REAL ESTATE OFFICE  |  LAW OFFICE

Prohmthep Accounting Co., Ltd. joins with International Law Office Patong Beach Co., Ltd. gather information for the benefit of the businessman who successfully establish partnership or company (hereinafter called "the businessman") for their responsibilities which have to be done for Ministry of Commerce, Revenue Department and others stipulated by the laws as follow.

1. Responsibility for Revenue Department.

1. The businessman must apply for tax number within 6 months from the date of company registration, Revenue Department will issue tax I.D card.
   Punishment: If the businessman does not apply in due time, he shall pay 500 baht fine.

2. The businessman must register for value-added tax (VAT) or special business tax which depend on type of business, in case of special business registration such as bank business, financial services business, securities business, life insurance business, pawnshop business, real estate business.
   It is incumbent on the businessman to pay VAT in case of income from business operation is as follow.

• Business which has annual tax base value not exceeding to 1,200,000 baht will be exempted from the VAT according to section 81/1, however the businessman is entitled to apply Por. Por. 01 form to Director-General of Revenue Department to apply for VAT registration and make a VAT payment in full at the rate of 7 % of product price or service fees.

• At any year that businessman has annual tax base exceeding to 1,200,000 baht, the businessman must apply VAT 09 form to change tax payment from 7% within 15 days from the date of tax base value is exceeding to 1,200,000 baht (section 82/18)
  Punishment: The fine is not exceeding to 5,000 baht

Remarks There are some business which is exempted from VAT (section 81) such as,

• Agriculture product sale

• Animal sale either life or non-life

• Fertilizer sale

• Fodder or ground fish sale

• Sale of medicine or chemicals which use for plant or animal

• Newspaper, magazine or textbook sale

• Transportation service in kingdom

• etc.

1. After the businessman register VAT or special business tax, the businessman is responsible to make tax report and apply VAT 30 form or special business tax (B.T. 40 form) within the date 15^th of next month.
   Punishment: The penalty is two time of tax money and added-money at the rate 1.5% per month.

2. The businessman who pay income to person or corporation is incumbent to deduct the withholding taxes at the rate of 2, 3 and 5 or progressive tax rate for salary which depend on type of income and the businessman must apply for income tax 1 form, income tax 3 form, and income tax 53 form within the 7^th of the next month.
   Punishment: The fine is not exceeding to 2,000 baht

3. The businessman is incumbent to apply for pay mid year tax by income tax 51 form either there is income in that year or not to estimate profit and loss of business operation. The form must be apply within 2 months from the last day of six months period. The businessman shall estimate net profit or net loss then calculate and pay tax from the quasi amount of net profit estimate at that accounting period (section 67 bis).
   Punishment: Same as clause 1.4

4. The businessman is incumbent to apply for pay annual tax by income tax 50 form either there is income in that year or not within 150 days from the last day of accounting period. The businessman shall pay tax at the District Office at the rate 30% of net profit (section 68).
   Punishment: Same as clause 1.4

5. Section 68, for the benefit of tax calculate, company or corporate partnership must make balance sheet, general journal and profit & loss statement at accounting period according to section 65, company or corporate partnership estimate income and expenditure by calculate all income and expenditure at any accounting period to be income and expenditure at that period even if the receiving or payment doesn’t make at that account period.

6. Capital (registered capital) may cause loan account from director or partner because of unreal capital money which may cause loan interest and increase net profit that can effect to corporate income taxation and special business tax will increase from usual

2. Tax invoice which can apply to return output tax and deduct to be expense of accounting and tax.

1. It must appear wording "Tax Invoice"

2. Tax I.D number of seller

3. Name and address of seller

4. Name and address of buyer

5. Tax Invoice number and tax invoice book number

6. Issue date

7. Name, type, quantity and price of product or service

8. VAT total which clearly separate from product price or service fee

3. Receipt which can deduct to be expense of accounting and tax

1. Name and address of seller.

2. Name and address of buyer.

3. It must appear wording "Receipt" or "Cash Receipt".

4. Receipt number and receipt book number.

5. Issue date

6. Detail of product or service

4. Voucher which can deduct to be expense of accounting and tax

1. Company name (payer company)

2. Voucher number

3. Issue date

4. Detail of payment
   4.4.1 Cash
   4.4.2 Bank check, check number

5. Description of product or service

6. Total Amount

7. Receiver, payer, make, approved person
   

5. Cash Register Machine

In case businessman who register VAT in full type operates sell retail business or personal service in a large number desire to issue tax invoice (ABB) by cash register, the businessman shall comply with rules, procedures and conditions as follow,

1. The registered businessman shall apply for approval to use cash register stipulated by Revenue Department to Director-General, Region Revenue Office, or Province Revenue Office attach with documents as follow,

• Cash register qualifications in summary

• Model number, brand name, serial number, total number of cash register asked for approval

• Chart locates the cash register position.

