As a Thai accounting firm that handles accounting clients who are foreigners doing business in Thailand, we see a lot of frustrated clients who do not know what constitutes a legitimate payment that will not get added back to their bottom line profit if they get audited by the Thai Revenue Department. Here is some general advice of what you should do. When you have a business operating in Thailand, you need to make sure when you make a payment for goods and/or services, you need to get a legitimate receipt from the vendor otherwise that payment may not be tax deductible. A legitimate receipt should have at least these particulars:
(1) taxpayer identification number of the receipt issuer,
(2) name or label of the receipt issuer,
(3) serial numbers of the book and of the receipt,
(4) date of issuance of the receipt,
(5) amount of payment received,
(6) type, description, quantity and price of the goods
A lot of times, the payment recipient would tell you that they are not in the VAT system. Some vendors are individuals or small partnerships or small companies and it is possible that they really are not registered in the VAT system for some reasons. As long as you get them to issue a legitimate receipt, you will be okay. Please insist that they issue a receipt in your business’s name and make sure the receipt you get has the above particulars. If they are not in the VAT system, they must not collect VAT from you and they must not issue a tax invoice, but it is their duty to issue a legitimate receipt whenever they get paid. And if they are registered in the VAT system, now they will ask for 7% VAT from you. You need to pay for the goods and/or the services and the VAT amount. Remember that if the tax invoice they give you contains all the particulars prescribed by law, you will be able to claim back the VAT you pay them.
What if some vendors are just individuals and do not have a company like people who are not your employees, a part-time messenger, a part-time maid, an electrician who is your maid’s boyfriend, etc. They would tell you they cannot make a receipt for you. This is what we hear very often. Sometimes you procure services from such people. When you pay them, you can make a payment voucher putting the date, their name, the description of goods or services and the amount you pay them and have them sign as the recipient of the payment. Then ask for their Thai ID card copy, make them sign it as to certify true copy and attach it with the payment voucher signed by them. This set of papers can be used as a legitimate proof of the recipient of the payment and therefore, is acceptable to the Thai Revenue Department.
Tomorrow, THAI ACCOUNTANT will talk about the particulars a legitimate tax invoice should contain.