The extra income from gratuity or service charges that entertainment establishments give to its employees could not be included in the Baht 300 daily minimum wage. Because it was money from customers and not from the employer, service charges are considered as welfare under the Labor Relations Act.

However, if any employer insists on including the service charge, he must discuss it with the workers first. In case both sides could not agree, Labor Court of Thailand will mediate to resolve any employment change issues. The Supreme Court has also ruled that an employer could keep 22% of the service charge for workers’ welfare and share the rest among the staff.

Contact MSNA for questions about Thailand Labor Law

The Thai Government has recently approved a 15-day paternity leave for state officials or employees whose wives have given birth to take care of the new mothers and babies. The draft royal decree permits the state officials or employees to take up to 15 days off at full salary within 30 days of the child’s birth.

If the state officials wanted to take the days off to take care of their wives after the mentioned 30-day period, it would be up to their supervisor, at the director general or equivalent position, if the officials would receive payment during the leave period.

The officials taking extra days off to take care of their newborns would not be entitled to the salary payment.

The draft royal decree also allows state officials who have not been ordained as Buddhist monks or on a pilgrimage to Meccato take religious leave with salary payment for up to 120 days, while officials wishing to take leave for vocational rehabilitation were entitled to leave with salary payment for up to 12 months.

Contact MSNA for your questions on this draft royal decree and for more information about Thai Labor Law.

Question:

Can we as a Singapore Company conduct a two-day training course for the public or companies in Thailand? Will there be any Tax and Work Permit When Organizing Training Courses in Thailand?

Answer:

If a company in Thailand arranges the seminar/training and hires your company to conduct it, they will withhold taxes from the payment they make to you. So for sure you will have paid your tax in Thailand for the earnings. Even so, the Thai company should get a work permit for the persons who will conduct the seminar to comply with the Working of Alien Act.

However, if you conduct it yourself without anyone hiring you, you will be breaking the foreign business law. Foreign companies cannot just come into Thailand and do business.

Contact MSNA for your accounting, tax and work permit questions.

Question:

Is it compulsory in Thailand to appoint a company secretary? Do you provide such service?

Answer:

Appointment of company secretary is not compulsory. However, if your company in Thailand has no secretary at all, you need to rent an office where there is someone to forward mails to you because when Thai authorities send letters a few times a year to the company, you need to get them in case it is a tax audit by the Revenue Department.

Moreover, although there is no necessity to appoint us, we can provide you the services like the role of a company secretary. We can assist you on preparation and filing of various legal documents required under Thai law per time such as Notices, Minutes of Meeting, updating Shareholder Lists, and the likes. We can also help you in changing company’s particulars such as change of office address, company directors, company shareholders, registered capital, etc.

Contact MSNA for your corporate and other business needs.

Today, our U.S. CPA answers a question from one of our payroll and tax clients regarding his U.S.personal income tax.

Question:

I’m a dual citizen (Thai & US) working for a multi-national company in Thailand. I was born and raised in Thailand and have always reported and filed my Thai tax returns. I’m currently working under my Thai citizenship and making below US income standards. Do I need to file my U.S .tax returns now?

Answer:

With respect to filing your U.S. Income Tax Returns, every citizen is required to file a return based on their world-wide income. That would, of course, include your Thai Income. Your income would be excluded under the foreign earned income exclusion, and accordingly, no tax would be due in theU.S. Hence, it simply becomes an administrative requirement. However, if your income exceeded $100,000, then it would be possible that taxes would be due but it doesn’t sound like this is your situation having a dual citizenship.

Questions on U.S.tax returns filing? Contact MSNA for professional assistance.

We have received an inquiry from an avid reader of our Blogs. Today, THAI ACCOUNTANT answers his question.

Question:

Hi, allow me to send you a question because I can’t find the answer
in any other place.

On the self declaration to the Thai Revenue Department, is it possible to deduct Baht 190,000 for a person with disability under and over 65 years of age?

I received a 100% disability pension from my home country and have a document in English confirming my situation and the document is verified by the Embassy of my home country. What documents does the Thai Revenue Department require to get the above deduction accepted?

Answer:

Thank you for your question. To be eligible to the disability deduction, you need:

1. to be a Thailand tax resident (residing in Thailand for 180 days or more)
2. to be not more than 65 years old
3. to have a disability card issued by the Department of Empowerment of Persons with Disabilities (DEP), Thailand Ministry of Social Development and Human Security.

