In Thailand, when a VAT registered company is in the business of selling goods (wholesale or retail), the value added tax (VAT) point occurs when you deliver the goods or when you get paid whichever comes first. VAT point determines when to issue a tax invoice. For more clarification:
When you deliver goods, even when you have not received payment, you need to issue a tax invoice.
If a customer just makes a deposit, though you have not delivered the goods, you need to give them a tax invoice (and a receipt) for the amount you got.
Now, for service businesses, when to issue a tax invoice? The VAT point occurs when you receive payment, whether or not you have rendered the service. So make sure you issue a tax invoice and a receipt for the amount of money you receive. If you just send an invoice to your client asking them to pay you, you don’t have to prepare a tax invoice yet.
Please note that not everyone can register in the VAT system. Some business activities are exempt from VAT. Others can register in the system, but if they have not reached Baht 1.8 M in gross sales, they may choose not to be in the VAT system yet.
If an individual or a company is not registered in the VAT system, they cannot issue a tax invoice and they cannot claim the 7% VAT they pay to vendors.
Contact MSNA Group for tax planning, accounting and tax compliance services.
Normally when you (as a company) rent an office space, you need to deal with rent withholding tax of 5% (to submit to the Revenue Department in the following month). You will pay the landlord only 95% in cash amount and prepare a withholding tax certificate for the amount of 5% that you withhold and give it to the landlord. If the landlord is a company, they may not have any problem receiving the amount of 95% from you in cash and 5% in a withholding tax certificate because they can use the withholding tax certificate as a proof of their prepaid corporate income tax at the end of their accounting year. However, when the landlord is an individual, many of them normally do not report their rental income on their personal income tax return. They will demand 100% rent amount from their corporate tenants. They will make you submit the rent withholding tax from your own pocket. If you do not accept it, they will probably not want to rent their space to you. Of course, they are wrong. You are just doing what the Thai tax law requires you to do. Most individual landlords whose properties are in high demand will not care. They want their rent in full amount or else you should find another place to set up your shop or office. It is your choice to see what they will do if you give them only 95% payment and a certificate showing the rent withholding tax of 5% . Most tenants will give in because they have already spent a lot of money renovating the space to suit their business needs and cannot afford to move to a place whose owner will accept that they need to pay tax on their rental income. Some individual landlords specify in the rental agreement that the tenants will pay for any taxes, including withholding taxes. In that case the tenants know from the beginning that the 5% rent withholding tax will come from their own pocket.
Why someone got a BOI promotion for their business and want
to sell it? We have some foreign clients who came to Thailand to apply for BOI
so that they can own their business 100% without Thai nominee shareholders.
Even though we work quickly with the clients to prepare the BOI application,
sometimes, the BOI people have too many cases on their hands and they cannot
approve a business project within 40 business days as promised on their
website. Some applicants wait for 10 months or one year before they finally get
the approval letter from the BOI.
Waiting to enter the market in Thailand for too long, many
investors have changed their business expansion plan. Many of them do not want
to open their BOI company here anymore after they got the certificate.
This is why once in a while, we have a BOI company for sale. If you do not have time to wait that long in order to operate your business and enter the Thai market, check with us. Contact MSNA Group now for a chance to buy a BOI company that has never been in operation.
When you buy a BOI company from us, we understand that you
trust us. We will guarantee that the company you buy will not have any
problems.
The Thai Board of Investment (BOI) provides both
Thai and foreign investors opportunity to obtain investment promotion for a variety
of businesses under applicable policies and criteria. Those businesses under
the BOI promotion will be receive incentives depending on their business
activities and merits to the country.
TISO
Currently, Trade and Investment Support Office
(TISO) is a promoted business activity (category 7.7) on the BOI promotion
list. To apply for TISO, the business must meet the two main conditions:
1. Annual sales and administrative expenses must be
at least 10 million baht.
2. The business plan and scope of business must be
one of the followings:
2.1 Monitoring and/or servicing associated enterprises including providing or letting office or factory building to company’s associated enterprises
2.2 Advisory services on business operations, except those engaged in buying and selling securities and foreign currency exchange. Accounting, legal, advertising, architecture and civil engineering businesses must obtain business licenses from the Department of Business Development or related government agencies prior to submitting the investment promotion application
2.3 Information services on goods sourcing.
2.4 Engineering and technical services, except those related to architecture and civil engineering services.
2.5 Business activities related to machinery, engines, tools and equipment, such as: – Importing for wholesaling – Training services – Installation, maintenance and repair – Calibration
2.6 Wholesaling products manufactured in Thailand.
2.7 International business process outsourcing whose services are provided through telecommunication networks, such as administrative services, finance & accounting services, human resource services, sales & marketing services, customer services, data processing, etc.
