A Noob Tax Question

[Omega7]

Hi, 

 

Im still young and stupid, never had a company or taxed really yet...

 

do i understand well, if i open a company in Thailand (lets say on my wifes name, its easier that way)

 

You have to pay each year 20% corporate tax on profit.

 

if you get out the profit after that (after that you paid 20%)  do you still need to pay personal income tax as well  up to 35% (if above 5 million baht?)

 

so you gonna be taxed a total of 55%?????  that sound a bit crazy....

 

am i seeing this right? or im completely lost in the forest?

 

thank you for all the enlightening comments.

[FritsSikkink]

You can't get the profit out just like that. You can pay money to the shareholders and/or get a job in the company and pay a salary. Salary is deductible as cost for the business but the person getting the salary must pay personal income tax.

The company can buy other things too depending on what sort of business you have, for example a car.

Talk to an accountant for more info.

Edited January 27, 2021 by FritsSikkink

[ukrules]

You will need an accountant / tax advisor.

 

Essentially no, if the money is paid out in some way via invoice, licensing fees, etc, etc, then that isn't taxed as corporate profit as it's been spent so it's no longer profit.

 

You have plenty to learn though.

 

Lots of companies end up making very little profit on paper, in order to get the tax bill down. For example you might invest nearly all of your profit from one year to cover ongoing expansion - that reduces your profit but with reduced profit comes reduced tax.

 

If on the other hand you decided to declare full profit and waited until the following year to pay salaries / other  outgoings then you would be in a situation where you're paying far too much tax - your accountant will advise you on how best to avoid this situation.

 

It's pretty common around the world to purchase lots of new things for the company before the end of the tax year.

[Omega7]

Thank you for both of you

 

yes I understand that part that there is lots of tricks, and the company can purchase many things as expenses..

 

but i just wanted to know that if generally speaking, is my assumption right about if i get out some profit end of the year, will that be double taxed?  20% corporate, then 5-35% personal incoma tax?     is it work like that in Thailand?  or you dont need to pay any tax after you pay the 20%   (or maybe some other tax not called personal income tax, called divident tax or bonus tax... is there any?)

 

thank you

 

[Poet]

I would be interested to hear opinions that folks here might have on whether it makes sense to register for taxes in Thailand but set up your company somewhere with favorable tax rules, such as Wyoming, pay yourself a salary into a non-resident bank account also outside Thailand, and only send money to Thailand after a year, making it ineligible for Thai taxes.

My presumption is that this is what most people conducting business or working for clients outside Thailand are doing.

 

Edited January 27, 2021 by Poet

[topt]

13 minutes ago, Poet said:

whether it makes sense to register for taxes in Thailand but set up your company somewhere with favorable tax rules, such as Wyoming, pay yourself a salary into a non-resident bank account also outside Thailand, and only send money to Thailand after a year, making it ineligible for Thai taxes.

Perhaps I misunderstand but if you are not doing business in Thailand why register for taxes here?

[Poet]

16 minutes ago, topt said:

Perhaps I misunderstand but if you are not doing business in Thailand why register for taxes here?

Thailand has relatively low taxes and the ability to skip tax on money that you have held abroad for at least a year is terrific for folks generating income outside Thailand.

Most countries (with the United States being a notable exception) allow you to cease paying taxes once you no longer live there, but you may need at some point to show that you are actually registered for tax elsewhere. Banks may also require that the holders of non-resident accounts provide their tax number from the country where they are resident.

As far as I know, claiming Thailand as your tax residence does not set alarm bells ringing in the West, but this may change as governments scramble to find ways to pay for 2020. I would be interested to hear whether folks here reckon this approach will remain viable.

 

Edited January 27, 2021 by Poet