Taxation services
We provide tax services according to the following options:
OPTION 1. Documents needed to compute the tax will be picked up from the client’s office. We will send our messenger to get the documents and bring here to our office for us to compute the tax, prepare the tax forms and submit to the Revenue Department.
OPTION 2. We will send our staff to client’s office to check the documents, compute the tax, prepare the tax forms and submit to the Revenue Department.
OPTION 3. Half Year Tax for dormant companies or companies which do not have staff here in Thailand. We provide assistance such as computation of tax, preparation of tax forms and submission to the Revenue Department.
OPTION 4. Yearly Tax (Corporate Income Tax) for dormant companies or companies which do not have staff here in Thailand. We provide assistance such as computation of tax, preparation of tax forms and submission to the Revenue Department. Basically, our annual audit services include preparation and submission of Yearly Tax.
OPTION 5. Review of tax before submission to the Revenue Department. If amount of tax was computed by the client’s staff, we assist them in reviewing the correct amount of tax to be submitted to the Revenue Department.
OPTION 6. Assessment of tax before filing for tax refund. We will assist our clients in checking, reviewing and computation of tax before submission of tax refund form to the Revenue Department.
OPTION 7. Act as mediator/agent between client and third-party regarding tax disputes or allegations.
OPTION 8. Act as representative of the client when requested by the Revenue Department Officer. This involves discussion with the tax officer regarding tax matters of the client company.
OPTION 9. Negotiate with the Tax Officer regarding the amount of taxes after assessment.
OPTION 10. Tax consulting. We provide consultation on taxation in line with the Revenue Code imposed by the Revenue Department.
OPTION 11. Tax planning. We provide assistance on tax planning and estimates.
Taxation is a system of raising money to support the government on financial matters. All governments require payments of taxes from people or any legal entity. These taxes are used by government to pay public employees, to build government infrastructures, public schools and hospitals, to provide food and medical care to the poor and elderly, and for other government purposes. It is true that tax is very important because without these taxes to support its activities, a government could not exist.
Taxation is the main source of government’s revenue. A large part of tax collection comes from three main agencies under the Ministry of Finance. These are the Revenue Department, the Excise Department, and the Customs Department – which collectively account for about 85-90% of the government’s revenue. The Revenue Department itself collects more than half of the total tax collection. Aside from collecting taxes, the Revenue Department is also responsible for ensuring that the administration of the tax collection is carried out in accordance with the government’s policies.
Thailand has many kinds of business identities. The tax rates and tax benefits of an individual or entity are affected by the type of its business. In general, the most common types of businesses here are Thai company and Foreign Company. Thai company is a company registered under Thai law. A foreign company can be a company carrying on business here in Thailand but registered under foreign law or a company not carrying on business in Thailand but deriving income from here.
Panwa Group provides taxation services for both foreign and local clients who need someone that have specialization, expertise, knowledge and innovative ideas in the complexity of taxation here in Thailand. From business analysis, we will be able to help client understand all the tax concern and guide them on the way on how they can save tax by tax planning by assisting them to minimize their tax liabilities.
You are in good hands when you put your trust on our professional and licensed accountants and auditors with a wealth of specialization and expertise. Our complete taxation services cover Personal income tax, Corporate Income tax, VAT, Withholding Tax, and Specific Business Tax (SBT).
An overview of Tax in the Kingdom of Thailand:
Personal Income Tax
Personal Income Tax (PIT) is a direct tax levied on income of a person. A person means an individual, an ordinary partnership, a non-juristic body of person, a deceased person and an undivided estate. In general, a person liable to PIT has to compute his tax liability, file tax return and pay tax, if any, accordingly on a calendar year basis.
Liability to tax depends on the concept of residence, and there is a liability to income tax if an individual is present in Thailand for at least 180 days or more in a tax year. Individuals and ordinary partnerships are liable to pay personal income tax in graduated rate bands of 5%-37% of net income. Tax is due on all forms of income earned in Thailand. The income liable to tax is income from all sources, less allowable expenditure and personal allowances.
Corporate Income Tax
Corporate Income Tax (CIT) is a direct tax levied on a juristic company or partnership which is established under Thai or foreign law and carries on business in Thailand or derive certain types of income from Thailand.
Corporate income tax is payable by companies and registered ordinary or limited partnerships. It is imposed on the net profits of a business during a tax year, after deduction of permitted depreciation and allowable expenditure. Tax is payable on the net profits arising from a business carried on. Foreign companies or partnerships are liable to pay tax on income originating in Thailand.
