The Revenue Department provides guidelines on and examples of the treatment of withholding tax and VAT on payments of fees, i.e.

(1) Fees related to customs clearance substantiated by in the name of the owner of the goods;
(2) Service fees of the shipping agents; and
(3) Expenses without receipts incurred in the name of the owner of the goods and traditional expenses which the owner accepts have actually been incurred.

The Revenue Department provides that fees in items (2) and (3) are subject to withholding tax and VAT, while fees under item (1) are not subject to withholding tax and VAT.
The Instruction indicates that the owner of the goods should be allowed to treat the fees under items (2) and (3) charged by shipping agent as tax deductible expenses, while the fees should be treated as taxable income of the shipping agents.
However, it is observed that the Instruction does not indicate whether receipt-less traditional expenses which the own accepts were actually incurred will be tax deductible. Therefore, the manner in which shipping agents should treat such expenses for tax purposes is uncertain.

Social insurance  The assessable maximum salary of Bht. 15,000 per month remains unchanged and therefore the maximum monthly employer's contribution will increase from Bht. 450 to Bht. 600. Employee's maximum contributions will also increase to Bht. 600 per month.

New royal decrees were issued to provide an extension of time to the period for tax exemption on the debt restructuring process and on partial business transfer, as well as another year's extension to the period for the reduction of the SBT rate from 3.3% to 0.11%.

The Revenue Department has expanded the tax base for the exemption from personal income tax from Baht 50,000 to Baht 80,000, commencing in the tax year 2003. Tax exemption is also provided for the sale of a main residence to purchase a new one. Two Departmental Instructions on the surcharge and penalty counting period and withholding tax sale promotions were issued as guidelines for Revenue officers.

BOI amended its Notification on the "Regional Headquarters" business category. The Board of Investment (BOI) notified an amendment to business category 7.9 by substituting the previous reference to "Regional headquarters" with "Regional Operating Headquarters". Together with the substitution of the business category, the BOI has also changed the entire set of conditions for qualifying for the business promotion in order to be congruent with those of the Revenue Department.
VAT on selling goods to a supplier in an export processing zone
A Company situated in an export processing zone purchased parts and stored them in its warehouse which was situated in the same export processing zone. The Company had not yet made payment for the parts. The seller cleared customs duty and delivered the parts to the export processing zone. The VAT rate is 0%. When the Company wished to use any of the parts, it only paid the price of the quantity required. The Revenue Department considered that this was an export of goods which qualifies for the 0% rate of VAT and that the liability to VAT arises on the date the domestic goods are brought into the export processing zone. When the Company took some parts from the warehouse for the manufacture of goods, this was regarded as bringing the goods for use in its own business and not regarded as being a sale of goods. The invoice issued by the seller is for payment purposes. The seller is not required to collect VAT again. VAT n Thailand is 7%

Public utilities expenses for the real estate business are not capital expenditure

A company is a real estate developer in the business of land appropriation and sale of houses. The Company had constructed public utilities on its land by which the land and the public utilities had not yet been transferred to anyone or for public benefit. The Revenue Department took the view that the construction expense was a disallowable expense in the CIT calculation according to Section 65 ter (5). The public utility expenses of the Company's permitted project i.e. road, side-walk, electricity system, water system, bridge, waste-water treatment and lake were expenses which the Company paid for the direct benefit of the land and houses in the permitted project. These expenses would increase the value of the land and houses in the Company's permitted project and benefit the Company's business directly; they are the Company's assets and treated as the Company's capital. The expenses, therefore, are a non-deductible expenses under Section 65 ter (5) of the Revenue Code. Instead, the Company is required t o deduct wear and tear and depreciation of such properties in accordance with Royal Decree No.145 B.E.2527 (1984).

Thailand's tax system is self-assessment. Directors are responsible for compliance with the Revenue Code and preparation/submission of complete and accurate tax returns. In addition, resources are stretched as companies are focusing on their competencies: activities that create value for the company. The result is limited resources available for tax compliance. We can assist you with managing your regulatory compliance needs.
Our services include: