Staff Professional Expenses

[TheMac]

I was aware that receipts for professional expenses incurred in Thailand and re-imbursed from a Thai company must indicate the company name and its address: I personally thought this was requried for the expenses to be either deductible from the Corporate Income Tax or maybe to be able to claim the VAT.

Now I received instructions that all receipts, whatever incurred in Thailand or overseas must indicate the company name or else it will cost the company 30% of additional tax.

So my question is:

- Is it true that even overseas receipt must indicate the company name and the address?

- Is it true that failure to have it, it will cost 30% additional tax to the company?

I hope I posted those question in the correct forum and thank you in advance for your answers.

[SunbeltAsiaExpert]

All business related expenses, whether in Thailand or abroad, must be invoiced under the company name and address. Otherwise, you simply cannot claim this as company expense. If you have paid for this personally, although it’s a business expense, and you failed to invoice it under the name of the company, then your company will not be able to reimburse you with the funds that you paid personally. You could take the expenses you had paid personally and invoice them to the company and get the funds and writeoff. but lets say you put it in the pettycash with no invoice, the revenue department officer at times agree to such terms but this is a case to case basis. ( such as a restaurant and you bought chicken at the fresh market) The revenue dept reserves the right to investigate on your company audit reports. Most auditors will not allow the invoice with no company name.

The typical accounting equation for profit and tax is: Gross Sales – Expenses = Net Taxable Profit. Simply put it this way, if you are not able to claim such expense under the company, you will not get the reimbursement back, neither can your company declare it as an expense. While it does not materially affect your Corporate Tax rates, your net taxable profit will be overstated since the expense was not considered which might result to a higher tax rate if the taxable income passes on to the next range of taxable income. Imagine if all companies can easily declare any expenses, then the outstanding taxable income will be relatively low and no company will pay corporate tax anymore.

With regards to withholding tax, your company may withhold part*of the service fees (exclude VAT) incurred by your Thai company.

*Withholding tax rate for service fees are 3%, for rental is 5%, and advertising is 2%

As for your VAT, if you are registered in the VAT system, each invoice that you issue you must impose additional 7% for Value Added Tax (considered as Sales Tax) on your service provided. Whereas for the invoice (expenses) that your company incurred (if the supplier was also registered in the VAT system), they would also add in additional 7% as VAT (Purchase TAX). You would have the responsibility to file your monthly VAT due to the Thai Revenue Department by the 15th day of the following month. The Sales Tax (that you collect) would be offset by the Purchase TAX (tax that you paid to your supplier). The remaining balance of the tax collected would be due to the Revenue Department on the said day.

[sunbelt][/sunbelt]