The Revenue Code outlines regulations for the imposition of taxes on income with income tax divided into three categories : Corporate income tax, value added taxes ( or specific business taxes), and personal income tax.

Corporate Income Tax

          Incorporated firms operating in Thailand pay income tax at a rate of 30 percent of net profits. Foundations and Association pay income taxes at a rate of two to 10 percent 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 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 five to 100 percent, depending on the item or at rates under any other acceptable depreciation method, are allowed as deduction from gross income .

          Net losses can be carried forward for up to five consecutive years. Interest payments in some foreign loans may be exempt 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 three 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.

Value Added Taxes

          The value added tax (VAT) system, which came into effect on 1 January 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 10 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 operator's business. payday loans

          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 operation is entitled to a refund in the form of cash or a tax credit, which must be paid in the following month.

Zero Rate

-Exports
-Services provided in Thailand for persons in foreign countries
-International Transportation 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
-Sales 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 earning 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 105 percent or the normal VAT. However, operators paying the gross turnover tax may not off set this tax by charging VAT to their customers in any step of production.

Special exemption from VAT

-Operators earning less than 600,000 baht a year
-Sale or import of agricultural products, livestock, and agricultural inputs, such as fertilizer, feed and chemicals
-Sale or importer 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 transportation ( excluding airlines ) and international transportation (excluding air and sea lines )

Specific Business Tax

          A specific business tax of approximately three percent is imposed, in lieu of VAT , on the following business :

-Commercial banks and similar businesses
-Insurancecompanies
-Financial securities firms and credit fanciers
-Sales on the stock exchange
-Sales of non-movable properties
-Pawn shops

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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 percent 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 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 10 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.

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 follow :

          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 law 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 wasearned.

          A standard deduction of 40 percent, but not in excess of 60,000 baht,is permitted against income from employment or services rendered of copyrights. Standard deduction ranging from 10 to 85 percent are allowed for other categories of income . In general, however, taxpayers may elect to itemize expenses in lieu of taking standard deduction on income from sources specified by law.

          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 counted. 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 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.

Treaties to Avoid Double Taxation

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

          Austria, Australia, Belgium , Canada , China , Denmark , Finland , France , Germany , Hungary , Indonesia , Ireland , Israel . Italy , India , Japan , Laos , Malaysia , Netherlands , Norway , Pakistan , Philippines , Poland , Romania , Singapore , S Korea , S Africa , Sri Lanka , Sweden , Switzerland , United Kingdom , USA, Vietnam

          Negotiations with Myanmar , Nepal, New Zealand, the United Arab Emirates and Greece are underway. The treaties generally place taxpayers in a more favorable position for Thai income than they would be under the Revenue Code , as profits will only be taxable if the taxpayer has a permanent establishment in Thailand.

Other Taxes

•  Petroleum Income Tax

          The Petroleum Income Tax Act replaces the Revenue Code in imposing a tax on income from firms which own an interest in a petroleum concession granted by the Thai government or which purchase oil from a concession holder for export. Net income from Petroleum operations includes revenue from production, transport or sale of oil and gas,the value of gas delivered to the government as a royalty and the proceeds of a transfer of interest in a concession. The tax rate for most operators is not less than 50 percent and not more than 60 percent of net profits.

•  Stamp tax

           The Revenue Code contains a Stamp Duty Schedule listing transactions subject to stamp tax. Rates depend on the nature of the transaction , and fines for failure to stamp documents are very high.

•  Excise Text

          xcise tax is levied on the sale of a number of goods, including petroleum products, tobacco , liquor , soft drink , cement , electrical appliances and automobiles.

•  Property Tax

          Owners of land and / or building in designated areas may be subject to annual taxes levied by the local government. Under the Local Development Tax Act of 1965, rates per unit vary according to the appraised value of the land. However, land for the personal residence of the owner, animal husbandry, or land cultivation is exempted from this Act. For land taxable under the House and Land Tax Act of 1932, which is based on the value of the land and buildings or any rate of 12.5 percent of the assessed assumed rental value of the property, and only owner occupied residences are exempt.

Tax Courts

          Tax cases are considered different in nature from normal civil cases. The Tax Court Establishment and Procedure Act, effective since 1985, provides special and accelerated procedures for tax litigation .Tax courts have authority to judge the following cases :

•  Appeals against the decision of tax officers or committees
•  Disputes over the claims of state tax obligations
•  Disputes over tax refunds
•  Disputes over rights or publications concerning tax collection obligations. Disputes the right or obligations regarding tax collection obligations
•  Other cases made subject to the Act as prescribed by other laws.

Note : Decision of the tax courts may be appealed to the Supreme Court within one month after the date of the judgement.

Tax Clearance Certificates

          As of May 1991, requirements for tax clearance certificates have been significantly resuced.Provided that an individual demonstrates compliance with tax laws, he is not require to secure a tax clearance certificate within 15 says before leaving the country.

          Employees of business in corporate under foreign law, but which carry out business in Thailand, must acquire a certificate from the Revenue Department before departure. The requirement is not enforced if the individual has been in Thailand less than 90 days in any tax year and not received any income.

Other Tax Reforms

          Thailand is activity pursuing reform of its tax system and taxes on industrial imports have already been sharply rescued. Over the past five years, the government has consistently moved to reduce tariffs on machinery and raw materials.The Ministry of Finance has reduced tariffs on more than 91 percent of all raw materials and machinery. The most recent actions will bring tariffs on most machinery down to five percent and over the next three years, tariffs on most raw materials will be reduced down to zero to five percent .

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