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.

The Thai BOI has decided to extend a flood relief measure on machinery replacement until 31 December 2012 allowing more than 150 companies in Pathum Thani and Ayutthaya to have access to this incentive and to help entrepreneurs who need assistance to renovate their facilities.

The Board considered that many BOI-promoted companies that had been seriously affected by the massive flood were preparing to make or were making decisions to apply for the investment incentives both for replacement of damaged equipment or as new investments.

As of 30 June 2012, the Board has found that the total number of projects receiving approval for import duty exemption for machinery replacement is 490 projects with the total imported machinery value of Baht 108.65 billion.

Further details of this extended flood relief measure have yet to be announced. Contact MSNA for expert advice on BOI promotion and Thai taxation.

Just recently, the Thai government has approved certain tax measures and official fees related to the funds to develop infrastructure projects. Here is a summary of these measures and fees:

1. For the transfer of immovable property registration, either a transferor or transferee, the rate of official fee is 0.01% capped at Baht 100,000;
2. For the registration of mortgage, the rate of official fee for the registrant is 0.01% capped at Baht 100,000;
3. For the lease of immovable property registration whether a lessee, sub-lessee, lessor or sub-lessor, the rate of official fee is 0.01% capped at Baht 100,000;
4. For the property rights with remuneration registration, the rate of official fee is 1%.

Although it has been approved, further details on the implementation of these measures and official fees have yet to be announced. Contact MSNA, English speaking accountants and tax experts for your accounting and tax business needs.

In Thailand, Trade and Investment Support Offices or TISO is one of the few ways on how foreigners can operate their service and trading companies and achieve 100% foreign ownership.

The Board of Investment can grant TISO incentive to foreign companies engaged with different types of services and trading in the country to help facilitate their business operations without the requirement of a Foreign Business License (FBL). Hence, a foreign company granted a TISO must still obtain a foreign business certificate which is less complicated than obtaining a FBL.

Some eligible activities allowed under the TISO incentive are as follows:

1. consulting services to affiliates

2. engineering services

3. export trading

4. Wholesaling, installation, maintenance, repairs of machinery & equipment, etc.

Some non-tax incentives are as follows:

1. 100% foreign ownership
2. Rights to own land for an office
3. Visa & work permit support for foreign experts

Contact ThaiLawyers.com, experts in company registration, BOI promotion, Foreign Business License and visa & work permit in Thailand.

The Thai government has recently implemented Royal Decree No. 289 (B.E. 2012) which grants a 5-year personal income tax exemption for foreign film actors who earn income from foreign movies shot in Thailand and approved by the National Committee for Movie and Video. This exemption is applicable to income derived from 1 January 2011 to 31 December 2015.

It can be recalled that a draft ministerial regulation related to this exemption has been already approved by the government earlier this year in a bid to attract foreign movie producers and promote tourism in Thailand. Hence, a foreign film actor which is considered as a foreign tax resident during the exemption period shall be exempted from personal income tax only if:

1. Such income was derived from performance in a foreign film produced by a company or partnership incorporated under a foreign law; and
2. A filming permit has been granted in accordance with the laws relating to film and video.

Need help in filing your Thai taxes? Contact MSNA, English speaking tax experts for professional advice.

American citizens can be permitted to enter Thailand through different types of visas as follows:

1. Visa Exempt Entry

U.S. citizens carrying a tourist passport and having a return airline ticket do not require a visa to enter Thailand. The passport must still be valid for at least six months to be allowed entry. Upon entry, Thai immigration officials will place an immigration stamp in the passport giving a 30-day permit of stay in Thailand if arriving by air or a 15-day stay if arriving by land. This permit of stay may be subsequently extended for an additional 7 days by paying a Baht 1,900 fee to the Thai Immigration Bureau office.

For those Americans who are carrying a diplomatic or official passport, it is advisable to obtain a visa before arriving in Thailand. In some situations, it is possible for diplomatic or official passport holders to enter without a visa, but it is up to the precautions of the airline and/or immigration personnel whether or not you will be granted an entry.

2. Tourist Visas

If an American wants to stay in Thailand for more than 30 days, he or she may consider obtaining a tourist visa at the Royal Thai Embassy or Consulate in theUnited States, before arriving in Thailand. This tourist visa will allow an initial stay of 60 days and must be used within 90 days from the date of issue. After arrival in Thailand, a tourist visa may be extended twice, each time for an additional 15 days. There is a fee of Baht 1,900 for each extension.

