Taxmen At The Door In Chiang Mai

[brobro2424]

A couple of Thai friends are starting a business and are convinced they don't have to pay any tax until they have a sign outside their premises displaying their company name. Is this a Thai thing, a Chiang Mai thing, or just nonsense?

They plan to export things from Chiang Mai to a farang who's moved back to Germany. Do small home-run businesses generally go under the radar for registration, tax etc? Is there a specific point at which they should make things official? Any general or Chiang Mai advise appreciated.

Thanks

[Irene]

When he is caught or when he needs evidences to show that he is a taxpayer! In the meantime, he bets on his luck. That is usually referred to as underground businesses.

[noahvail]

My understanding from my wife, who runs a small shop (not underground) is that new small businesses have 6 months of operation before they are required to register. Since many small businesses fail fairly quickly, it saves everybody a lot of paperwork. She pays her business tax regularly, and it's a relatively negligible amount. Having a sign out means the landlord has to pay GST on the rent of the shop.

Again, don't take that to the bank, it's what I'm hearing from my wife.

[JoePai]

To save all this guesswork and 3rd hand advice why not go along to the Revenue office and ask ! In my experience the different offices these days are very helpful, unlike the past.

[WinnieTheKhwai]

When he is caught or when he needs evidences to show that he is a taxpayer! In the meantime, he bets on his luck. That is usually referred to as underground businesses.

This is completely incorrect. If you don't know, why respond.

Any person can do any kind of trade for a profession. This is not illegal at all. Indeed visit the tax office to check what the limits are; when you make a profit more than X then that becomes taxable income. This is why so many small mom & pop operations don't have to bother with taxes.

Business transactions (purcases and sales) will need to inlude his personal ID number.

As for the sign, I think the confusion is that there is a separate tax due on signage, it depends on the size of the sign. Also Thai only signs are cheaper than English only signs. So almost all signs will at least have the name in Thai int here as well, even if tiny.

It makes sense setting up a company (different types here as well) when the business is successful, and especially when hiring staff.

Edited September 1, 2010 by WinnieTheKhwai

[Irene]

WinnieTheKhwai

Completely incorrect? Your answer is based on all traders know and follow Thai tax laws completely. The number is a minority of the population who comply with the tax law.

We are similar to many countries in which effectiveness of tax collections by government officials is weak. There are a large portion of population who should have filed the tax return and paid tax but haven't done so and get away with the lapses. Believe me, I have been in the loop of Thai tax law and environment for decades. I do not write somethings that I have no knowledge of or even half of the knowledge.

[WinnieTheKhwai]

Completely incorrect? Your answer is based on all traders know and follow Thai tax laws completely. The number is a minority of the population who comply with the tax law.

We are similar to many countries in which effectiveness of tax collections by government officials is weak. There are a large portion of population who should have filed the tax return and paid tax but haven't done so and get away with the lapses. Believe me, I have been in the loop of Thai tax law and environment for decades. I do not write somethings that I have no knowledge of or even half of the knowledge.

Right, so if his question had been "Please weigh in typical tax issues for small or personal businesses in Thailand" then your post would have answered that very well.

Instead, he asked about specific people who are getting in business, and if their approach to taxes made sense, or was nonsense. To that you replied

When he is caught or when he needs evidences to show that he is a taxpayer! In the meantime, he bets on his luck. That is usually referred to as underground businesses.

I can only assume you know this particular person.

I'm saying it's very possible to do as the OP described, and not break any tax laws. So as such his friend was not talking nonsense. What the OP described was nothing other than what any Thai person with an eBay account does. The tax office will be able the profit threshold below which the income is not taxable.

The implied strategy of starting out small to see if you have a business model, and only then make it official and put money into it is a very sound one, I think.

Edited September 2, 2010 by WinnieTheKhwai

[gotlost]

Hers is an old thread on signage 2005 but it holds true today.

http://www.thaivisa.com/forum/topic/28943-english-spoken-here/

[Irene]

I can only assume you know this particular person.

I do not know this person but I have been facing this type of questions from first-timers in small businesses so often that the answer is so simple and proven to be effective. That is not to do anything in a big way at the beginning such as incorporating a company etc. or having a fancy name of a company hung up or trade name of any sort to gratify one's sense of grandeur. Be humble and low-profile at the beginning by testing your toes in the water first. One will learn the right way. Talk to similar traders before ever talking to any tax advisers. When you need a tax adviser is the time when your business is flourishing and then can use those advisers effectively. Don't forget that these advisers never have done any profit making business and know less than those hawkers and street food sellers on how to deal with tax matters.

[WinnieTheKhwai]

Thanks; I think we agree. And I apologize for the combative tone of my earlier post.

Edited September 2, 2010 by WinnieTheKhwai

[Irene]

'WinnieTheKhwai'

Thank you and no apology is necessary. We live and learn from each other that is the beauty of this forum.