LEGAL ASSISTANCE FOR

ACCOUNTING AND ANNUAL AUDIT

All companies based in Thailand need to keep track of their accounts. This scenario not only holds true for a limited company, but also for foreign juristic persons doing business in Thailand, registered partnerships, joint ventures and public limited companies. Only a private person is excused from this obligation. The accounts are drafted following the rules and regulations of Thai Accounting Standards(formulated by the Institute of Certified Accountants and Auditors of Thailand) in such a manner, that it should centralize a true and correct image of the company’s expenses and assets.

The Law states if its a new company registration, then the company should close its first accounting year within 12 months after its registration, and for the next preceding years, the accounting period should be closed in every 12 months (per December 31 or another date). The balance sheet — reflecting the summary of the assets and liabilities — and the profit and loss accounts have to be prepared and filed at the end of each period. The accounting year may be changed, but written approval from the Director-General of the Revenue Department is mandatory.

The financial statements are also examined and certified by a licensed accountant (regardless of the condition whether the company has traded or not). Within 4 months after the closing of the accounting year, the fully signed off accounts needs approval from the Annual Shareholders’ Meeting. Upon approval, the financial statements will be submitted to the Revenue Department and the Commercial Registrar within 1 month. However, failure to comply with any of these conditions may result in a penalty up to 200,000 THB.

The accounts and other relevant company documents have to be kept at the company’s registered address for a minimum of five years.

CIT

CORPORATE INCOME TAX

All companies are bound to apply for a Taxpayer Identification Number (TIN) within 60 days after incorporation or – for foreign companies – before starting a business in Thailand. This number will serve the purpose for Corporate Income Tax including Withholding Tax and VAT purposes.

The Standard Corporate Income Tax Rate of Thailand

As from January 1, 2013 20%
   

Corporate income tax rates for SME companies (Paid up capital not exceeding 5M THB and sales and services income less than 30M THB):

Net profit(TBH) Tax rate
0 – 300,000 Exempted
300,001 – 1,000,000 15%
1,000,001 and above 20%
   

Half Year Report

In addition to the annual tax payment, any company subject to CIT is duty-bound to make a half-year tax prepayment (Form CIT 51). A company needs to estimate its annual net profit as well as its tax liability and pay half of the estimated tax amount within eight months after the beginning of the accounting period. The disburse tax is creditable against its annual tax liability.

However, in conditions where enough tax was not prepaid – the actual year-end profitability will amount to 25% more than (the double of) the forecast – with an additional 20% tax to remain due on the difference between the forecast and the actual tax due.

VAT

VALUE ADDED TAX ACCOUNTING

A company is bound to register for VAT in three cases:

  • The activities conducted by the company are VAT subjected (e.g. export of goods).
  • When the turnover of the company exceeds 1,800,000 THB per year, the company becomes eligible to apply for a VAT number within 30 days after the company reached this amount of sales.
  • If the company employs a foreigner then it has to apply for a work permit.
Activity Rate Additional information
Sale and import of goods and services 7% The official VAT-rate is actually 10% but as an economic measure during the crises in 1997, the rate was lowered and has been confirmed every year since. In principle the rate of 10% will be applicable again as from October 2012.
  • Export of goods
  • Services rendered in Thailand, but used abroad
  • Sale of goods and services to the authorities, state enterprise or UN organisation under a foreign loan or assistance project
  • International transport services
  • Sale of goods and services between bonded warehouses
  • Sale of goods within customs free zones
0% VAT amounts are not counted when the services are rendered or the good is sold, but the company can deduct the VAT credits while receiving goods or services from another VAT subjected company.
  • Domestic transport
  • Rent of immovable property
  • Sale of agricultural product o.a.
  • Sale of newspapers, magazines and textbooks
  • Healthcare, cultural and educational services
Exempted  

The VAT system in Thailand works in the following manner - if company A (subject to VAT) purchases fabrics from company B (also subject to VAT), then company A is targeted to VAT credits while company B is targeted to VAT debits. Suppose if company A manufactures clothes for selling to a distributor, it will have VAT debits. At the end of the month, the VAT debits will be set off against the VAT credits. In case the company has credits left, it can request a VAT refund (however, a time-consuming process), whereas if it has due debits, then the amount will have to be paid effectively.

In Thailand, VAT returns (PP 30) should be filed on a per month basis before every 15th of the following month with the Area Revenue Branch Office. Please note that, if the goods or services are also subject to the Excise Tax, the VAT return should be filed with the Excise Department together with the Excise Tax Filings. Even if the return is null for that month VAT returns are an obligation. The payment of the VAT remains unpaid at the same time.

Cloud 7 Legal Services offer a full range of VAT accounting services, including the registration with the tax authorities, VAT filings and reimbursement of VAT credits.

WHT

WITHHOLDING TAX ACCOUNTING

Tax has to be restrained by the payer of – amongst others – employment income, dividends, interests, royalties and technical service fees. The applicable rates are:

Employment Income

Paid to an employee 5-37% Advance tax (to be deducted from the CIT)

Dividends

Paid to another company registered in Thailand >10% or exempted  
Paid to a non-resident company >10%  
Paid to a residing individual >10% >Possibility to obtain a dividend tax credit
Paid to a non-resident individual >10%  

Interests

Paid to another company in Thailand (which is not a financial institution) >1% Advance tax (to be deducted from the CIT)
Paid to a non-resident company >15% or the rate provided in the applicable tax treaty Final tax
Paid to a residing individual >15% Final tax
Paid to a non-resident individual >15% or the rate provided in the applicable tax treaty Final tax

Royalties

Paid to another company registered in Thailand >1% Advance tax (to be deducted from the CIT)
Paid to a non-resident >15% or the rate provided in the applicable tax treaty Final tax
Paid to a residing individual >15% Final tax
Paid to a non-resident individual >15% or the rate provided in the applicable tax treaty Final tax

Technical Service Fees

Paid to another company registered in Thailand >1% Advance tax (to be deducted from the CIT)
Paid to a non-resident >15% or the rate provided in the applicable tax treaty Final tax

legal assistance for

PAYROLL SERVICES AND SOCIAL SECURITY FUND

Even with a small number of employees, managing salaries can be a tedious and time-consuming accounting process. Computations can be a complex process of paperwork, transfers of funds to different bank accounts, employee savings accounts, and different government agencies.

Our accounting services provide flexible payroll services and accountancy that improve payroll management for small and medium sized businesses. Apart from the above-mentioned monthly payments of withholding tax on salaries (PND 1), our services generally include a mix of the following tasks:

  • Payroll calculations
  • Pay-slip creation
  • Submitting pay instructions to your bank
  • Withholding Tax Certificate (BIS 50)
  • Provident Fund
  • Workmen’s Compensation
  • Payments to government agencies
  • Electronic reporting

Both the employee and employer are obligated to contribute 5% of the monthly salary, with a capital of 5% of 15,000 THB (≤ 750 THB). Cloud 7 Legal Services can fulfill all your Social Security Fund obligations (SPS 1-10).