Today, we got a question from one of our accounting clients regarding VAT.

Question:

I have just purchased a plane ticket for a business trip overseas and the travel agency issued a Tax Invoice/Receipt but shows 0 VAT. Is this correct?

Answer:

Yes, the receipt is correct. They cannot collect VAT from you when it is air ticket or transportation.

Tour companies; usually have pre-printed form of receipt/tax invoice so they can also use it when they arrange tours, which they need to collect VAT from their clients. When they receive money for just transportation, they cannot collect VAT and this paper should be called only “receipt”. For them to do it correctly, they need to cross out the word “Tax Invoice”, but if they did not do it, it is not your problem because there is no VAT that you will wrongly claim back anyway.

Contact MSNA for your Thailand accounting and tax questions.

Today, we got this inquiry regarding the expenses of a branch office in Thailand.

Question:

For the expenses of our Thailand branch office, can it only be paid from our branch office account or the head office can pay on its behalf and then invoice the branch office later for reimbursement?

Answer:

Expenses incurred by the branch office can be paid by anyone. The head office can pay expenses on behalf of the branch but please make sure the branch get all invoices and receipts from the vendors in its official name and address. Also, the branch must withhold taxes where applicable. Thus, then the branch has to pay back to the head office, you can just send a memo or an invoice.

Contact MSNA for your accounting and tax questions.

Cloud accounting service in Bangkok Thailand is now offered by MSNA. In the fast-paced world of technology and business, a lot of processes are quickly changing. Many would find that there is a lot of work that should be done on a day to day basis for the business to survive and progress. Keeping up with this kind of issues could consume an ample amount of time and resources for the company.

One of the most vital component of a company that every business should focus to but many would often take no notice of, is accounting. Good management of the accounting books would be helpful for the company in using the available financial information for their decision making and to be able to see the company’s performance. But having to handle different accounting issues would be a lot of work. We believe that there are ways to work smarter – not harder or longer – to focus more on the business and earn more profit.

As our aim to serve our clients beyond their expectations, we always need to be on the loop of the most up-to-date processes. We now introduce our clients to cloud accounting software for our Accounting and Bookkeeping Services. With this kind of software our Accountants and the clients are able to access their books anytime online; data are saved in the “cloud”, no need for keeping a server on their offices cutting off some great amount of costs – costs of keeping professionals that would have to manage all IT issues, costs on buying those equipments and those unexpected costs when troubleshooting and updates are needed. All will be needed would be a stable internet connection and any device that can connect to the internet.

The cloud accounting software that we are handling is very simple that every client wouldn’t have to worry on using it; we can also provide training in such cases that this would be needed so any person from the company can be a user of the software to access the data anytime they needed it.

Because clients are able to have the access on the cloud accounting software in real time there is transparency on management of accounting books for them. The company’s financial information would be available for its users on time whenever they need it.

Our Accountants have undergone extensive training in using this cloud accounting software and can offer complete range of Accounting and Bookkeeping services from setting up the books, preparing tax and financial reports, maintaining accounts, and recording of all your accounting transactions online.

Contact info@msna.biz for cloud accounting service.

Recently we were commissioned to assist on a due diligence investigation for one of our clients for the proposal of its headquarters to undertake initial public offering (IPO) and to list on the Securities Exchange overseas.

First, we discuss Initial Public Offering (IPO). IPO is done by a company who wants to have their stock be sold to the public through the Stocks or Securities Exchange. That is why it is usually referred to “going public”. Since this involves “selling” this could also mean raising cash for the company, hence increasing capital.

One of the requirements to be done to get into IPO is due diligence. Here we will talk only about legal due diligence. It is a comprehensive investigation of company’s legal requirements, checking of company’s compliance to relevant authorities, and a thorough understanding of all the company’s obligations. This kind of practice greatly requires examination of legal matters.

For the legal due diligence that we had with one of our clients for the purpose of IPO, we performed the following actions:

• Confirm the good standing of the Company (i.e. that the Company is duly incorporated in Thailand and registered accordingly and that its statutory records and filings with the relevant authorities are up to date and accurate);
• Confirm current ownership structure of the Company (i.e. details of all issued shares of the Company; and details of ownership (legal and beneficial) and control of the Company);
• Confirm details of all directors; secretaries and officers of the Company;
• Review all statutory records and registers of the Company, filings and the minute books available in the data room (access to be provided) and through publicly available searches;
• Verify the details of all existing encumbrances of the Company;
• Perform litigation and winding-up searches on the Company;
• Confirm that the Company has all governmental, statutory or other permits, authorities or licenses required in order for it to satisfy its obligations under material contracts to which it is a party;
• Verify that all fees due in relation to all Licenses have been paid and all conditions are complied with;
• Confirm full details of any current breach of any License (as per publicly available information);
• Confirm that the Proposed Restructure / Proposed Listing will not result in a breach of any License or an entitlement for the issuer to revoke, qualify or vary any License; and;
• Review all material contracts in respect of which the Company is a party and provide summary (including details of change of control triggered by the IPO and Proposed Restructure).

