A 30-year lease can be a good idea to a freehold
purchase or usufract, or a Thai company (7
PARTNERS) can be established with Thai majority shareholders. Foreigners
only own 49% shares in a company with foreigner
ownership. We can assist you to make sure your
company is safeguarded. Remember if you need advice ask us.
he
value added tax (VAT) system, is subject to 7% tax rate.
Producers, wholesalers, providers of services, retailers,
exporters and importers are affected as with Thai companies
employing foreigners. When you apply you will receive back an
A4 size certificate which you frame on your Office wall. However
please photocopy and use a copy because only 20% Thais pay income
tax and these certificates can be copied, sold and altered. The
same goes for your Company registration.
VAT is paid monthly, calculated as: Output tax - Input tax = Tax paid
where output tax is VAT which the business collects from the
purchaser when a sale is made, input tax is VAT a business pays to
the seller of a goods or service which is then used in the
business. If the calculation is a plus figure, the business sends
the remaining tax to the Revenue Department no later than 15 days
after the end of each month. If a negative balance, the business
gets a refund in the form of cash or a tax credit, which must be
paid the next month. Please remember foreigners who now want
a work permit must file for VAT as well so therefore all companies
with foreign workers with work permit are subject to register for
VAT before a work permit is issued. When you pay your monthly VAT
you normally receive back the receipt via registered mail. It pays
also to have copies of these receipts as well as another set of
books just to make sure. remember if you use electronic accounts
this is not allowed. Invoice books are still used & there must
be 4 copies per invoice.If you make a mistake filling out an
invoice you must fold that invoice and start again.
WHO
IS EXEMPT:
1/. Exports 2/. Services provided in Thailand for persons in foreign countries
3/. International 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
4/. Sale of goods or services to civil service or state
enterprises under foreign loan or aid schemes
5/. Sale of goods or services to the UN and its agencies, foreign embassies and consulates
6/. Sale of goods or services between bonded warehouses, between operators in export processing zones, or between the former and the latter. Operators whose gross earnings 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 1.5 percent or the normal VAT. However, operators paying the gross turnover tax may not offset this
tax by charging VAT to their customers in any step of production. The
above is now clear due to foreigners who now must be registered
for VAT.
VAT
Special exemptions:
1/. Operators earning less than 600,000 baht a year
2/. Sale or import of agricultural products, livestock, and agricultural inputs, such as fertilizer, and feed
3/. Sale or import of published materials and books
4/. Auditing, legal services, health services plus other professional services
5/. Cultural and religious services
6/. Educational services
7/. Services provided by employees under employment contracts
8/. The sale of goods as specified by Royal Decree
9/. Goods exempt from import duties under the Industrial Estate Authority o Thailand (IEAT) Act
10/.Domestic transport (excluding airlines) and international transport (excluding air and sea lines).
SPECIFIC Business Tax (SBT)
A specific business tax of 3% is levied, in lieu of VAT, on the following:
1/. Commercial banks and similar businesses
2/. Insurance companies
3/. Financial securities firms and credit financiers
4/. Sales on the stock exchange
5/. Sales of non-movable properties
6/. Pawn shops.
The SBT is computed on the monthly gross receipts at the
following rates:
Type of BusinessTax Rate Banking or similar business:
finance, securities and credit finance business3%
Insurance - Life 2.5%- Insurance against loss
3%
Sale of immovable property in commercial manner for profit 3%
TAX
REMITTANCE ON PROFITS:
Remittance tax applies to profits transferred from a Thailand branch to its head office
overseas rated at 10% remitted before tax, and must be paid by the remitting office of the offshore company within seven days of the date of remittance. Outward remittances for 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% of the gross remittance.
A flat 15 percent rate is effective on all assessable income except dividend
income being 10%.
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.
Remittance of funds may not be necessary in
order to incur either the dividend or interest tax liabilities, which may be incurred by making book entries.
PAYING
TAXES ONLINE:
Taxes may be paid on-line. You will be able to make electronic payments (e-payments) for all
categories of taxes, including income tax, following the department's launch of VAT payments, its first online
service. Paying taxes online, you must apply for the service at http://www.rd.go.th . The Revenue Department will then ask to check a taxpayer's identity in person before they receive a user ID and password.
But you must have an account with one of three commercial banks - Krung Thai Bank, Siam Commercial Bank or Bank of
Asia. Later the service will be extended to those with accounts with Thai Farmers Bank, Citibank and Bangkok Bank.
A lack of basic computer skills of the taxpayer rather than lack of confidence in e-transaction security
were reasons why this isn't popular. The Revenue Department now provides an electronic manual with step-by-step procedures.
In May, some 135 companies had registered to use the service, but only 43 submitted all the requested information. 24 companies had made e-payment transactions, with the value of e-tax payments being
approx Baht 300,000.- In June, 128 companies had applied for the service,
& 1 company conducting a transaction this month so far.
Corporate taxpayers are also encouraged to use the online VAT payment system.
If companies paid VAT on-line and were eligible for a VAT refund, they would receive it within 30
days, compared to 60 days.
