Taxation law in Thailand covers both National and Local Taxes. The central government as mandated by law as the main authority for its implementation. The majority of tax collection is vested to the Ministry of Finance. The Ministry of Finance is responsible for its administration and implementation through its 3 departments as govern by the Revenue Code of Thailand.
The Revenue Department : Personal Income Tax, VAT, Specific Business tax and Stamp Duties.
The Customs Department : Import and Export Tax
The Excise Department : Excise taxes levied on certain specific commodities.
Meanwhile, for the Local Taxes, the Local Governing bodies deal with the collection of property and municipal taxes.
TAXATION SYSTEM IN THAILAND
There are different categories of Tax in Thailand, to name a few:
Note that Personal Income Tax (PIT) is a normally a direct tax levied on any income of a person. The definition of a person means any individual or a non-juristic body of person or an ordinary partnership and an also an undivided estate. Generally, any person who is liable for personal income tax has to calculate their tax liability and also file tax return and pay the taxes, if any are due yearly. There are exemptions which are granted to certain persons which may include United Nations officers, visiting experts or diplomats under the terms of international and bilateral agreements this Thailand.
Tax may be levied on the followings;
i. Salary paid in Thailand or abroad
ii. Income (wages, interest, dividends, etc.) from abroad brought into Thailand in the year earned by a person who resides in Thailand for a total of 180 days or more in any one taxable calendar year
iii. Housing and meal allowances or their value
iv. School fees for dependents paid for by employer
v. Cost of home leave for taxpayer and dependents
vi. Capital gains arising from transfer of assets
vii. Pensions and retirement pay brought into Thailand
Taxpayers have been classified into “resident” and “non-resident” taxpayers. The “Resident” taxpayer means any person who is residing in Thailand for a period of more than 180 days in any tax year. A resident taxpayer of Thailand is liable to pay all taxes on income from any sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however, subject to tax only on income from sources in Thailand.
For certain categories of income, the payer of income has to withhold tax at source, file tax return and submit the amount of tax withheld to the District Revenue Office within seven days after the end of the month. The tax withheld shall then be credited against tax liability of a taxpayer at the time of filing PIT return. The followings are the withholding tax rates on some categories of income.
Corporate Income Tax (CIT)
Corporate tax is a direct tax levied on a juristic company or partnership carrying on business in Thailand or not carrying on business in Thailand but deriving certain types of income from Thailand According to revenue code the term juristic company or partnership (hereinafter called company) means a limited company, a limited partnership or a registered partnership incorporated under Thai law or foreign law as well as an association and a foundation.
The taxable income under the Revenue Code is net profit which is calculated by deducting income from business or income arising from business carried on in an accounting period with expenses, an accounting period shall be twelve months.
Value Added Tax (VAT)
Any person or juristic person provides services in Thailand and has an annual turnover exceeding 1.8 million baht is subject to VAT in Thailand. Service is deemed to be provided in Thailand if the service is performed in Thailand regardless where it is utilized or if it is performed elsewhere and utilized in Thailand. VAT taxable period is a calendar month. VAT return therefore must be filed on a monthly basis. VAT return (Form VAT 30) together with tax payment, if any, must be submitted to Area Revenue Branch Office within 15 days of the following month.
Specific Business Tax (SBT)
This is another kind of indirect tax to replace the renounced Business Tax. Certain businesses that are excluded from VAT will instead be subject to SBT. According to revenue code the follow businesses carried in Thailand are subject to specific business tax.
A. Banking, Financial or other similar businesses
B. Life Insurance
C. Pawn Brokerage
D. Real Estate
Certain documents mentioned in the stamp duty schedule of the revenue code [e.g. Power of Attorney, Contract, Transfer of share, Hire purchase of property, Loan agreement, Insurance policy, Letter of credit, etc.] must contain documentary stamps on various specified denominations.
THE IMPORTANCE AND BENEFITS OF TAX PLANNING
Tax planning is a preparation or scheduling of Tax Payment either for short or long term purposes in order to lessen or minimize the taxes being paid by an individual or companies without committing any violations against the law or Revenue Code of Thailand. Â But this is not an easy task, only lawyers with an expertise on this matter can do it.
At G.A.M. Legal Alliance, our experienced professional Lawyers, Auditors and Accountants can help you with this matter. Please let us take care of the case and provide you with our legal advice and assistance in the preparation for your Tax Planning. This will be carefully done in accordance with the existing rules and regulations of the Revenue code.