Tax services

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This includes the preparation of the pre-printed tax forms for all applicable taxes, filing with the Revenue Department together with the client's payment:
Pho.Ngo.Do. 1:
Personal Income Tax for staff and management
Pho.Ngo.Do. 3:
Withholding Tax for individuals
Phor.Phor. 30:
In- and outgoing VAT documentation
Pho.Ngo.Do. 51:
Half-year tax forecast, corporate income
Pho.Ngo.Do. 50:
Corporate Income Tax return for fiscal year
Pho.Ngo.Do. 53:
Corporate Withholding Tax
Tax services of TPL


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Corporate Income Tax
Personal Income Tax
Value Added Taxes (or Specific Business Taxes)

A. Corporate Income Tax
Incorporated firms operating in Thailand pay income tax at a rate of 30 % of net profits. Foundations and Associations pay income taxes at a rate of 2 % to 10 % of gross business income, depending upon the activity. International transport companies face a rate of three percent of gross ticket receipts and three percent of gross freight charges.

All companies registered under Thai law are subject to taxation as stipulated in the Revenue Code and are subject to income tax on income earned from sources within and outside of Thailand. Foreign companies not registered or not residing in Thailand are subject to tax only on income derived from sources within Thailand.

Normal business expenses and depreciation allowances, at rates ranging from 5 % to 100 %, depending on the item, or at rates under any other acceptable depreciation method, are allowed as deductions from gross income. Inventory must be valued at cost or at market price, whichever is lower. Net losses can be carried forward for up to five consecutive years. Interest payments on some foreign loans may be exempt from a firm’s income tax.

Inter-corporate dividends are exempt from tax on 50 % of dividends received. For holding companies and companies listed on the SET, dividends are completely exempt, provided the shares are held three months prior to and after the receipt of dividends.

Deductions for gifts and donations up to a total of 4 % of net profit are available as follows:
Donations and gifts to approved public charities or for public benefit: 2 %
Donations and gifts to approved education or sports bodies: 2 %

No deduction is permitted for any expenditure that is determined on the basis of net profit (e.g. bonuses paid as a percentage of net profit) at the end of an accounting period. Depreciation of assets of limited companies and partnerships is based on cost. The rates of annual depreciation permitted by the law generally vary from five to 20 years.

Entertainment and representation expenses are deductible up to maximum limits as a percentage of gross sales, or of paid-up capital at the closing date of the accounting period, whichever is greater.

Taxes are due on a semi-annual basis within 150 days of the close of a six-month accounting period, and employers are required to withhold personal income tax from their employees.

Except for newly-incorporated companies, an accounting period is defined as a duration of 12 months. Returns must be accompanied by audited financial statements.

A corporate taxpayer must file a half-year return and pay 50 % of the estimated annual income tax by the end of the eighth month of the accounting period. Failure to pay the estimated tax or underpayment by more than 25 % may subject the tax payer to a fine amounting to 20 % of the amount in deficit.

Failure to file a tax return, late filing or filing a return containing false or inadequate information may subject the taxpayer to various penalties. Failure to file a return, and subsequent non-compliance with an order to pay the tax assessed, may result in a penalty equal to twice the amount of tax due. Penalties are due within 30 days of assessment. 

B. Personal Income Tax
Every person, resident or non-resident, who derives assessable income from employment or business in Thailand, or has assets located in Thailand, is subject to personal income tax, whether such income is paid in or outside of Thailand. Exemptions are granted to certain persons, including United Nations officers, diplomats and certain visiting experts, under the terms of international and bilateral agreements.

Personal income tax is applied on a graduated scale as follows: 

Net Annual Income (in Thai Baht)  Tax Rate 
0 - 50,000 0 %
50,001 - 100,000 5 %
100,001 -  500,000 10 %
500,001 - 1,000,000 20 %
1,000,001 - 4,000,000 30 %
> 4,000,001 37 %

Individuals residing for 180 days or more in Thailand for any calendar year are also subject to income tax on income from foreign sources if that income is brought into Thailand during the same taxable year that they are a resident.

Exchange control laws stipulate that all foreign exchange earned by a resident, whether or not derived from employment or business in Thailand, and brought into Thailand, must be sold to or deposited with commercial banks within 15 days, unless permission for an extension is granted.

Personal income taxes and tax returns must be filed prior to the end of March of the year following the year in which the income was earned.

A standard deduction of 40 %, but not in excess of Thai Baht 60,000.-, is permitted against income from employment or services rendered or income from copyrights. 

Standard deductions ranging from 10 % to 85 % are allowed for other categories of income. In general, however, taxpayers may elect to itemize expenses in lieu of taking standard deductions on income from sources specified by law. 

Other types of taxable income and the rate of standard deduction include:
Interest, dividends, capital gains on the sale of securities: 40 %, but not exceeding Thai Baht 60,000.-
Rental income: 10 % to 30 %, depending on type of property leased
Professional fees: 60 % for income from medical practice, 30 % for others
Income derived by contractors: 70 %
Income from other business activities: 65 % to 85 %, depending on the nature of the business activity

The following annual personal allowances are permitted (All amounts in Thai Baht):

Person Amount (in Thai Baht)
Taxpayer  30,000.-
Taxpayer's spouse  30,000.-
Each taxpayer's child not yet at schooling age 15,000.-
Each taxpayer's child's education  17,000.-
For taxpayer contributions to an approved provident fund  10,000.-
For taxpayer and spouse for interest payments on loans for purchasing, hire-purchasing or construction of residential buildings  10,000.-
For taxpayer and spouse with respect to contributions to Social Securities Fund Actual contribution not more than 10% of adjusted income

Only three children per tax payer family qualify for the child allowance, but this limitation applies only to children born on or after January 1,1979.