LEASING
VIA A LOAN TO YOUR COMPANY:
This is an excellent way to
lease if you have a company. An owner takes a lease out on a particular
piece of land he wants to own with his own money? he loans his company
money to buy the land and the lease in effect is owned by the company
via the buyer. This then becomes an asset of the company and can be
depreciated from his or her share registration & paid back at the
buyer's pleasure. You must have audited books to access a loan from a
Bank.
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On
March 3rd 2000 the Thai Foreign Business Act of 1999 took
effect. (FBA). This replaced the old Act of 1972.
In a company you
need 7 partners but you can according to the investment control
100% via B.O.I. (Board of Investment). However a normal 2m baht
Thai Company foreigners can have 6 foreign shareholders & 1
Thai but the Thai holds 51% shares & now have access to the
company account. What one does not know until they decide to form one is
that certain businesses are closed to foreigners BUT THIS IS OF
NO CONCERN IF ONE JUST WANTS A COMPANY FOR THE PURPOSES OF
BUYING A HOUSE AND LAND but remember buying a house via a
company your Thai workers will be interviewed and you must carry
out business. We can help you form the company and
take care of all steps for you plus search the Title Deeds &
any other request like making sure their is no lien on the
property. We also check the Courts for you in case the seller
has a not so good record.
THAIS MARRIED TO
FOREIGNERS - the answer to your land buying
problems?
BOI allows foreign companies to own land, usually factories.
Don't forget the Treaty of Amity, which virtually gives
Americans the right to own 100% of a company doing business
in Thailand. The Japanese use nominees a lot. There are people
that buy in someone elses name and put a mortgage on the
property for the purchase price to protect their interest. There
are also concurrent land leases that can be set up, as there is
no restriction on foreigners owning buildings (40% of a condo
complex) and lastly theres those who trust their wife or friend
& use their name. Laws are worthless without enforcement,
& Thailand practices "selective" enforcement.
Foreigners can buy property in Thailand & please use a
lawyer as sometimes Title Deeds are false, or the building you
buy is not on the deed or the land has encroached on other land.
Most farangs use their Thai wife and give property rights to
them. But if not married to a Thai lady then you can have a 30
year rental. Rental total fee equals the purchasing price. At
expiry date, a second 30 year rental period is granted at
zero-cost to the rentee that being you. The rental-contract is
written in English and acknowledged by a lawyer. This deal is a
person-to-person basis. Problems may arise at expiry date
between heirs of both parties.
1/. Be careful. Check utilities
as sometimes theres no phone lines & never believe it until
you have written proof of phone lines are going in.
2/. Learn which areas flood and which don't. A developer will
not tell you. Don’t listen to pub talk. Rent before buying if
you have time or ask the neighbours.
3/. A land lease NOT filed with the land department (and 1%
fee paid) is only valid for 3 years regardless of the term of
the lease. All lease for a period over 3 years MUST be
registered at the Land Office and written in Thai. You have also
to pay fees calculated on the TOTAL amount of rent agreed upon
and for the full period (eg.: rent 1000 baht x 12 months x
30years = 360.000 baht)
Those who want to sign a lease-contract and don't want to
register it, should know that such a contract is automatically
void at the death of one of the signatory (this means that such
a contract is NOT transmissible without prior agreement of the
other party.)
While a contract registered at the land office is
transmissible & if one signatory dies, & the contract is
not cancelled, the heirs of the estate have to respect it. This
is Ok if the lease is transferable and every time a transfer is
made, the Land Office must be notified.
If no record of your lease with the developer, then any
private agreement between the 2 parties will not be legally
binding. If the developer wants to play you out, he can. The
Land Office uses only one language - Thai. Even your name in the
contract has to be in Thai. The "fee" is actually
government tax & you pay the Land Office equivalent to a
little under 5% purchase price. A developer may want a
"deposit" equivalent to 1 year's maintenance fees.
They say you recover this amount from the person who buys the
property from me. But ask your Thai neighbours if they pay it as
you will find they don’t- its rubbish. Confusing-------- thats
why you need our law office.
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WHAT WE ARRANGE:
Our company can setup
your company using our Thai lawyer or formulate leases, agreements etc
that suit your situation. If wanting to purchase or lease land do
not sign any forms until you talk to us, but please obtain a Title Deed
and have it searched. We initiate an investigation of your Title Deed
for you and we give you a full Court/lien & ownership report for
your situation, in English.
. If you want a company
or work permit we give you a step by step English translation guide
on all the steps we take for you, ensuring full confidence in our
services. There are no hidden costs. Remember you do not need a work
permit if you are not going to work or are only coming to Thailand to
retire in your house otherwise you need a 2 million baht company min.
Total costs for this is 35,000 baht including VAT for a standard 2m baht
company. However you will need an "O" non immigrant visa or
"B" non immigrant visa if working in Thailand which you can
obtain after your company is formed. After one year in business we can
then assist you to obtain a 1 year visa in Thailand.
We arrange a 30 year
lease & assist with renewal and prenuptial agreements to cover you
while you are alive. This is sometimes preferable then buying a house
and condo using a company. Again we arrange with our Thai lawyer all the
work for you.
WHY USE OUR SERVICES:
