entities in Thailand whereas copies of company registration papers and other additional supporting documents are also needed before they can open a business bank account.

However, regardless of any type of business entity, foreign business owners or managers can open a business bank account since there are no restrictions on foreign firms opening a business bank account in Thailand.

Aside from major local banks, international banks such as Citibank, HSBC, Standard Chartered and UOB provide business banking services in Thailand. All of these banks are able to provide full online banking facilities and support as well. Both local and foreign currency accounts are available under similar terms and conditions.

In opening a Thailand business bank account, there is a minimum initial deposit required but usually, it is a relatively low amount. Normally, the international banks require Baht 50,000 or more (or the equivalent in foreign currency) as the initial deposit. For major Thai banks such as Bangkok Bank, Kasikorn Bank, Siam Commercial Bank, etc, the minimum initial deposit for a Thai Baht account is usually Baht 10,000 for a current bank account and Baht 500 for a savings account. However, it is advisable to know the terms and conditions of these banks before deciding to open a bank account.

MSNA can assist you in opening a business bank account in Thailand. We can help you coordinate with the respective bank officers and prepare the necessary requirements. Consult now for further information.

Life insurance premium is one of the specific allowances that are allowed to use as deduction for computation of a taxpayer’s personal income tax in Thailand.

Life insurance premiums actually paid by taxpayer or his/her spouse on the taxpayer’s own life in amount not exceeding Baht 100,000 are allowed as a deduction for the calculation of personal income tax as long as the insurance policies are for a minimum period of 10 years and the insurer’s life insurance business is registered in Thailand.

For life insurance policies carried out from 1 January 2009 on wards, the amount of any health or accident premiums enclosed will not be deductible. Additionally, if the policy includes savings plan which provides an annual return to the policy holder exceeding 20% of the annual premium, the whole amount of insurance premium will be non-deductible.

However, qualified pension life insurance premiums paid to a Thailand based insurer from year 2010 on wards are allowed as a deduction in an amount not exceeding 15% of total taxable income with a maximum of Baht 200,000. Nevertheless, such allowance along with the contribution to a registered provident fund, the welfare fund, the investment in a retirement mutual fund, long term equity fund and the civil servant pension fund should not exceed Baht 500,000 in the same tax year.

Moreover, a life insurance premium paid for the taxpayer’s spouse who does not earn income is also allowed as deduction provided that their marital status still exists throughout the tax year and the amount paid is up to a maximum of Baht 10,000.

Consult with MSNA, English speaking accountants for your accounting and taxation needs.

One of our accounting clients has asked us about issuing invoice to reimburse the expenses that they initially paid on behalf of their clients and whether they need to charge VAT on top of the amounts.

As our response, we advised our client that there are two ways to issue invoice for reimbursement of expenses. One is that they need to keep all the receipts of expenses paid on behalf of their client and as their accountant, they should let us know about it before we prepare the monthly accounting so that we will not claim back the VAT for them and we will book them as accounts receivable and not as expense, then when they invoice their client to reimburse the amounts, they do not have to charge VAT.

Another way is that if it is not practical to get all the receipts of the expenses paid on behalf of their clients, they need to charge VAT when they invoice for the reimbursement.

Need help on accounting? Contact MSNA for your accounting, tax and other business needs.

Today, one of our accounting clients asked us some questions about tax refund.

We have some VAT receivables for this month. We would appreciate if you could advise us when we can get back the VAT refund from the Thai Revenue Department. We also need to know how you calculate VAT payable and whether all VAT that we paid for are refundable. Thanks.

Answer:

VAT payable is derived from Output VAT (Sales VAT) minus Input VAT (Purchase VAT).

You can claim a refund but usually, the process will take time before the Revenue Department decides to give it back to you. Normally they will need to see every supporting details, receipts, tax invoices, etc. to assess and check whether those taxes are real and you are applicable for a refund. In general, instead of applying for refund, most companies can also use this VAT receivable to offset with the VAT payable in the following months. In short, each month that your input VAT exceeds output VAT, you can claim a refund either by cash or tax credits to be used within the next months.

VAT refund can only be claimed within three years of the filing date. However, not all VAT receivables can be claimed back. Certain Input VAT such as VAT in entertainment expenses and petrol for company (4-door vehicles) cars cannot be used to get a VAT refund but can instead be used as deductible expenses against Corporate Income Tax (CIT).

Contact MSNA for Thai tax and accounting services.

The Board of Investment of Thailand (BOI) approved investment promotion criteria for the steel-dust recycling business.

The major factors that the BOI would consider for promotion are as follow:

1. Technology and environmental management including freight, stocking operations and proper waste disposal
2. Proposal for incentives and corporate social responsibility activities such as scholarships and community development fund establishment
3. Raw materials and marketing

However, only two most appropriate steel-dust recycling projects would be promoted by the BOI in order to match with the current local supply of steel dust which currently there are only 100,000 tons generated every year. Thus, if the amount of steel dust increases in the future, the BOI may consider approving more steel-dust recycling plants.

Interested investors shall submit project proposals to the BOI within 30 November 2012. The project proposals should include details related to the criteria and must accept the condition requiring that the raw materials used in their projects must be locally sourced only.

For investors who have already submitted applications, they have to amend their projects in order to comply with the new conditions. Amended proposals must be resubmitted within 30 November 2012.

Contact MSNA, English speaking BOI experts for Thailand BOI promotion, company registration and related business services.