40k/month Limit For 1 Year Extention Visa Of Marri

[kriswillems]

I found a very nice web-site explaining the personal income tax in Thailand.

http://www.rd.go.th/publish/6045.0.html

This web-site defines that:

TAXABLE INCOME = assessable income - deductions - allowances

40K income per month that is necessary to get a one year extention of a non-immigrant-o visa, is that the accessible income or taxable income?

[kriswillems]

I found a very nice web-site explaining the personal income tax in Thailand.

http://www.rd.go.th/publish/6045.0.html

This web-site defines that:

TAXABLE INCOME = assessable income - deductions - allowances

40K income per month that is necessary to get a one year extention of a non-immigrant-o visa, is that the accessible income or taxable income?

Sorry, where I said accessible income I meant assessable income

[kriswillems]

Anyone?

[Tywais]

Sorry, where I said accessible income I meant assessable income

// Topic title corrected...

[kriswillems]

Is this calculation correct?

Suppose the business of my self-employed wife would have officially 150K baht/month sales.

This would give us a 50K/baht per month profit.

This gives us an assessible income of 12 * 50.000 = 600.000 baht.

We're married so the tax allowances = 60 K baht

We get a 80% deduction because my wife is self-employed.

600.000 * 20 % - 60.000 (allowances) - 100K (tax exempted income) = -40.000 baht taxable income

This would mean we don't need to pay income tax.

But, because the assesable income multiplied by 0.5% is bigger we need to pay income tax:

600.000 * 0.5% = 3000 baht income tax (to be paid in 2 times : 1500 in the middle of the year and 1500 at the end).

The value added tax (VAT) would be aroud 50K * 7% = 3500 baht/month.

Because my my wifes accessable income would be >40K month I would be allowed to get a 1 year extention based on marriage.

Are my calculations correct?

Edited November 7, 2006 by kriswillems

[kriswillems]

Kriswillems, if u r correct its a great news for all the foreigners that own shops on the wife's name. (no cmpany)

right? am I correct?

Interesting view on the thai taxtation system and the ways to get around things here in thailand.

It don't think this very great news because you still need to pay VAT on your added value or profit, which is 7% (starting from the first baht, so no exemption), so similar to the income tax your would be paying if you were working for a company.

Edited November 7, 2006 by kriswillems

[Sunbelt Asia]

Is this calculation correct?

Sorry to say, no.

Suppose the business of my self-employed wife would have officially 150K baht/month sales.

This would give us a 50K/baht per month profit.

This gives us an assessible income of 12 * 50.000 = 600.000 baht.

The assessable income is in fact 1,800,000 Baht

We're married so the tax allowances = 60 K baht

Ok

We get a 80% deduction because my wife is self-employed.

Depends. As an example, if she owns a hotel, restaurant it would be 70%. If she sells tickets, it's 65% and if she owns an oil refinery, farmer, makes tobacco it would be 85%. She can use the actual expense or these % ( 65-85% depending on the types of income)

600.000 * 20 % - 60.000 (allowances) - 100K (tax exempted income) = -40.000 baht taxable income

This would mean we don't need to pay income tax.

Sorry this is wrong.

Lets look at the methods with a noodle shop

Actual Expense Method

1.8 million in assessible income

Less actual expense ( 100,000 Baht times 12 months ) 1.2 million

Deductions of 60K being married

Net assessible income

540,000 Baht

Income tax rate

1-100,000 is 0

100,001-500,000 is 10%

500,001 to One million is 20%

Total for the personal tax is 48,000 Baht for the year.

% Method based on type of income

1.8 million in assessible income

1,260,000 expense for taxpayer of noodle shop of 70%

60,000 being married

Net assessible income

480,000 Baht

Total for the personal tax is 38,000 Baht for the year.

The method you would go with in this case, is the % Method based on type of income. Your wife would have income tax of 38,000 Baht.

But, because the assesable income multiplied by 0.5% is bigger we need to pay income tax:

Sorry this is a mistake.

The assesable income is 1,800,000 Baht times 0.5% which is 9,000 Baht.