We are not sure if the National Office for Empowerment of Persons with Disabilities will issue a disability card for you as you are not Thai. And if you don’t have the card you cannot use 190,000 tax deductions. You may want to contact the Department of Empowerment of Persons with Disabilities (DEP) and see if they can issue you a disability card.

Contact MSNA for your tax questions in Thailand.

Setting up a branch office of a US company is possible in Thailand. Today, Thai Business Expert summarizes the steps and timeline for MSNA to set up a branch office of a US company to operate in Thailand as follows:

1. We would like to see your US Company’s documents like Articles of Association, By Laws, Operating Agreement, Certificate of Registration or Certificate of Incorporation (Different US states call corporate documents different names). Basically, we need the official documents that show the company name, registration number, address, registered capital (if any), names of shareholders (if possible) and names of authorized directors. Also we need a passport copy of the president/CEO who is going to sign all the papers and the name of the American (or Thai) person who will be the Thailand branch manager. After we see those documents, we may ask for more papers.

2. We will use the information from step 1 to prepare an Affidavit and a Power of Attorney for the Branch Manager for the president or the CEO of the US company to sign, and we will also prepare a General Power of Attorney for one of MSNA’s staff to be able to sign and file all the papers on your company’s behalf. The affidavit and the POA’s will be emailed to you to print out and sign and have them notarized. We need at least 2 business days to draft the 3 documents for you.

3. Once we get all the papers from step 2 from you, we will apply with the US Commercial Service inBangkokfor a letter certifying that the majority of shareholders and directors of the company are American and so the company is entitled to the right perThailand- USA Treaty of Amity to operate the business inThailand. – This step usually takes 1 week for the US Commercial Service to issue the certification letter.

4. We will submit all the papers to the Foreign Business Committee, Ministry of Commerce, to get the Certificate of Business Operations per Foreign Business Law. – It usually takes 3-4 weeks for the certificate to be issued. Please note that this step also requires a passport copy of the Branch Office Manager showing entry intoThailand a few days before we submit the papers.

5. We will register the Branch Office into the Thai tax system (including VAT). – We need only one day.

6. We will get a work permit for the American Branch Manager so that he can sign any papers on behalf of the Branch Office, including bank accounts. – This takes about 10 days.

7. If you would like, we will prepare the papers and meet with your Thailand Branch Manager at a bank to open a saving account and/or a checking account for the Branch Office. – This takes one day.

Setting up your US company’s branch office inThailand can be relatively easy with MSNA. Contact us for more questions and information on company registration and setting up a branch office inThailand.

A question on withholding taxes: We hire a company to repair old molds and to produce new ones. Do we have to withhold taxes when we pay them? In another case, we have a manufacturing company (who normally produces and sells its own products) produce our plastic products using our own molds. Are we responsible for withholding taxes?

Answer:

When you hire a company carrying on repair service, to repair and produce molds and the required materials are provided by that company itself, such transaction is considered to be a hire of work for the production and repair service. The payment for this kind of service is therefore subject to a 3% withholding tax.

As for the manufacturing company by which you order your goods to be manufactured using your provided mold, and required materials are sourced by that company, in accordance with your orders, the transaction is considered to be a sale of goods and thus, withholding tax does not apply.

Contact MSNA for your accounting and tax questions.

Here is a VAT question from one of our clients:

Hi, our Thai company provides information technology services, including systems monitoring and software management to a company overseas via a website based in United States. Part of our service is to send our employees to the client’s office overseas from time to time for consultation and training purposes. Do we have to include VAT when issuing service invoice to our clients?

Answer:

Services in relation to systems monitoring and software management provided to clients outside of Thailand are considered as an exportation of services which is entitled to a 0% VAT rate.

Learn more information on the VAT system of Thailand on www.MSNAGOUP.com. Contact MSNA for your accounting and tax questions.

As the deadline for submission of Personal Income Tax Returns is nearly approaching, we often receive questions from our individual clients concerning the deductions and computation of their personal income taxes. Here is one of the questions that were answered by the THAI ACCOUNTANT:

Question:

Is it considered a taxable income for the employment benefits in terms of childcare facilities provided by our employer?

Answer:

Employee benefits in the form of contributions made by employers in relation to providing childcare facilities are exempted from Thai tax from 1 January 2011 onwards. The exemption only applies to the employee’s natural children, as opposed to adoptive children, and the childcare facilities must be licensed to operate as part of employee benefit scheme under Child Protection Law.

Contact MSNA for your accounting and tax questions and for more information on Thailand personal income tax.