The corporate tax rate is 30% of net income. The tax is paid in two stages. A company must file interim accounts and an interim tax return within two months of the end of the first six months of its accounting period and pay 50% of the tax estimated to be due. The final accounts and the year-end tax return must be filed within 150 days of the close of the accounting period and the balance of the tax paid, taking into account the interim payment made halfway through the accounting year.
Value Added Tax (“VAT”)
Value Added Tax (VAT) has been implemented in Thailand since 1992 replacing Business Tax (BT). VAT is an indirect tax imposed on the value added of each stage of production and distribution.
VAT is payable on the provision of taxable services by an entity registered for VAT. The Thailand VAT system is very similar to that in the United Kingdom. The main differences are: (i) the Thailand VAT rate is a flat rate of 10%, but temporarily reduced to 7% at present; and (ii) VAT returns are filed and the VAT due is paid monthly, within the 15th day of the month following the month of assessment.
Withholding Tax
Certain types of income paid to companies are subject to withholding tax at source. The withholding tax rates depend on the types of income and the tax status of the recipient. The payer of income is required to file the return (Form CIT 53) and submit the amount of tax withheld to the District Revenue Offices within seven days of the following month in which the payment is made. The tax withheld will be credited against final tax liability of the taxpayer. The following are the withholding tax rates on some important types of income.
Withholding personal income tax must be deducted from an employee’s wages paid by his employer and paid to the Revenue Department on a monthly basis. Credit is given against the employee’s annual tax bill for any tax earlier withheld and paid.
There are many other occasions when liability to withhold and pay tax arises, for example, on the payment of interest, rent or service fees. When a Thai company pays an invoice for services to another Thai company, 3% of the invoice amount is deducted and paid to the Revenue Department as withholding tax. The issuer of the invoice then has a tax credit for this amount, which he can utilize in his own tax return. International withholding taxes can also arise (see below).
Specific Business Tax (“SBT”)
Specific Business Tax (SBT) is another kind of indirect tax introduced in 1992 to replace Business Tax. Certain businesses that are excluded from VAT will instead be subject to SBT.
Certain types of business, including banking and pawn broking, are not subject to value added tax, but are subject to SBT. SBT also arises on the sale of land.
Stamp Duty
Stamp duties are taxed on instruments and not on transactions or persons. For the purposes of stamp duty, an instrument is defined as any document chargeable with duty under the Revenue Code. The stamp duties rules are contained in Chapter VI of Title II of the Revenue Code. These explanations of different taxes are adapted from the Revenue Department of Thailand. Tax computation and other related responsibilities are very complicated especially when you are not familiar with the taxation system. For your personal assessment and assistance for your tax requirements, please feel free to contact us.
Q & A
Q1: Buy new year gift for customer can be used as VAT credit or not?
Panwa: Input VAT from by buying Gift or giving customer a Gift for new year or custom occasion such as New Year, Songkarn, open new brand (product) by enclosing the name card of the company which declare company’s name with address and logo, these Input Vat can not be claimed as VAT credit from Output VAT under Sector 82/5(4) of the Revenue Code and item no. 5 of Announcement of Director of Revenue Department ( no.17)
Regarding Output VAT of that Gift which the company has obtained on the custom occasion as general business with proper value (not over value), the company is not liable to include obtained Gift as value of tax base of Output VAT, under Revenue Code Sector 79(4) and item no. 2(6) of Announcement of Director of Revenue Department (no.40).
Q2: the company give customer a new year gift, this value of Gift can be used as deductible expenses or not? And how much does Revenue Department can accept or allow as deductible expense and the Input Vat can be used or not?
Panwa
- Corporate Income Tax (CIT); value of Gift can be deductible expenses not exceeding Baht 2,000 each customer (person) under The Ministry Rule no.143 (B.E.2522)
- VAT; the Input VAT incurred from buying Gift to give is unclaimable VAT under Sector 82/5(6) of the Revenue Code and item no. 5 of Announcement of Director of Revenue Department (no. 17).
Q3: What are the government expected tax amount of dormant company I have to take in consideration for one year?
