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A ‘Claimable’ Expense may be confusing to foreigners, perhaps because Thai lawyers and/or accountants may find it difficult to communicate the specifics that make the expense claimable in another [not their native] language.

Understanding what makes an expense claimable according to the Revenue Department [Tax Office in Thailand] is important so, put as simply as possible;

a claimable expense is any qualifying [your company is allowed to claim the purchase because it is related to the activities of your company] expense and/or fixed asset that is sold by another party; individual or company, and purchased by your company, that includes ALL of the necessary information on the ‘Receipt‘, for a non VAT registered seller, or a ‘Tax Invoice/Receipt‘, for a VAT registered seller, to the purchaser [your company].

Information like the seller’s full legal name, tax id and registered company address, the purchaser’s full legal name, tax id and registered company address and specific details about the product and/or service being sold/purchased as well as, any/all applicable taxes like; Withholding Tax [WHT], and/or Value Added Tax [VAT], to be paid at the time of exchange [sale/purchase].

​For more information on accounting and tax laws in Thailand, check out the most recent Thai Tax Booklet (2020-21), in English, drawn up by Price Waterhouse Coopers [PWC].

Under section 41 of the Revenue Code an individual Thai citizen or foreigner who lives in Thailand for one or more periods totaling at least one hundred and eighty (180) days in any tax year is, for tax purposes, deemed a resident of Thailand and subject to tax on all assessable income derived from sources within the country, whether paid within or outside Thailand, and on assessable income derived from foreign sources to the extent that it is brought into Thailand in a year in which income is received. A non-resident individual is subject to tax only on assessable income from Thai sources, regardless of payment location.

The tax rates in 2021 for employment income and hire of work [per annum] are as follows:

Withholding Tax or WHT [abbreviated], is applicable when invoicing a company for your services only, WHT is not applicable to ‘off the shelf’ products, sold by your company. The percentage of WHT is dictated by the type of service being offered. Examples are as follows:

• • 1% WHT on Transportation [like delivery services, excluding public transport] or,
  • 2% WHT on Advertising Fees [like promotion of your business in a magazine] or,
  • 3% WHT on Professional Services [like Samui Law Firm] or,
  • 5% WHT on the Lease of Assets [like property].

​The applicable WHT is deducted from the excluding VAT [if your company is VAT registered] total invoice value and paid each/every month on your behalf, by your accounting company, to the Revenue Department on or before the 7th of the proceeding month.

Example: your company sends an invoice for 1,000 baht plus VAT [1,000 baht x 1.07 [7%] = 1,070 baht] to another company for services rendered. The ‘payer’ [company receiving and paying the invoice] is obliged by law to withhold three (3) percent for ‘Professional Services’ on the VAT exclusive amount [1,070 baht Total Amount – 70 baht in VAT = 1,000 baht x 0.03 [3%] = 30 baht]. Therefore, the ‘payee’ receives 1,040 baht into their bank account [or in cash] for services rendered, and the ‘payer’ must provide evidence to the ‘payee’ [withholding tax forms – stamped and signed by the ‘payer’ company], that the withheld amount [30 baht], has been paid to the Revenue Department.

Note 1: the total amount payable by the ‘payer’ remains 1,070 baht, of which 1,040 baht is paid to the company providing the services and 30 baht is paid to the Revenue Department.

Note 2: the VAT payable to the Revenue Department [RD] by the ‘payee’ is not affected either, it remains [70 baht] as calculated above, meaning, the net amount received by the ‘payee’ after all deductions is 1,070 baht minus 30 baht [Withholding Tax paid to the RD by the ‘payer’] minus 70 baht [Value Added Tax paid to RD by the ‘payee’] = 970 baht, being three (3) percent less than the VAT exclusive amount originally invoiced.

Once you [as a person], your partnership or your company reaches a turnover of 1,800,000 THB in any given financial year [with some minor exceptions], you are obliged to register for Value Added Tax. VAT in Thailand is currently 10% but, the government currently offers VAT at the discounted rate of 7%, and this input/output tax must be added onto each and every invoice, once registration has been activated. This tax is very similar to other countries like England [VAT] or Australia [GST].