Incentives
The incentives for TISO cover only the non-tax
incentives. That is to say, the business under this category will receive no corporate
income tax exemption.
Regarding to aforesaid fact, this type of promotion
will mainly benefit foreign investors. With these non-tax incentives the
promoted business will receive:
Permission to own land;
Permission to take out or remit money abroad
in foreign currency;
Permission to bring in skilled workers
and experts to work in investment promoted activities; and ultimately
Permission for 100% foreign ownership of
the promoted business.
If you are interested in setting up your business in Thailand, we highly suggest you to get an experienced agent like MSNA Group to assist you, to deal with the complicated process of business set up and make a plan for your next move.
Contact MSNA Group for your business need in Thailand.
Over the past five years, not only the number of companies
under the BOI investment promotion has significantly grown, but also the number
of foreign expatriates working with those companies. It is clear that a work
permit to be granted under the BOI investment promotion is one of the channels
for a foreigner to stay and work in Thailand.
However, the fact is people, from time to time, change their employer due to many factors: job incentives, salary, position, etc.
To change employer from a BOI-promoted-company to another,
the following steps are for an employee holding a work permit under BOI to take.
Step 1. Suitability and
compatibility
Similar to applying for a work
permit in the first place, for changing employer, such foreign employee must be
well-suit for the new position in the new company with supporting biographic,
education background, work experiences and qualifications.
Step 2. Approval of position
in the Single Window System
Unless the company has an
available approved position in their Single Window System, the company will
have to get its new position to be approved by the BOI by uploading all required document as well as providing
position details namely: position title, scope of work, qualification for the
position and work duration, and so on, into the system.
Step 3. Removing the employee
from the existing position
The current employer then has
to remove the employee from the existing position as well as to cancel the current
work permit and visa via the Single Window system. The work permit holder
should make sure that the current employer will process the cancellation of his
work permit and Visa in a way that it will take effect not less than 15 days from
the day they submit the notification online. This way, the new employer will
have enough time to process the new work permit.
Step 4. Application for the
placement in to the new position with the new employer
Since the employee can use
his/her existing Non-Immigrant “B” visa to get
a new work permit under the BOI promoted business of the new employer, the
process from this step will be similar to applying
for a work permit under a BOI company the first time. Pursuant to the approval
of the Step 3, the new employer will have to
submit all necessary documents through the Single Window system (such as bio
data form, a copy of passport and a copy of certificate of the employee, etc.
Step 5. One Stop Service Center and Digital Work Permit
Upon
the approval of step 4, the employee will go to One-Stop Service Center to pick
up his Work Permit and extend his Permit of Stay to a longer term.
The keys of the success of changing employers are timing and precision. If any of the steps falls behind the schedule or is done incorrectly, the employee’s visa will expire before the placement is done causing him to leave Thailand and, once again, to apply for a new Non-Immigration “B” visa. This is why you need an expert like MSNA Group to assist you with each step. Contact MSNA Group for your business needs in Thailand.
We have an inquiry from many clients of how to calculate overtime payment for monthly salaried employees. If you have not read our excerpt of Thailand Labor Law, please consider reading it first. Below is the answer and an example of how to calculate overtime payment.
The maximum
number of working hours of employees is fixed by law at 8 hours a day and 48
hours a week in total. Most employers, however, set it at 8 hours a day and 5
days a week (so 40 hours a week). For work performed in excess of the maximum
number of hours, which is fixed either by the company’s regulation or by specific
employment agreement (if the latter is lower), the employee must be paid
overtime compensation. The rates of overtime are:
– 1.5 times
if the employee works outside of normal working hours on normal work
days.
– 2 times if
the employee works during normal working hours on a holiday. However, in case
of monthly salaried employees, the employer will pay only 1 time extra because
his monthly salary has already covered 1 time when he does not work on the day.
– 3 times if
the employee works outside of normal working hours on a holiday.
Example: A
company’s normal work hours is 8 AM to 5 PM with 1 hour lunch break in between,
Monday to Friday. If an employee whose monthly salary is THB 24,000, works for
an hour after 5 PM, then the overtime rate is 150% of his hourly rate. You need
to use 30 days per month (even if a particular month has more or fewer than 30
days) and 8 hours per day to calculate his hourly rate. In our example, his
hourly rate is 24,000/30/8 = THB 100.
If the same
employee works on a Saturday during 8 AM to 5 PM with 1 hour lunch break, he
will be paid an OT of THB 100 per hour for this day.
If this
employee happens to work after 5 PM on a holiday, he will receive 3 times the
normal hourly rate for this period of work which is 100 x 3 = THB 300 per hour.