Americans who wants to stay in Thailand for more than 90 days during any six-month period will be required to obtain a valid Thai visa from a Thai Embassy or Consulate that is authorized to issue visas. The U.S. Embassy advises all Americans who wish to obtain a Thai visa to contact the Thai Immigration Bureau for complete visa requirements and regulations. Individuals who do not comply with Thai visa regulations may be possibly denied entry to Thailand at the border.

3. Work Visa

All foreigners (regardless their nationalities) who are interested in working in Thailand must obtain a valid Thai work visa and Thai work permit. In order to be granted a work permit, an application must be filed by a company, foreign government, or other organization in Thailand on behalf of the work visa applicant. Once granted, the work visa can be extended to one year.

4. Retirement Visa

Thai retirement visas are available to foreigners aged 50 years and above. These visas are valid for only one year and any kind of employment is strictly prohibited. According to Thai Immigration, applicants must have the following qualifications in order to be eligible for retirement visa:

– Applicant must be able to provide evidence of a pension or other regular income from a source outside ofThailand;

– Applicant’s pension or other regular income must be no less than the equivalent of Baht 65,000 per month;

– Alternatively, the applicant may meet the financial requirement by maintaining a Thai bank account with a minimum balance of Baht 800,000. Thus, applicants will need to show that they have Baht 800,000 in savings each year when they renew their visa.

– Any applicant married to a Thai citizen may be able to receive a visa on that basis rather than retirement.

5. Visa Overstays

If a person does not leave Thailand upon the expiration of his or her permit of stay or visa, this person is already considered staying in Thailand illegally. And, in order for him or her to leave the country after his visa or permit expires, it will be necessary to pay a fine for overstaying of Baht 500 per day up to a maximum of Baht 20,000. The fine is payable to the Immigration Bureau, at the Suvarnabhumi Airport Immigration office or other departure points.

Thailand visa rules regulations are subject to change without prior notice. For further assistance, contact MSNA lawyers for visa and work permit services.

Just recently, an extension of VAT reduction period has been approved by the Thai cabinet as a way to promote economic growth due to 2011 and 2012 floods. With this measure, VAT rates will be reduced according to the following:

1. The VAT rate will again be reduced to 6.3%, effective from 1 October 2012 to 30 September 2014. Thus, the collectible VAT rate after adding municipal tax at one-ninth of the 6.3% will be 7%.
2. After the above period, the VAT rate will then be returned to 9% and therefore, the collectible VAT rate after adding municipal tax at one-ninth of the 9% will total 10%.

However, one should note that this normal VAT rate of 10% has always been reduced to 7% (by way of Thai cabinet’s approval) from the time VAT was introduced into the Thai tax system decades ago as a way to boost the Thai economy.

Contact MSNA, Thailand English speaking accountants, for expert advice and guidance on Thailand accounting and taxation.

As a move to prepare Thailand for ASEAN Community (AC), which is set to be formed in 2015, the Thai Ministry of Labour proposes Office of the National Economic and Social Development Board (NESB) 10 projects, hoping that the country will have labour protection standard that is recognized at international level, and will be prototype of human resource development for other countries.

The Thai government has resolved to have the NESDB, the Secretariat of the Cabinet, and concerned agencies mapped out a master plan to help prepare Thailand for the AC and to have these agencies work together to help push the AC into existence by 2015.

The Ministry of Labour has been tasked to arrange a three-year government operational plan (2013-2015) as well as other plans and projects to help Thailand prepare for the AC. They must be in line with the building of the AC, which consists of three main pillars namely ASEAN Security Community, ASEAN Economic Community (AEC), and ASEAN Socio-Cultural Community. The Ministry has also instructed concerned agencies to map out 10 projects to help Thailand prepare for the AC and rank them in order of importance, from the least important project to the flagship project.

So far, three projects were designed by Department of Employment such as:

– Information system development project to support free flow of labour,

– Laws/rules/regulation improvement project, and

– Awareness building project on decent work.

The Department of Skill Development has designed two projects:

– Skill development project for the preparation of the AEC, and;

– Occupational skill development projects for women, youth, old-age people, people with disability, and informal workers.

Meanwhile, the Department of Labour Protection and Welfare has designed two projects: a project to create workplace prototype and a project to improve labour management.

The Office of Social Security has also designed 2 projects, which are:

– A project to transform the workers rehabilitation center into the South East Asian workers rehabilitation training center with comprehensive training curriculum for workers with disability, and

– A project for the protection of ASEAN social security rights.

Moreover, Office of the Permanent Secretary has also designed one project, which is a study of capability of Thai workers in trade, service, and investment sectors.

Implementation of these projects has yet to be announced.

Contact MSNA for your inquiries and business needs.