IPO is a way to potential growth for any company. But this move would never be easy for anyone; one should be eligible by all means since it involves the public and not all companies would qualify to have their stocks be listed publicly. The company should consider on whom they can rely for the process in undertaking IPO for it to be successful. At MSNA Group, we have our Thai Accountants and Thai Lawyers that has good background on financial and legal aspects of businesses in Thailand to serve in any way possible in attaining our client’s targets. And as our commitment, we will be with them every step of their way – from start-up to growth.

Moreover, due diligence investigation can be carried out for different purposes, the most common purpose for this service is when a potential buyer would like to evaluate a business or company for merger and/or acquisition and another would be, as we’ve mentioned earlier, when a company would like to have their shares be available and listed publicly.

Contact MSNA for Due Diligence Services.

With regard to the recently issued Announcement of the Board of Investment No. 1/2557, the Thailand BOI is encouraging both BOI-promoted and non-BOI promoted manufacturers to invest additionally for the improvement of production efficiency. This improvement is to be achieved through 3 measures as follows:-

The announcement includes 3 measures as follows:

1. A measure to promote energy conservation, alternative energy utilization, or reduction of negative environmental impact. The investor must submit an investment plan detailing proposed upgrading of machinery to save energy, a plan to introduce alternative energy into the project or a plan to reduce damaging environmental impact according to the stipulated criteria.
2. A measure to promote investment to upgrade manufacturing technology and machinery to increase production efficiency. Investors must submit an investment plan detailing replacement or modification of machinery used in automated production lines.
3. A measure to promote investment in research and development to upgrade manufacturing technology and advanced engineering designs for improving efficiency. Investors must submit an investment plan for research and development or implementation of advanced engineer designs that conform to the stipulated criteria. Investors with large projects must invest no less than 1% of their total revenue for the first three years from the date of application submission in research and development or advanced engineering designs. For SMEs, projects must invest no less than 0.5% of their total revenue for the first three years from the date the application is submitted in research and development or advanced engineering designs.

Interested investors for incentives under these measures must operate businesses of a type that is specified on the BOI list of businesses that are eligible for promotion. The minimum capital investment requirement for each project must not be less than 1 million Baht, excluding land cost and working capital. For Small and Medium Enterprise (SME) projects, the BOI requires an investment value of Baht 500,000, excluding the cost of land and working capital.

The incentives given to approved projects in all zones include exemption from import duty on machinery and a three-year corporate income tax exemption based on the revenue of an existing project, and will not exceed 50% of the total investment value under this measure, excluding land cost and working capital. Project applications must be submitted by December 31, 2017 and the projects must be completed within three years from the date the promotion certificate is issued.

The investment promotion measures to improve production efficiency are in accordance with the National Economic and Social Development Plan No. 11 which outlines a strategy for restructuring the economy to ensure quality and sustainable growth, with the focus on improving manufacturing production efficiency and promoting the use of advanced science, technology and innovation while also furthering the use of clean energy and alternative energy.

Know more about Thailand BOI promotion and its benefits for your business. Consult with ThaiLawyers for getting BOI certificate, Thai company registration, visa and work permit application.

The Thai Immigration has recently announced the new regulations for extension of temporary stay in Thailand. Under the Order of Royal Thai Police No. 327/2557 which has been effective since 29 August 2014, the regulations that have been changed are as follows:

1. Foreign nationals of certain countries entitled for Visa Exemption for tourism purposes and permitted to stay in the Kingdom for 30 days upon arrival according to the Interior Ministerial Announcements, shall be granted extension of stay for one time and not exceeding 30 days from the expiry date.
2. In case that the application for extension of temporary stay is not approved due to incomplete qualifications and the foreigner has been granted extension of stay for 7 days in order to leave the Kingdom, such foreigner is not able to appeal for reconsideration of non-permission.
3. For the reason of study in a private educational institution particularly for Non-school system (such as Language School etc.) each permission of stay shall be granted for not longer than 90 days but the total permitted period of stay for this reason consecutively shall not exceed one year from the date of entry into the Kingdom.
4. For the reason of performing duties in a public charity organization, a foundation, a non-government organization, an association, a foreign chamber of commerce, the Federation of Thai Industries, in case of no certification letter by the relevant government department, each permission of stay shall be granted for not longer than 90 days but the total permitted period of stay for this reason consecutively shall not exceed one year from the date of entry into the Kingdom.

Contact ThaiLawyers for your visa and work permit questions.

One of our accounting clients asked a question about VAT on their export.

