Taxpayers Rights

As a foreigner doing business in Thailand, you may know that you have a duty to register a tax ID, file tax returns, co-operate with the tax officers, and of course, you have to pay tax as assessed by tax officers ON TIME. Should a taxpayer fail to pay a complete sum, the assessment officer has the right to seize and sell your assets by auction even without a court decision!

Cash raised from the transaction will be used to pay off tax arrears. To balance those responsibilities, you do have certain rights as a taxpayer. You have many rights under the law and I think it is important that you know your rights. I have taken the most up-to-date information from the website of the Revenue Department (www.rd.go.th) to share it here with you, (along with my own comments that may be useful to you).

1) Tax installment payment: For personal income tax, a taxpayer can pay any tax amount which exceeds 3000 baht in up to three installments without paying fines or surcharges. A taxpayer can file a request for an installment payment of tax arrears. However, such payment must meet the requirements set by the Revenue Department

Comment: Besides personal income tax, basically the tax officer also uses the same rule for other kinds of tax.

2) Appeal in dispute of tax assessment: In the case where a taxpayer disagrees with the decision made by the assessment officer, he has the right to appeal to the Commission of Appeals (in the form P.S.6) within 30 days starting from the day when an assessment notice has been received. Should a taxpayer disagree with the ruling of the Commission of Appeals, he has the right to appeal within 30 days starting from the day the ruling of the Commission of Appeals has been received. Should you fail to appeal within 30 days, you no longer have the right to appeal and must pay the whole amount of tax, fine and surcharge.

3) Deferral of tax payment by using collateral for tax arrears: The right to appeal is not a deferral of tax payment. A taxpayer who receives a tax assessment notice must pay tax on time as stated in the assessment notice. However, should you wish to wait for the hearing or decision of the Commission of Appeals, you have the right to defer tax payment by providing various securities as collateral in accordance with the rules and regulations of the Revenue Department.

Comment: You have the right to wait until getting the result of your appeal but remember that if the result is not what you want, you have to pay interest of 1.5% per month for the delay of payment on tax and penalty.

4) Application for exemption or reduction of fine and surcharge: A taxpayer has the duty to file their tax return and pay the proper taxes on time. Should you fail to do so, you will be subject to a fine and surcharge on top of the tax due. However, on some special grounds you may request for an exemption or reduction of fine. A tax officer does not have the power under any law to exempt or reduce surcharge. Only in the case where the Director-General grants an extension of the time period of tax payment or remittance and such tax has been paid or remitted within the extended time period, then the surcharge may be reduced to 50% thereof.

Comment: Generally, the district tax office can give up to 50% reduction for the fine but you have to request the reduction in writing. Within the request letter there are certain specific sentences that are required in order to get a reduction, as follows; – That your policy is to comply to the laws – That the mistake you have made is not intentional but due to lack of understanding of the laws. – That you have provided good cooperation and assisted the tax officers in acquiring additional documents or information during the audit period

5) Access to documents: A taxpayer has the right to make a copy of his documents relevant to his past tax payment record (tax returns and receipt).

Comment: This means, you can go to the tax office in your area to ask for a certified copy of your tax return form that you have filed in the past, for which you may be charged a small fee.

Non-Deductible Expenses

Taxes can be a painful part of every business owner’s life but there are ways to reduce your company’s tax burden if you know how to use business-expense tax deductions and how to avoid non-deductible expenses.

As a business owner you only owe taxes on net profits – that is, after making expense deductions from all revenues. As a result, knowing how to take full advantage of your deductible business expenses and avoid non-deductible expenses can dramatically lower your taxable profits.

The only problem is how to avoid non-deductible expenses? You may already be aware that under Thai laws all revenues are assessable but expenses are not treated in the same manner. To plan for maximum tax effectiveness, there are some items that are always found by the Revenue officer to be non-deductible expenses.

These you need to know and try to avoid:

1) Any private expense, gift or donation, except a sum donated for public charity/Education/ Athletics, deduction may be made not exceeding 2% of net profit.

Note: Private expenses such as buying a washing machine to use at home are not allowed to be deducted as corporate expenditure. Donations can be accepted only if donated to an organization that has approval from the Revenue Department, but it cannot be more than 2% of net profit. This means if your business is making a loss then all of your donation expenses are non-deductible. If you donate a T-shirt to a foundation but you put your company logo on it, rather than booking it as a donation, why don’t you book it as a marketing expense which will not be limited by the law?

2) Entertainment expenses up to 0.3% of gross receipt but not exceeding 10 million Baht are deductable.

Note: Entertainment expenses that are more than 0.3% of gross revenue are non-deductible but remember sometimes you go to a restaurant to have an internal meeting with your staff, this kind of expense can be booked as a conference expense rather than entertainment and there are no limits for conference expenses.

3) Any artificial expenses of another accounting period.

Note: Expenses that you put into your book but have never been paid are also non-deductible as well as the expenses for activities that occurred in a separate accounting period.

4) Any disbursement if the identity of recipient can not be proved.

Note: You may have had the experience of having evidence of business expenses rejected by your accountant due to them being “incomplete”. This results in your recordable tax expenses being lower than your actual expenses. This means you have to pay more.

The reason why “incomplete receipt” is normally due to the fact that you cannot prove the recipient of the expenditure. In order to get around this problem you need to keep detailed records of your expenses and must be able to trace them back to the recipient.

To do this you need the following information:
a) Completed receipt consisting of name & address of supplier, Tax I.D.#, description of goods, and signature of receiver
b) Your own payment voucher that consists of the same items as a)
c) A copy of the I.D. card that is signed by your supplier as the receiver
d) A copy of A/C payee only cheque that you’ve paid to your supplier
e) A copy of pay-in slip if you have made wire transfer to your supplier.

Finally, please keep in mind that you must always maintain complete and accurate business records to document your income, expenses and deductions. If the Revenue Department Officer audits your business, it may require you to demonstrate that each entry on your tax return is correct.

Tax laws change annually, and they can be very complex. Always consult your accountant for assistance, strategies and recommendations for your individual situation.

Reproduced courtesy of Khun Sirirat of Thai Accounting         www.thaiaccounting.com