The beneficiary of the payment having seen part of his income withdrawn may alternatively obtain a tax credit or a refund of the tax upon declaration if the amount withdrawn is greater than the amount due.
There is also a “withholding tax” at a different rate for income paid to foreign companies. Indeed, the company which pays income to a foreign company keeps a part which it redistributes to the “Revenue Department”. The rate charged is 10% for the payment of dividends and profits and 15% for other income such as interest, royalties, capital gains, rents and professional fees paid to foreign companies. These withholding tax rates may be reduced or exempted depending on the income category, in accordance with bilateral conventions in order to avoid double taxation.
The Value Added Tax (VAT) is an indirect tax levied on the various stages of production and distribution. Any person or company with an annual turnover of more than 1.8 million Thai Bahts must register for VAT within 30 days of exceeding the threshold. It is possible to register voluntarily in the event that the company pays VAT and wishes to obtain a refund. VAT registration is done with the “Revenue Department” using the accounting form “PP 01”
The applicable rate of VAT is 7% in Thailand. The VAT payable for a company is equal to the difference between the VAT collected and the VAT paid. The company must report the collected and disbursed VAT in the form “PP 30”, which must be filed no later than the 15th of the month following the payment of the VAT.
The taxpayer must also pay VAT on behalf of its foreign service suppliers who are not registered with the Thai system. Indeed, as soon as the Thai company uses a service from foreign providers, it must submit a 7% VAT on their behalf via the form “PP 36” within 7 days of the following month.
Certain activities are exempt from paying VAT, such as newspapers, health services, education services or certain cultural services. There is also a 0% VAT rate for goods exported abroad. In this case, the VAT registration will make it possible to obtain a refund of the amount of VAT paid by the company.
When the company is registered for VAT, pay attention to the tax invoice issued by the seller. When you buy goods from someone who is also registered in the VAT system, that person must issue a tax invoice upon delivery of the goods. The tax invoice may or may not be on the same paper as the delivery note or receipt. If they are not registered in the VAT system, they cannot issue a tax invoice and do not have to claim VAT from you.
A tax invoice must at least contain the following information:
|➤ The words “tax invoice” in a prominent place|
|➤ The name, address and taxpayer identification number of the company issuing the tax invoice|
|➤ The name and address of the purchaser of the goods or services|
|➤ The serial number of the tax invoice|
|➤ Description, type, class, quantity and value of the goods or services|
|➤ The amount of value added tax calculated on the value of the goods or services which is clearly separated from the value of the goods or services; and the date of issue|
Certain types of businesses (e.g. banking, finance, securities, insurance, pawn shops, sale of real estate for business or for profit) are subject to the specific business tax (Specific Business Tax – SBT) rather than VAT. Businesses subject to SBT must pay VAT on their purchases of goods and services but are not entitled to a VAT credit. The SBT varies between 2.5 and 3.0% on monthly gross receipts.
As soon as the company employs an employee, it has an obligation to subscribe to the social security fund. She must therefore register first in order to obtain a social security identifier number and register her employees as and when they start their employment.
Social contributions are paid by both the employer and the employee. For the employee, the tax is levied directly by the employer on his income. The tax is paid monthly by the employer no later than the 15th of each month by filing the form “SSO 1-10”. The employee has the possibility of deducting the payment of the contribution from his taxable income when filing the income tax.
Employees and employers are required to pay 5% of the employee’s salary per month up to a limit of 750 THB.
To be insured for social security, you must be employed and be between 15 and 60 years old. Therefore, the guarantees cease in the event of death or termination of professional activity. To stop the payment of contributions, it is necessary to unsubscribe the person concerned.
Subscription to the social security fund provides protection against the following events: accidents or non-occupational illnesses, invalidity, maternity, death, children, old age and unemployment.
In the event of termination, employees are entitled to several benefits including notice pay equal to two months’ salary, and severance pay, the amount of which varies depending on the employee’s seniority. The employee has the right to severance pay equal to one month’s salary if he has stayed more than 4 months with the company and up to 400 days of salary if he has stayed for more than twenty years with the company.