Therefore, in counting the number of children, a child born prior to 1979 can also be counted. For example, a taxpayer with four children born before 1979 continues to qualify for an aggregate allowance of Thai Baht 60,000.-. A fifth child, born in 1979, would not qualify.

Additional taxes can be assessed, within a period of two years from the date of filing a return, and up to five years for tax evasion or tax refund. If an individual fails to file a return, the assessment officer may issue summons within a period of 10 years from the filing due date.

C. Value Added Taxes (or Specific Business Taxes)
The value added tax (VAT) system, which came into effect on January 1,1992, largely replaced the old business tax system, which critics claimed caused inefficient redundancies and facilitated tax evasion.

Under the new tax regime, value added at every stage of the production process is subject to a seven percent tax rate. Those who are affected by this tax are: Producers, providers of services, wholesalers, retailers, exporters and importers. VAT must be paid on a monthly basis, calculated as:

Output tax - Input tax = Tax paid 

where output tax is the VAT which the operator collects from the purchaser when a sale is made, and input tax is the VAT which an operator pays to the seller of a goods or service which is then used in the operator’s business.

If the result of this calculation is a positive figure, the operator must submit the remaining tax to the Revenue Department not later than 15 days after the end of each month. However, for a negative balance, the operator is entitled to a refund in the form of cash or a tax credit, which must be paid in the following month.

1.) Zero Rate
Exports
Services provided in Thailand for persons in foreign countries
International transportation by air and sea by Thai juristic persons.Foreign juristic persons may enjoy zero percent when its country applies zero percent to Thai juristic persons operating there
Sale of goods or services to civil service or state enterprises under foreign loan or aid schemes
Sale of goods or services to the UN and its agencies, foreign embassies and consulates
Sale of goods or services between bonded warehouses, between operators in export processing zones, or between the former and the latter
Operators whose gross earnings from the domestic sale of goods and services exceed Thai Baht 600,000.-, but are less than Thai Baht 1,200,000.- per year, can choose between paying a gross turnover tax of 1.5 % or the normal VAT. However, operators paying the gross turnover tax may not offset this tax by charging VAT to their customers in any step of production.
2.) Special exemption from VAT
  Operators earning less than Thai Baht 600,000.- per year 
  Sale or import of agricultural products, livestock, and agricultural inputs, such as fertilizer, and feed
  Sale or import of published materials and books
  Auditing, legal services, health services and other professional services
  Cultural and religious services
  Educational services
  Services provided by employees under employment contracts
  The sale of goods as specified by Royal Decree
  Goods exempt from import duties under the Industrial Estate Authority of Thailand (IEAT) Act 
  Domestic transport (excluding airlines) and international transport (excluding air and sea lines)
3.) Specific Business Tax (SBT)
A specific business tax of approximately 3 % is imposed, in lieu of VAT, on the following businesses: 
  Commercial banks and similar businesses
  Insurance companies
  Financial securities firms and credit fonciers
  Sales on the stock exchange
  Sales of non-movable properties
  Pawn shops

The SBT is computed on the monthly gross receipts at the following rates: 

Type of Business Tax Rate 
Banking or similar business:
finance, securities and credit foncier business
3 %
Insurance:
Life Insurance 
Insurance against loss
2.5 %
3 %
Pawnshop 2.5 %
Sale of immovable property in commercial manner for profit  3 %

4.) Remittance Tax
Remittance tax applies only to profits transferred or deemed transferred from a Thailand branch to its head office overseas. It is levied at the rate of 10 % of the amount to be remitted before tax, and must be paid by the remitting office of the offshore company within seven days of the date of remittance.

However, outward remittances for the purchase of goods, certain business expenses, principal on loans to different entities and returns on capital investment, are not subject to an outward remittance tax.

The tax does not apply to dividends or interest payments remitted out of Thailand by a company or partnership; these are taxed at the time of payment. 

Section 70 of the Revenue Code addresses income paid to foreign juristic persons. When a company or partnership incorporated under a foreign law and not carrying on business in Thailand receives “assessable income” paid either from or in Thailand, the payer is usually required to deduct income tax at a rate of 15 % of the gross remittance. In 1992, standard deductions, which used to vary with each type of income, were abolished, making the flat 15 % rate effective on all assessable income except for dividend income, on which the rate of the withholding tax was reduced from 20 % to 10 %. 

There is no withholding tax on capital gains or on the share of profit paid to foreign investors in mutual funds, if in the SET. Physical remittance of funds may not be necessary in order to incur either the dividend or interest tax liabilities, which may be incurred by making book entries. 

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  2000 Trade Partners Limited
 86/1 Sukhumvit Soi 23, Sukhumvit Road, Bangkok 10110, Thailand
 Tel.:+66-2-258-4086, 259-1601, Fax: +66-2-259-6217
E-mail:
info@thailand-accounting.com