When the company moves its office, it has to register the
change with the Department of Business Development. However, in case it is
registered in the VAT system, it has to file Form PP09 to change the address with
the Revenue Department at least 15 days before registering the change with the
Department of Business Development. Failure to do so will result in a fine of a
few thousand Baht.
Now to register the change of address with the DBD:
A. Registering the change of address within the same
province can be done within one day. However, the preparation of the
registration forms and related documents may take much longer.
B. Registering a relocation to another province will result
in an amendment of the section 2 “Location of the company’s office” of the company’s
Memorandum of Association (MOA). The process will take roughly 20 days with the
following steps
1. The MOA can be amended through the Extra Ordinary
Shareholder’s Meeting.
2. To summon the meeting, the signatory director will have
to send a letter calling for the meeting to shareholders not less than 14 days
before the date of the meeting.
3. Once the meeting has been held and the relocation has
been approved through the meeting resolution, the relocation can then be
registered with the Office of Partnership and Company Registration.
The mentioned process is only for the registration of the relocation of company’s registered office with the Department of Business Development. You also have to notify the Social Security Office if you have been registered with it when you first had an employee. Contact MSNA Group for your business needs in Thailand.
– The employee is entitled to take Maternity Leave for a
maximum of 98 days. So if she takes less than 98 days, it is fine.
– The employer will have to pay to the employee up to 45
days of wage. This means, if the employee takes 50 or 60 or 90 days of leave,
the amount that the employer will have to pay is 45 days of wage anyway. On the
other hand, if the employee takes less than 45 days of leave, the amount
entitled to the employee shall base on the actual number of days of leave.
– In an event the wage is a monthly salary, one day of wage
shall be equal to the amount of salary divided by 30.
2. Payment Term
– The payment shall be made on the date of regular payday.
To make it clear please see the below example:
“The regular payday is on the 30th of each calendar
month. The employee takes a 45-leave-day from the 23rd June 2019. At the end of
June, the employer will have to separately pay a 23 days of wage for the work
done by the employee and 7 days of wage for the Maternity Leave(from 24th to
30th).
By the 31st July 2019, a wage of 31 days shall be made to
the employee and the rest of the wage of 8 days shall be paid on 30th August
2019.”
On the side of employee
The female employee can receive Child Delivery payment of
THB 13,000 from the Social Security plus 50% of the 90 days’ wage, but the
monthly salary cap for Social Security’s purpose is THB 15,000.
Let’s say if the monthly salary is THB 50,000, the cap
allowed by the SSO is THB 15,000. The 90-day-wage shall be 15,000 x 3 = 45,000.
So 50% of 45,000 is 22,500. Hence THB 22,500 shall be paid by SSO.
Contact MSNA Group for your business needs in Thailand
We got a question from a client about corporate health
insurance policies. Thailand has Social Security system. The employer is required to deduct 5% (maximum
Baht 750) from the employee’s salary and match the amount from their pocket and
submit it to the Social Security Office. Social Security covers free medical
treatment for most diseases at the hospital the employee chooses when he first
joins the employer. Most companies in Thailand do not offer health insurance
for their employees. However, some big companies do and they seem to be
attractive employers to the job seekers.
Accounting for BOI companies with various sources of incomes
Most people misunderstand and assume that with the BOI status, they can receive incomes from many different sources. We want to explain here that having a BOI promoted company does not always mean you can always do any businesses and earn incomes from different sources. But in case you can (explain down here), you want to read further about accounting for BOI companies with various sources of incomes.
Thailand Foreign Business Law allows foreigners to do certain business activities. For most business activities, if you do not want to have a Thai majority partner, you need to get a permission to operate the business. One way for foreigners to own their business 100% is to get a BOI promotion whose main purpose is to promote investment in the businesses that truly benefit Thailand. The companies with BOI promotion can operate only the business activities that the BOI approved on the BOI certificates.
Now assuming that your company’s major shareholders are Thai, you may still want to get the BOI promotion for the tax benefits; corporate income tax exemption, machinery import duties reduction, etc. The benefits granted by the BOI are only for the business activities approved by the BOI. However, as a Thai company, you will be able to do other business activities too. This is when you have to be careful in your bookkeeping. In doing accounting for BOI companies with various sources of incomes, you need to separate the incomes and expenses into BOI business and non-BOI business. For the expenses that are paid for the whole company (benefiting both BOI and non-BOI businesses), you will have to allocate them using the most reasonable method. If 40% of the office space is used for the BOI business and 60% is for the non-BOI business, then you will allocate rents accordingly. If specific employees only work for your BOI business, then their salaries will be allocated to the BOI business while the other employees’ salaries will go to non-BOI business.
Contact us today to find out if your business is eligible for BOI promotion or if you need help with accounting.
