value added tax (VAT) system, is subject to 7% tax rate.
Producers, wholesalers, providers of services, retailers,
exporters and importers are affected as with Thai companies
employing foreigners. When you apply you will receive back an
A4 size certificate which you frame on your Office wall. However
please photocopy and use a copy because only 20% Thais pay income
tax and these certificates can be copied, sold and altered. The
same goes for your Company registration.
VAT is paid monthly, calculated as: Output tax - Input tax = Tax paid
where output tax is VAT which the business collects from the
purchaser when a sale is made, input tax is VAT a business pays to
the seller of a goods or service which is then used in the
business. If the calculation is a plus figure, the business sends
the remaining tax to the Revenue Department no later than 15 days
after the end of each month. If a negative balance, the business
gets a refund in the form of cash or a tax credit, which must be
paid the next month. Please remember foreigners who now want
a work permit must file for VAT as well so therefore all companies
with foreign workers with work permit are subject to register for
VAT before a work permit is issued. When you pay your monthly VAT
you normally receive back the receipt via registered mail. It pays
also to have copies of these receipts as well as another set of
books just to make sure. remember if you use electronic accounts
this is not allowed. Invoice books are still used & there must
be 4 copies per invoice.If you make a mistake filling out an
invoice you must fold that invoice and start again.
1/. Exports 2/. Services provided in Thailand for persons in foreign countries
3/. 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
4/. Sale of goods or services to civil service or state
enterprises under foreign loan or aid schemes
5/. Sale of goods or services to the UN and its agencies, foreign embassies and consulates
6/. 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 600,000 baht, but are less than 1,200,000 baht per year, can choose between paying a gross turnover tax of 1.5 percent 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. The
above is now clear due to foreigners who now must be registered
1/. Operators earning less than 600,000 baht a year
2/. Sale or import of agricultural products, livestock, and agricultural inputs, such as fertilizer, and feed
3/. Sale or import of published materials and books
4/. Auditing, legal services, health services plus other professional services
5/. Cultural and religious services
6/. Educational services
7/. Services provided by employees under employment contracts
8/. The sale of goods as specified by Royal Decree
9/. Goods exempt from import duties under the Industrial Estate Authority o Thailand (IEAT) Act
10/.Domestic transport (excluding airlines) and international transport (excluding air and sea lines).
SPECIFIC Business Tax (SBT)
A specific business tax of 3% is levied, in lieu of VAT, on the following:
1/. Commercial banks and similar businesses
2/. Insurance companies
3/. Financial securities firms and credit financiers
4/. Sales on the stock exchange
5/. Sales of non-movable properties
6/. Pawn shops.
The SBT is computed on the monthly gross receipts at the
Type of BusinessTax Rate Banking or similar business:
finance, securities and credit finance business3%
Insurance - Life 2.5%- Insurance against loss
Sale of immovable property in commercial manner for profit 3%
REMITTANCE ON PROFITS:
Remittance tax applies to profits transferred from a Thailand branch to its head office
overseas rated at 10% remitted before tax, and must be paid by the remitting office of the offshore company within seven days of the date of remittance. Outward remittances for 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.
A flat 15 percent rate is effective on all assessable income except dividend
income being 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.
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.
Taxes may be paid on-line. You will be able to make electronic payments (e-payments) for all
categories of taxes, including income tax, following the department's launch of VAT payments, its first online
service. Paying taxes online, you must apply for the service at http://www.rd.go.th . The Revenue Department will then ask to check a taxpayer's identity in person before they receive a user ID and password.
But you must have an account with one of three commercial banks - Krung Thai Bank, Siam Commercial Bank or Bank of
Asia. Later the service will be extended to those with accounts with Thai Farmers Bank, Citibank and Bangkok Bank.
A lack of basic computer skills of the taxpayer rather than lack of confidence in e-transaction security
were reasons why this isn't popular. The Revenue Department now provides an electronic manual with step-by-step procedures.
In May, some 135 companies had registered to use the service, but only 43 submitted all the requested information. 24 companies had made e-payment transactions, with the value of e-tax payments being
approx Baht 300,000.- In June, 128 companies had applied for the service,
& 1 company conducting a transaction this month so far.
Corporate taxpayers are also encouraged to use the online VAT payment system.
If companies paid VAT on-line and were eligible for a VAT refund, they would receive it within 30
days, compared to 60 days.
wish to thank Kuhn Ornachai for sending us the above
information & the Thai Embassy NZ for providing us with info. Please ask your accountant to verify as we do not
accept responsibility as there could be changes since we received
this information. This is only a basic guide for those interested
in the tax system of Thailand
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