Panwa: Taxation of dormant company base on kind of related tax below;
a. corporate income tax (CIT), imposed based on “net profit” below is tax rate for year 2017 as below:
| Net Profile | Incentive for SME Capital not exceeding Baht 5 million for year 2017 |
Ordinary company for year 2017 |
| 0 – 300,000 | 0% |
20% |
| 300,001 – 3,000,000 | 15% |
20% |
| Over 3,000,000 | 20% |
20% |
Normally, net profit will be calculated by = Income – Expenditure, for this should concentrate on kind of income as below situation:
- You put capital fund into bank (such as saving account), this kind of income is “Interest from Bank”
- You do not put that capital fund into bank that mean still keep in your personal bank, that fund must be recorded as “Loan to director”, this kind of income is “Interest” form its loan. Applicable interest rate for this borrowing is 4% per annum.
Example: Case study:
Capital is Baht 10 million, Expenditure Baht 20,000 for 1 year period, tax amount will be paid is Baht
(4%10,000,000) – 20,000 = Net profit = 380,000 Baht,
CIT – Tax amount = 20%380,000 = Baht 76,000 per year) , applicable tax rate is 20%
**SBT – Tax amount = 3.3% of 400,000 = Baht 13,200 per year, will be paid when settle interest of loan.
Remark: We advise you avoid a huge of tax amount by 2 ways below:
- 1. Setting up company with capital no exceeding Baht 5 million
In the same case study; tax amount for capital Baht 5 million is
CIT = Baht 4,500 per year.
**SBT = Baht 6,600 per year. - 2. Setting up company with capital no exceeding Baht 5 million and paid up only 25% of registered capital.
In the same case study; tax amount for capital Baht 5 million with paid up capital 25% is
CIT = Baht 0.00 per year.
**SBT = Baht 1,650 per year. - 3. We recommends you to set up company with capital of Baht 1 million and paid up only 25% of registered capital.
In the same case study; tax amount for capital Baht 1 million with paid up capital 25% is
CIT = Baht 0.00 per year.
**SBT = Baht 330 per year.
b. Half year tax, except for the first year, but for the second year and onwards will be paid at least 50% of CIT and can use its tax as credit amount for CIT’s calculation at ending period.
c. Monthly withholding tax, will withhold and be paid within 7th day of the following month. Normally, dormant company no business activity will no withholding tax amount.
d. VAT, there are no requirement for registration of dormant company because of income still not exceeding Baht 1.8 million. VAT registration can be done later when start the business activity.
e. **Special Business Tax (SBT), based on “Interest Income” from “Loan to director” by applicable tax rate is 3.3% per annum.
Q4: The company is carrying on hotel business by construction of building in progress.
The first building was constructed in year 2003 whereas the company constructed only partial around 1 out of 3 of the total projects. The company opened the hotel from the partially constructed building to serve the clients while still continues the construction of the remaining building and planned to finish in year 2004. Initially for the first plan, they planned to operate the hotel on 2006. The company declared the income of year 2003 and 2004 in the PP.30 form as income of the complete project. For the partial completeness of hotel where they generate the income, the company has cost also. This cost is depreciation of the building including furnishing. From this, the company has certain inquiries:
- Does the company can be able to calculate the depreciation of building in progress for the partial construction to be the expenditure of year 2003 or not? In case that can be able, the company has right to calculate depreciation of the building from what value?
- The company will have more income in year 2005 due to partial construction of work in progress of the 2nd part has completed and can open later than year 2004. The company can calculate depreciation of building same as item no. 1 or not?
- In case of recording as referred to item 1 and find mistake, how does the company adjust to correct the mistake due to the company carry on hotel business which is different with other businesses?
Panwa:
- In the case of item 1 and item 2 above, the company can use building in progress which is partially completed around 1 of 3 of all projects which is already opened for service in year 2004 which affects to the company to generate income from service, therefore, the company can calculate ratio of the complete building clearly under actual usage in compliance with the Generally Accepted Accounting Principles (GAAP). The company is eligible to deduct depreciation of hotel partial building value under the ratio of the building value by using the start of depreciation from the first day that the building was used.
- In the case of item 3, the recording of deduction of partial depreciation, the company is eligible to record in compliance with GAAP. In case the company did mistake in recording, the company is eligible to adjust its recording.
Q5: I was a resident for tax purposes and filed a tax return in 2009. In 2010 I stayed in Thailand over 180 days but did not bring any part of my income into the country, so I think I need to file a nil tax return.
Panwa: There’s no need to file your personal income tax in Thailand for year 2010 due to did not bring any part of your income into Thailand and also you earn income in Thailand less than Baht 50,000 per annum for salary and less than Baht 30,00 per annum for other.