Help With Vat & Wht Questions

[Bredbury Blue]

We are in the VAT system and have some questions.

1. If we provide a service in thailand, for an overseas company who will be paying from overseas, for our service of recruiting someone in thailand who will work overseas, should 7%VAT be applied ?

2. If I sell advertising on my website. [a] to a thai company, then I would include for 7% VAT but would 3% WHT need to be withheld from our payment, how about with an overseas company?

Hope you can offer advice.

thanks

[Bredbury Blue]

bump

[junkofdavid2]

We are in the VAT system and have some questions.

1. If we provide a service in thailand, for an overseas company who will be paying from overseas, for our service of recruiting someone in thailand who will work overseas, should 7%VAT be applied ?

Yes, but the rate will be 0% Vat instead of 7%. But it should still be itemized on the receipt.

2. If I sell advertising on my website. [a] to a thai company, then I would include for 7% VAT but would 3% WHT need to be withheld from our payment, how about with an overseas company?

For the Vat issue, refer to above. For the WHT issue, answer is No. However, you still have to declare it as part of your income and pay corporate income tax at the end of the year. Take note that WHT is just an 'advance' of your taxes to the government and is not a 'final' tax... and you can use that WHT/advance as a tax credit to lessen your tax paid at the end of the year.

Hope you can offer advice.

Disclaimer: I'm not a lawyer nor an accountant. This is just from what I know from my own experience.

thanks

Edited September 9, 2008 by junkofdavid2

[Bredbury Blue]

Junkofdavid2 - Many thanks for your very clear and concise answers.

On this VAT issue, my client states no VAT (i.e. as per your opinion), my Thai accountant states Vatable at 7% based upon the following (from the Rev Dept website)

http://www.rd.go.th/publish/6043.0.html

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[/b].

All very confusing.

[junkofdavid2]

Yes, your accountant and that link is correct in saying that you are subject to Vat. However, it only specifies "vat" and does not specify "7% vat"

Tell your accountant that she can either (1) go back to accounting school, or (2) scroll down to item#4.2 of the same link she provided you.

http://www.rd.go.th/publish/6043.0.html

4. Tax Rates

4.1 General Rate

Currently, the rate is 7 percent.

4.2 Zero Percent Rate

Certain activities are liable to VAT at the rate of zero percent. Those activities include:

- export of goods;

- services rendered in Thailand and utilized outside Thailand in accordance with rule, procedure and condition prescribed by the Director-General;

I have done as I recommend (0% vat) on similar issues and in a subsequent official audit by the revenue dept., I was not questioned for it. However, I did staple a print-out of the same link highlighting the said item 4.2 so that the Revenue Dept. auditor would "remember" the rule in advance and not question me.

*Usual disclaimers apply.

Edited September 10, 2008 by junkofdavid2

[Bredbury Blue]

Once again many thanks for your excellent answer.

I doubt my accountant is aware of 4.2, and my client hasn't been able to deduce why is should be 0% except somebody told them.

I will send your answer to my accountant (tidied up of course) and ask they check with 4.2 with the revenue dept.

I want a conclusion to this issue ASAP as it comes up so often.

Appreciate your help, thanks.

[Zen]

Hi

I've also got questions on VAT, hope to get some info on this:

If I sell goods on consignment, the time when I deliver the goods to the retail shop is the first event that triggers the VAT liability. It seems that my argument that the ownership of the consigned goods is not transferred yet will not hold. I was told that as long as there's a transfer of goods, VAT has to be recognised, regardless of whether the goods on consignment have been sold or not.

Does that mean that the steps I have to take for consignment is:

1) Issue TAX INVOICE and deliver together with the goods to the retailer

2) When the retailer sells something, I will issue a RECIEPT for that particular item that he sold

Would appreciate some thoughts.

Thank you.

[junkofdavid2]

You already asked that on another thread. Interesting question, but I've never done consignment so I wouldn't know. I'd like to know too though.

However, I would THINK that vat is triggered when you issue a VAT receipt/tax invoice (different from a 'billing invoice'... In Thailand, Tax Invoice and Receipt are the SAME from what I know); and not when goods are delivered on consignment (or merely 'borrowed' for that matter)... actually, I would think that the Revenue Dept isn't even interested to know where your inventory is at any one time; and they seem to just be interested on PAID sales/income, and if it tallies with changes on your balance sheet. So why even 'declare' where your goods are being 'stored'(in this case, stored at the shop where you are consigning them)?

(I emphasized the word 'PAID sales' because from my experience in previous audits, they didn't even seem to even be interested in customer billings for collectible accrued sales and were only interested in paid sales; but I may be wrong)

Or, maybe on your vat form ( translated at http://203.146.251.175/fileadmin/download/...rm/frm_pp30.pdf ) you first declared it as a sale, and then declared it as an 'overdeclared' sale until payment has been made? Or, maybe declare it as an exempted sale? Interesting question...

Edited September 15, 2008 by junkofdavid2

[Zen]

Another question, what is the difference between "INVOICE" and "TAX INVOICE"?

I was told that I have to issue "TAX INVOICE" everytime I sell something, even though my customer has not paid.

I tried to find out the possibility of issuing an INVOICE first and then TAX INVOICE when my customer pays up, but I was told that this can only work in the "service industry". Since I'm selling products, I have to issue "TAX INVOICE" every time.

Is that true?