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Taxation for Foreigners Who are Working in Thailand

Apr 24, 2008
Reporting requirements and accounting policies are decided by the Civil and Commercial Code, the Revenue Code and the Accounts Act. The accounting standards in Thailand are issued by the Institute of Certified Accountants and Auditors of Thailand.

These standards have usually been manufactured from International Accounting Standards (IAS), or from generally recognized accounting standards (GAAP) prevalent in the United States.

There are mainly two taxes that have a direct impact on businesses functioning in Thailand. They are the Corporate Income Tax and Value Added Tax.

All business firms operating there must possess a taxpayer identification card inside sixty days after establishment. The corporate income tax rate is calculated as 30% of net profit. Corporate taxes are payable semi-annually. Financial statements must be created by a company auditor annually.

The Revenue Department insists that accounts must be in the Thai language. The books must be placed at the business centre for ten years. Corporate Income Tax (CIT) is a direct tax imposed on a juristic company or alliance which is functioning under Thai or foreign law and performs business in Thailand or makes certain types of income from Thailand.

The usage "juristic company or alliance" implies a limited company, a limited alliance or a registered ordinary alliance operating under Thai or foreign law as well as an association and an institution involved in business which brings revenue. The usage also covers any joint venture and any trading or profit-seeking activity performed by a foreign government or its agency or by any other juristic body listed under a foreign law.

Value Added Tax was established in 1992. The VAT is imposed to each stage of the production process, and is payable at a monthly basis. The VAT is levied at a rate of 10%. Exports, domestic transportation and some other sales are freed from VAT. Any person or entity who supplies goods on a continuous basis or delivers services in Thailand and has an annual income in excess of 1.2 million Baht has to pay VAT in Thailand.

Service is regarded to be provided in Thailand if the service is carried out in Thailand no matter where it is made use of or if it is carried out somewhere else and made use of in Thailand.

Some other taxes also need to be considered. It includes the Specific Business Tax, the Remittance Tax, and the Personal Income Tax. Specific Business Tax (SBT) is another type of indirect tax launched in 1992 to substitute Business Tax. Certain businesses will come under Specific Business Tax in place of VAT.

Businesses that come under SBT comprise of Banking, Financial and similar business, life insurance, pawn brokerage, real estate and any other business acknowledged by the Royal Decree i.e. business involves in repurchasing agreement (REPO) and factoring.

While the Remittance Tax has an impact on branch offices, the Withholding Tax, the Personal Income Tax, is calculated at 30-37% for income crossing the mark of $40,000, and the petroleum, stamp duty on some transactions, excise taxes on numerous goods such as liquor and tobacco, and property taxes.

When you consider the Taxation in Thailand the impact of Double Taxation Treaty must have to be mentioned. The U.S. and Thailand agreed on a tax treaty in the year 1996. The treaty will exempt double taxation, allowing U.S. investors to have a credit against their U.S. tax obligations for taxes spend in Thailand, as well as other benefits. The treaty will come into effect in 1998.
About the Author
For nearly 30 years, Bamrung Suvicha Apisakdi Law Associates (BSA Law) has focused on providing reliable legal advice and services to the Thai and foreign business community in Thailand. We provide international standards of legal services while retaining the customs of the Thai business culture.
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