• Chart shows connection system between cash register and computer or other hardware, if any.

• Example of tax invoice (ABB) and example of product sale report
  

1. Cash register must have qualification as follow,

1. Cash register machine

1. Electronic Cash Register (ECR) which mostly programs product sale or service in ROM or Erasable Programmable ROM which must use special tools of ECR to modify product sale program or service or

2. Computer Cash Register which mostly programs product sale or service in RAM and has input drive to record product or service description and be able to write program of product sale or service control or in case there is no input drive, it shall be able to write program of product sale or service from CPU.

1. Cash register must use paper to print tax invoice (ABB) for product buyer or service receiver. It may have copy of tax invoice (ABB) overlap under the original paper in the same size but it must have roll paper to print diary transaction journal which can be tax invoice copy.

1. Cash register must print tax invoice (ABB) which has detail by the law section 86/6 and shall print wording "TAX INV (ABB)" or "TAX INVOICE (ABB) if cash register can print 12 or 16 digits seriatim.

2. Cash register must print serial number stipulated by Director-General of Revenue Department on tax invoice (ABB) and its copy.

3. Tax invoice copy shall be printed serial number at the beginning or the end of roll paper which print diary transaction journal. The registered name, tax I.D number or statement specify that price of product or service is included VAT may not appear on tax invoice copy. Description of product or service may print to be product or service code on tax invoice copy which may not print description as tax invoice (ABB). The word "Tax Invoice (ABB)" may be printed or sealed at the beginning or the end of roll paper printed diary transaction journal.

Incorporated firms operating in Thailand pay income tax at a rate of 30 percent of net profits. Foundations and Associations pay income taxes at a rate of 2-10 percent of gross business income, depending upon their activity. International transport companies face a rate of 3 percent of gross ticket receipts and 3 percent of gross freight charges.

All companies registered under Thai law are subject to taxation as stipulated in the Revenue Code. 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 5-100 percent, depending on the item or at rates under other acceptable depreciation methods, are allowed as deductions from gross income. Net losses can be carried forward for up to five consecutive from a firm’s income tax.

Inter-corporate dividends are exempt from tax on 50 percent of dividends received. For holding companies and companies listed on the SET, dividends are completely exempt, provided the shares are held 3 months prior to and after the receipt of dividends.

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.

7. 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 7 % percent of the amount to be accempted 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, however, are not subject to an outward remittance tax.

The tax does not apply to dividends or interest payments remitted out of Thailand via a company or partnership; such remittances 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 percent of the gross remittance. In 1992, standard deductions which used to vary with each type of income were abolished, making the flat 15 percent rate effective on all assessable income except for dividend income, on which the 20 percent withholding tax was reduced to wa percent. 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. These taxes may be incurred by making book entries.

8. 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 UN officers diplomats and certain casting experts, under the terms of international and bilateral agreements.

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

Net Annual Income (Baht) Tax Rate
51.000 - 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 commercial bands 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 percent, but not in excess of 60.000 Baht, is permitted against income from employment or services rendered or copyright. Standard deductions ranging from 10 to 85 percent are allowed for other categories of income. In general, however, taxpayers may elect to itemise expenses in lieu of taking standard deductions on income from sources specified by law.

The following annual personal allowances are permitted:

• Taxpayer

• Taxpayer’s Spouse

• Each Child’s Education

• For Taxpayer and Spouse for contributions to approved provident fund

• For Taxpayer and Spouse for interest payments on loans for purchasing, hire-purchasing construction of residential building

• For Taxpayer and Spouse whit respect to contributions to Social Securities Fund

• * or the amount actually paid if less

• Charity Not more than 10% of

Only three children per taxpayer family qualify for the child allowance, but this limitation applies only to children born on or after 1 January 1979. Therefore, in counting the number of children, a child born prior to 1979 can also be counter. For example, a taxpayer with four children born before 1979 continues to qualify for an aggregate allowance of 60.000 Baht. 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 5 years for tax evasion or tax refund. if an individual fails to file a return, the assess, emt pffocer ,ay issue summons within a period of ten years from the filing due date.

6. Treaties to Avoid Double Taxation

Thailand has treaty agreements to eliminate double taxation with the countries listed below:

Negotiations for treaties with for treaties with Myanmar, Nepal, New Zealand, the United Arab Emirates and Greece are underway.

These treaties generally place the taxpayer in more favorable position for Thai income than they would be under the Revenue Code, by stipulating that profits will only be taxable if the taxpayer has a permanent establishment in Thailand.

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