You may, of course, choose to add the VAT on top of each product or service you sell or include the VAT within your current pricing but, whichever you decide, VAT must be reconciled every month and paid to the Revenue Department on or before the 15th of the proceeding month

Specific Business Tax [SBT] is levied on certain businesses for which it is difficult to determine a value addition thus, Value Added Tax [VAT]. These businesses are considered to be operating outside the VAT system.

Companies that are subject to Specific Business Tax include those in the following sectors:

• • Banking and Finance
  • Life Insurance
  • Pawn Brokerage
  • Real Estate
  • Others such as those engaged in re-purchasing agreements and factoring and those specified by the Royal Decree.

Some organizations belonging to the above listed categories may also be exempt from Specific Business Tax. Such organizations include; the Bank for Agriculture and Agricultural Cooperatives, the Government Housing Bank, the Government Savings Bank and the Bank of Thailand.

Entities subject to Specific Business Tax must register with their District Revenue Office within 30 days of their first day of business operations.

Specific Business Tax is calculated on gross monthly receipts and must be filed each month with the District Revenue Office regardless of whether the business had income for that month or not.

Once the Financial Year has drawn to a close [December 31st], and the company has shown a Profit, in line with Profit & Loss above, Corporate Tax shall be applied incrementally, depending on:

• • the size [registered capital] of the company and,
  • the amount of annual profit made by the company.

If the company has a registered capital of 5,000,000 THB or less then, the tax brackets, and amount payable, differs from a company with a registered capital of more than 5,000,000 THB, as shown below:

Companies with 5,000,000 THB or less in Registered Capital shall be taxed as follows:

​> 0 THB < 300,000 THB in annual net profit = 0% Corporate Tax

> 300,000 THB < 3,000,000 THB in annual net profit = 15% Corporate Tax

> 3,000,000 THB in annual net profit = 20% Corporate Tax

​Companies with greater than 5,000,000 THB in Registered Capital shall be taxed as follows:

​> 0 THB in annual net profit = 20% Corporate Tax

​Note: net profit is calculated on turnover [for that financial year], minus all Claimable Expenses [for that financial year], equals net [taxable] profit.

Similarly to Profit & Loss above, if you own a Thai partnership or company, the Department of Business Development [DBD], where the partnership or company was created, ‘reserves the right’ to close the partnership or company down [defunct], in the event that the company does not submit an End of Year Balance Sheet & Audit for three (3) consecutive years.

If you own a Thai partnership or company, the Department of Business Development [DBD], where the company was formed, will allow a three (3) year grace period for the partnership or company to reach Profitability before the DBD ‘reserves the right’ to close [defunct] the partnership or company as a non viable entity.

​Further to this, in the event that the company runs at a Loss [is not profitable], for two (2) consecutive years, the Labor Office also ‘reserves the right’ to not issue or renew any foreign Work Permit.

​Before you panic..! ‘reserve the right’ does not necessarily mean the DBD will close [defunct] your company for certain but, it does mean that they maintain the power to do so should they wish to exercise the right!

Samui Law Firm offers transparent, affordable fees for monthly accounting services. Fees are based on the number of invoices, bills and receipts we would normally process for your company each and every month:

• • 0-10 invoices/bills/receipts [from your company] = 1,500 THB + VAT per month,
  • 11-25 invoices/bills/receipts [from your company] = 2,500 THB + VAT per month,
  • 26-50 invoices/bills/receipts [from your company] = 3,500 THB + VAT per month,
  • 51-100 invoices/bills/receipts [from your company] = 4,500 THB + VAT per month,
  • 101-200 invoices/bills/receipts [from your company] = 6,000 THB + VAT per month,
  • 200+ invoices/bills/receipts [from your company] = Contact Us for a Quotation

We also charge a supplementary service fee for VAT registered companies as there is extra work to reconcile VAT each and every month:

• • VAT Registered Company = 1,000 THB + VAT per month