As an accounting firm that provides accounting service to foreign companies in Thailand and also work permit service to foreigners, MSNA gets asked by our clients very often about employing foreigners when they don’t have a work permit. What should they do to be able to expense the salary?

If your Thailand company employed a foreigner who does not have a work permit then your company is hiring an illegal foreign worker, which is against the law. You will not be able to take advantage of the expense. The same applies to the case where he has a work permit with another company, but will work for your company too. If you hire a foreigner, your company must sponsor his work permit so as to be legal for the both of you. Or in other words, his work permit has to have your company as one of the employers.

If you hire foreigners who work outside of Thailand (Some of our clients are software companies and hire foreigners who work outside Thailand), this way, they don’t need to have a work permit. However, you need to withhold 15% when you pay them each time. In this case, you can use their invoice and a copy of their passport as the supporting documents for the expense and you have to submit the withholding tax of 15% to the Revenue Department within the 7^th of the month following the payment.

Contact MSNA for your tax and work permit questions.

When your Thailand company buys a passenger car of not more than 7 seats (cash or installments), the cost of the car allowed to be depreciated over 5 years is not more than Baht 1,000,000. This cost includes VAT, interest paid (in case of installments), registration fee and the car itself. So basically, when you acquire the car, it is booked as a fixed asset with the amount of all the costs previously mentioned combined. If your accountant calculates the depreciation expense of the car for the year using the straight-line method, the depreciation expense allowed by the Thai tax law is not to exceed Baht 200,000 a year (to be prorated to the exact number of days in the first and the last years). Whatever amount exceeding Baht 200,000 becomes non-tax deductible and will be added back to your bottom line profit when filling out the end of year corporate income tax return.

The expenses like a driver, car maintenance, gasoline and yearly vehicle tax can be tax deductible only if they are proven to be related to the business operation.

In case your company leases a passenger car of not more than 7 seats (including leasing with a driver), where the company will not own it at the end of the lease term, the lease expense allowed by law is not more than Baht 36,000 per month (or Baht 1,200 per day). For the expenses like insurance premium, car maintenance, gasoline and yearly vehicle tax can be tax deductible only if they are proven to be related to the business operation and it is advised that there should be an agreement with the lessor that the lessee is responsible to those items otherwise the Revenue Department may view it as the lessor’s responsibility and thus your company should not pay for them so they should become non-tax deductible for your company.

Contact MSNA for your Thailand tax and accounting questions.

The Thai cabinet approved tax measures to promote the development of the capital market in the country. Details of such tax measures are as follows:

1) The tax rate is to be reduced and personal income tax is to be exempted on dividends received by Thai tax residents from a foreign company or partnership in respect of securities listed on the Stock Exchange of Thailand; and

2) Income tax is to be exempted for income from sales of securities listed on stock exchanges in ASEAN member countries, provided that the sale is made through the system of the Stock Exchange of Thailand.

Contact MSNA for your Thai accounting and tax questions.

In an effort to promote the shooting of foreign films in Thailand, the Thai cabinet has recently approved personal income tax exemption for such foreign actors. The draft ministerial regulation specifies that income derived by a film actor who is a foreign tax resident during the period from 1 January 2011 to 31 December 2015 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.

However, since this is just a newly approved ministerial regulation, further details on the implementation of these measures and associated regulations have yet to be announced.

Contact MSNA for your Thai accounting and tax questions.

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.