Corporate Income Tax

[PMK]

Hi,

I need some very basic info about the different kinds of limited companies a Thai citizen can form here, and the income tax rates that companies have to pay. The background to this is that the wife may be making some pretty good commissions in real estate - let's say up to 1 million/year for discussing purposes. Obviously we are interested paying the minimum amount of income tax possible but keeping legal.

I'm encouraging her to go to a tax advisor also, but there's the eternal problem in LOS of finding a qualified and honest professional. Any recommendations in the Pattaya area?

Thanks,

Peter

[monty]

This looks like a rather smallish operation, not worth forming a company for.

If she turns over less then 1.8 million/year she does not have to register for VAT.

I reckon the best course for her would be to register as a sole trader (sole proprietorship), where depending on what your actual line of business is, a fixed deduction of 65% to 85 % is automatically done. On the remaining amount you pay personal income tax.

So on a 1 million income, on average she will be allowed to deduct 700,000 Baht in expenses (no proof, invoices or anything required!) leaving her with 300,000 Baht taxable income (actually less after all other deductible allowances).

On 300,000 Baht she'll pay 15,000 Baht tax (first 150,000 Baht free, 10% on the part between 150,001 and 500,000 Baht).

If you form a company, you have overhead paying accountants, plus every penny expense has to be proven by invoices. It'll be very hard to get up to 700,000 Baht expenses when receiving 1 million in commissions!

And small companies pay 15% tax on every Baht of profit (if profit is less then 1 million, the part between 1 and 3 million is taxed at 25%).

Actually there are only a few professions for which you have to register as a sole proprietor (financial services is one I think). With most professions you just walk in the tax revenue office, fill out a form stating how much you received in income, they will just give you a bill which pay and of you go. She then has a tax pay slip stating how much she made and how much tax she paid.

Acceptable by banks for applying credit cards and everything!

[monty]

References:

Corporate taxes and allowed deductions: http://www.rd.go.th/publish/6044.0.html

Personal income taxes: http://www.rd.go.th/publish/6045.0.html

The deductions allowed as a sole trader are described in point f. under "Deductions allowed for the calculation of PIT"

[Indo-Siam]

If she is collecting income from properties she owns, she should learn about a little-known entity called a Kha Nah Buk Khon - which is an entity that:

1. Can have a unique "business" name

2. Receives a tax registration

3. Can employ workers (including, under certain conditions, foreigners with work permit)

4. Pays taxes on "profit" at personal income tax rates

Must be set up and controlled by a Thai - cannot be established by a foreigner.

My company has set one of these up for a client in Bangkok - but I would not want to get involved with Chonburi Revenue Department.

Cheers!

Steve

Indo-Siam Group

[PMK]

Thanks all especially Monty who comes to the rescue once again!

Can somebody tell me phonetically, or even better get the gf or wife to also write it in Thai (can we do that on this forum or attach something to a PM?) the Thai name for 'sole proprietorship'?

Peter

[Sam125]

If she is collecting income from properties she owns, she should learn about a little-known entity called a Kha Nah Buk Khon - which is an entity that:

1. Can have a unique "business" name

2. Receives a tax registration

3. Can employ workers (including, under certain conditions, foreigners with work permit)

4. Pays taxes on "profit" at personal income tax rates

Must be set up and controlled by a Thai - cannot be established by a foreigner.

My company has set one of these up for a client in Bangkok - but I would not want to get involved with Chonburi Revenue Department.

Cheers!

Steve

Indo-Siam Group

Steve,

How does it differ from a sole proprietorship?

Sounds very similar...