Tax Clearance Certificate

What is a Tax Clearance Certificate?

Tax Clearance Certificate is a certificate issued by the Director-General of the Revenue Department or the Provincial Governor or the delegated authority to a foreigner who is departing Thailand to indicate that he has already paid taxes or that he has provided a guarantor or securities as guarantee for tax liabilities and tax payable.

Who is required to acquire a Tax Clearance Certificate?

Section 4 quarter of the Revenue Code stipulates that a foreigner departing shall apply for a Tax Clearance Certificate in the form prescribed by the Director-General within 15 days before leaving the country, whether or not there is any tax payable.

A foreigner departing Thailand is required to file an application for Tax Clearance Certificate (Form P.1) and supporting documents if:

He is liable to payment of tax or tax arrears before departing Thailand He has duty to file a tax return and pay tax on behalf of a company or juristic partnership incorporated under foreign laws and has been carrying on business in Thailand He has taxable income, whether or not in Thailand, from being a public performer in Thailand.

The word “public performer” means a drama, movie film, radio and television performer, singer, musician, professional sportsperson or performer for any kind of entertainment.

Credit by The Revenue Department

Value Added Tax

Value Added Tax (VAT) has been implemented in Thailand since 1992 replacing Business Tax (BT). VAT is an indirect tax imposed on the value added of each stage of production and distribution. 

1. Taxable Person
Any person or entity who regularly supplies goods or provides services in Thailand and has an annual turnover exceeding 1.8 million baht is subject to VAT in Thailand. Service is deemed to be provided in Thailand if the service is performed in Thailand regardless where it is utilized or if it is performed elsewhere and utilized in Thailand. 

An importer is also subject to VAT in Thailand no matter whether one is a registered person or not. VAT will be collected by the Customs Department at the time goods are imported. Certain businesses are excluded from VAT and will instead be subjected to Specific Business Tax (SBT). Under VAT, taxable goods mean all types of property, tangible or intangible, whether they are available for sales, for own use, or for any other purposes. It also includes any types of articles imported into Thailand. Services refer to any activities conducted for the benefits of a person or an entity, which are not the supply in terms of goods. 

2. Exemptions
Certain activities are exempted from VAT. Those activities are : 

• Small entrepreneur whose annual turnover is less than 1.8 million baht;
• Sales and import of unprocessed agricultural products and related goods such as fertilizers, animal feeds, pesticides, etc.;
• Sales and import of newspapers, magazines, and textbooks;
• Certain basic services such as:

1. transportation : domestic and international transportation by way of land;
2. healthcare services provided by government and private hospitals as well as clinics;v
3. educational services provided by government and private schools and other recognized educational institutions;

• Professional services: Medical and auditing services, lawyer services in court and other similar professional services that have laws regulating such professions;
• income from business, commerce, agriculture, industry, transport or any other activity not specified earlier.
• Cultural services such as amateur sports, services of libraries, museums, zoos;
• Services in the nature of employment of labour, research and technical services and services of public entertainers;
• Goods exempted from import duties under the Industrial Estate law imported into an Export Processing Zones (EPZs) and under Chapter 4 of the Customs Tariff Act;
• Imported goods that are kept under the supervision of the Customs Department which will be re-exported and be entitled to a refund for import duties; and
• Other services such as religious and charitable services, services of government agencies and local authorities.
• Credit by The Revenue Department

Why You Should Hire a Bookkeeper

A bookkeeper can ease the burden of the above responsibilities so you can focus on building your business. He/she has the knowledge and experience to help you understand the financial aspects of your business, knows what taxes are due and the filing dates of returns.

If you have a high volume of customer billing and/or vendor payments, you may want to consider hiring a clerk to process customer invoicing, collect receivables and pay bills. The bookkeeper may come in monthly or quarterly to make sure everything is handled properly.

We use the term bookkeeper but depending on the size of your business you may need to consider an accountant to oversee the financial aspects of your business. This person may also be helpful in devising strategies to protect your income. Plans such as Simple IRA’s, Flexible Spending Accounts may be helpful in reducing your tax liability and increasing your personal wealth.

Accounting Basics in Thailand

All companies in Thailand have to prepare and keep accounts. This is not only the case for a limited company, but also for registered partnerships, foreign juristic persons doing business in Thailand, public limited companies and joint ventures. Only a private person is exempted from this obligation. The accounts have to be drafted according to the Thai Accounting Standards formulated by the Institute of Certified Accountants and Auditors of Thailand, and should reflect a true and correct image of the company’s expenses and assets.

VAT – Value Added Tax Accounting

A company is obliged to register for VAT in three cases:

1. The activities that the company will conduct are VAT subjected (e.g. export of goods)
2. The turnover of the company is more than 1,800,000 THB per year. The company has to apply for a VAT number within 30 days after the company reached this amount of sales
3. The company will employ a foreigner and will thus have to apply for a work permit

In Thailand, VAT returns (PP 30) should be filed on a monthly basis. We offer a full range of VAT accounting services, including the registration with the tax authorities, VAT filings and reimbursement of VAT credits.

WHT – Withholding Tax Accounting

Tax has to be withheld by the payer of – amongst others – employment income, dividends, interests, royalties and technical service fees.

Payroll Services and Social Security Fund

Both the employee and employer are required to contribute 5% of the monthly salary, with a cap of 5% of 15,000 THB (≤ 750 THB. We can fulfil all your Social Security Fund obligations (SPS 1-10).