I would like to know if the export portion of my product sales which is roasted whole coffee beans grown, roasted and packed in Thailand, is classified as 0% VAT? The challenge is that I export only 1 or 2 kg per shipment and it is done by EMS courier and then sent via a Thai Post Office. I do not export from an airport or customs point. Kindly clarify. I have been told conflicting answers and I can’t seem to find a definitive answer. Your assistance is greatly appreciated.

Thai Accountant answered: When you export products from Thailand, you must do it via customs. Sending it by post or EMS, you still can declare it with the Customs Department of Thailand. You need to tell the post office that you want to declare Customs, which normally is done using form EMS Por 256. When exporting your products using DHL or Fedex, you need to tell them that you want to send your products through customs. They will prepare some customs export shipment papers for you.

If you do not have Customs export shipment papers, the Thai Revenue Department will treat your sale as domestic one, which is subject to 7% VAT.

Contact MSNA for your accounting and tax questions.

If your business is software related, BOI is the best way to set up your business in Thailand.

The BOI promoted company has the following advantages:

1. The company needs only THB 1 M capital/investment.

2. The company can be owned 100% by foreigners.

3. The company can get more work permits for its foreign technicians or experts than non-BOI companies. (Normally, a non-BOI company needs to have at least THB 2M capital for each work permit and must hire 4 Thai employees for each work permit it is getting.)

4. The promoted company is permitted to own land which is to be used as its location to do software business only.

5. The promoted company is exempted for the import duty on the machinery (hardware and software.)

6. The promoted company is exempted for corporate income tax on the net profit generated from the promoted activity for a period of 8 years as from the date it starts to generate such income.

7. The dividends derived from the promoted activity are also tax exempted.

8. The promoted company is allowed to transfer money to overseas in foreign currency.

Read Thailand BOI information and contact MSNA for consultation on getting BOI for your software business.

Thailand BOI has recently approved the seven-year draft investment promotion strategy which will commence from 2015 to 2021. The new investment strategy will shift from broad-based to focused and prioritized investment promotion that will lead to the restructuring of the Thai economy. It will also move the country forward to become a higher-income economy with sustainable growth in the long run.

The new strategy will still offer promotional privileges to seven groups of industries: agro-industry and agricultural products; mining, ceramics and basic metals; light industry, metal products, machinery and transport equipment, electronics industry and electrical appliances; chemicals, paper and plastic; and services and public utilities although greater emphasis will be placed on high technology, high added value, research and development or design and environmentally friendly activities.

There are two types of incentives to be offered: (1) activity-based incentives and; (2) merit-based incentives. For instance, basic incentives will be offered in accordance with the types of activities. Additional incentives will also be provided for projects that will benefit the country, such as research and development, high-skill development, and the distribution of wealth to regional areas.

Meanwhile, the previous zoning policy, whereby Thailand was divided into three zones for investment purposes, will be revoked. It will be replaced by the promotion of new regional clusters in order to create new investment concentration in each region and stronger value chains.

Moreover, the new strategy will attach importance to both inbound and outbound investment promotion. This will help ease constraints in terms of domestic resources. It will also enable the country to seek new business opportunities for the Thai private sector, especially when the ASEAN Economic Community (AEC) goes into full effect and Thailand plays a greater role in the international arena.

In this regard, the first target countries include Indonesia, Myanmar, Vietnam, Cambodia and Laos. The second ones are China, India and other ASEAN nations, while the third group includes Central Asia, South Asia and Africa.

Contact MSNA for company setup, BOI promotion, Foreign Business License, factory license, visa and work permit application in Thailand.

One of our tax clients is planning to purchase a condominium unit in Bangkok. He asked us if there is any tax to be paid to the authorities. Today, we answer his question based on two scenarios: if the condominium will be purchased under his name or the company’s name.

1. When he buys it in his name, he needs to hold it for 5 years otherwise, he has to pay for Specific Business Tax (SBT) 3.3% of the selling price when he sells it on top of the 2% transfer fee and his personal income tax because it will be considered as purchasing a condo for business purpose. However, if he sells the unit after 5 years, he doesn’t have to pay for SBT of 3.3% although he needs to pay for the transfer fee and income tax.

2. When the purchase is done in company’s name, the company has to pay the transfer fee plus Specific Business Tax 3.3% of the selling price whether he sells it before 5 years or after. Although we are not yet sure how much corporate income tax the company has to pay in the future, tax will be based on the net profit of the company, part of which is the profit from selling the condominium. Furthermore, if he use it personally, when the Revenue Department comes to check the condominium and they know that he is staying there, they will make the company charge him for rent and this will be part of company’s income. The company can also use the depreciation of the condo as company’s expenses.

Contact MSNA for your accounting, tax and other business needs in Thailand.