May A Thai Company Outsource To A Foreign Company/freelancer?

[Marvo]

Pardon me for hopping onto the thread, but could one of you learn-ed fellows explain to me in as much detail as you can how the witholding tax system works for a Thai company invoicing an overseas company (for say 100,000 baht). Say the overseas company sends the 100,000 baht to the Thai company - what happens next?

Thanks.

It is not so much about the funds coming in, but what tax paperwork the Thai company issued on the supporting invoice requesting payment. And that will depend upon the tax status on the Thai company. If the Thai company is registered with Revenue Department as a provider of 'export services', it will be zero rated for VAT. In that case the Thai company would issue an invoice for 100k of services and add VAT at 0% with total invoice amount showing 100k, and would keep the full amount when received. Otherwise, the invoice would be issued for 100k for services plus 7% VAT totaling 107k, and the VAT amount would need to be paid across to the Revenue Department by the 7th day of the month following issue of invoice via monthly withholding tax return.

Thanks for the info thaiphoon. No special arrangements have been made to register the Thai Co. with the revenue dept. as a provider of export services but the Thai Co. has provided a service for an overseas Co. and has invoiced them. The Thai Co.'s turnover is less that 1.8 mil baht per year and is not registered for VAT so the invoice it issued is not a "VAT invoice" and no VAT is due from the overseas Co.. Does the 100K go straight to the Thai Co. or is the Thai Co. facing complications as it hasn't " registered with the revenue dept. as a provider of export services "?

[thaiphoon]

Thanks for the info thaiphoon. No special arrangements have been made to register the Thai Co. with the revenue dept. as a provider of export services but the Thai Co. has provided a service for an overseas Co. and has invoiced them. The Thai Co.'s turnover is less that 1.8 mil baht per year and is not registered for VAT so the invoice it issued is not a "VAT invoice" and no VAT is due from the overseas Co.. Does the 100K go straight to the Thai Co. or is the Thai Co. facing complications as it hasn't " registered with the revenue dept. as a provider of export services "?

Good question Marvo. My company is unfortunately a little bit bigger and needed VAT registration. My guess would be that as the company's turnover falls into the bracket where registration for VAT is not compulsory, the whole amount received would stay with the company as VAT will not have been added to the invoice. But would suggest you take a steer from company's service provider - as they will be the one's having to have that discussion with Revenue Department later if query is raised on annual accounts filing.

[Marvo]

Thanks for the info thaiphoon. No special arrangements have been made to register the Thai Co. with the revenue dept. as a provider of export services but the Thai Co. has provided a service for an overseas Co. and has invoiced them. The Thai Co.'s turnover is less that 1.8 mil baht per year and is not registered for VAT so the invoice it issued is not a "VAT invoice" and no VAT is due from the overseas Co.. Does the 100K go straight to the Thai Co. or is the Thai Co. facing complications as it hasn't " registered with the revenue dept. as a provider of export services "?

Good question Marvo. My company is unfortunately a little bit bigger and needed VAT registration. My guess would be that as the company's turnover falls into the bracket where registration for VAT is not compulsory, the whole amount received would stay with the company as VAT will not have been added to the invoice. But would suggest you take a steer from company's service provider - as they will be the one's having to have that discussion with Revenue Department later if query is raised on annual accounts filing.

Talking to the accounting service is the next step, I just wanted to be be clued up as far a s possible so as not to look a complete idiot. Thanks for your input, much appreciated.

[jazzbo]

You never say what is the nature of your work i.e. website design, RFP response writing, etc. You could possibly get a Non-Imm 'B' for 'Doing Busines...', which would not require a work permit, to arrange for the contract with the Thai company... then get on a plane to Singapore to do all the actual work with paymernt to your new Singapore bank account.

Edited January 31, 2010 by jazzbo