38,000 Baht is higher than 9K so your wife would still have to pay 38K for tax.

600.000 * 0.5% = 3000 baht income tax (to be paid in 2 times : 1500 in the middle of the year and 1500 at the end).

It would be 19K in this example at the 6 month mark and than 19K at the annual audit.

The value added tax (VAT) would be aroud 50K * 7% = 3500 baht/month.

Sorry this is not corect. Vat output tax is from gross sales, not net profit. VAT liability = Output Tax - Input Tax

The Vat output tax would be 126,000 Baht. ( 7% on 1.8 million)

The Vat input tax would be 44,100 ( This example I'm using food costs of 35%... 630,000 Baht times 7% Vat)

VAT Liability would be 81,900 Baht for the year or around 6,825 Baht per month.

www.sunbeltasiagroup.com

[kriswillems]

Thank you very much sunbelt for the detailed explanation.

So, if I understand correctly:

So, I was already wrong right in the beginning. The assesable income of a shop is the total turnover of that shop and not the profit (selling price - buying price), Right? The self-employed person gets a deduction going from 65% up to 85% depending on the kind of business.

An employee gets a deduction of 40% on his asessable in come with a maximum of 60K baht?

Which income is used to to determine if a foreigner has the right on a 1 year extention of his non-immigrant-O visa? Taxable income or assessible income or net assessable income?

Edited November 8, 2006 by kriswillems

[Sunbelt Asia]

The assesable income of a shop is the total turnover of that shop and not the profit, Right?

Correct

The self-employed person gets a deduction going from 65% up to 85% depending on the kind of business.

yes

An employee gets a deduction of 40% on his asessable in come with a maximum of 60K baht?

Not correct

Which income is used to to determine if a foreigner has the right on a 1 year extention of his non-immigrant-O visa? Taxable income or assessible income or net assessable income?

Net assessible income

www.sunbeltasiagroup.com

[kriswillems]

On the thaivisa web-site it say there's a deduction of 40% on the income from employment with a maximum of 60.000 baht. Is this not correct?

see:

http://www.thaivisa.com/thailand_income_tax.0.html

And this web-site also talks about the 40% reduction (with a maximum of 60K).

http://www.thailand-accounting.com/incometax.html

I am totally confused now

Edited November 8, 2006 by kriswillems

[Sunbelt Asia]

On the thaivisa web-site it say there's a deduction of 40% on the income from employment with a maximum of 60.000 baht. Is this not correct?

see:

http://www.thaivisa.com/thailand_income_tax.0.html

And this web-site also talks about the 40% reduction (with a maximum of 60K).

http://www.thailand-accounting.com/incometax.html

I am totally confused now

Not valid for a self employed noodle shop owner. If you worked for the noodle shop as an employee, then that’s a different story. Then you would have a different calculation of taxes as well, versus the examples sited above.

www.sunbeltasiagroup.com

[Casanundra]

If I read into this correctly then...

If the wife is shown to be earning all of this money as a noodler shop owner and it equates to nett 40k per month taxable less any discounts she can get on her tax return etc... then you as her husband are able to get a visa based on marriage and are just able to sit outside the whole process from a showing funds / salary perspective and basically the onus is all on the wife to do the leg work.

Am I correct in this assessment?

[kriswillems]

A Thai friend of mine says is self employed. He has a monthly sales of almost 100.000 Baht (turnover), with about 35000 baht/month profit.

He goes to see the tax department every 6 months. He doesn't lie to the tax department about his sales. He tell them he sells almost 100000 baht/month. He pays income tax twice a year, every time only a bit more than 1000 Baht.

He didn't register for VAT because his sales are lower than 1.2 million/year.

He pays a "gross sales tax" of 1.5% on his turnover. This is about 2000 baht tax every 1.5 month.

The income tax part doesn't match with Sunbelts calculations. But it would match if his accessable income would be his profit on sales (selling price - buying price) and not his turnover. So, I am still a bit confused why he pays almost no income tax.

[Sunbelt Asia]

A Thai friend of mine says is self employed. He has a monthly sales of almost 100.000 Baht (turnover), with about 35000 baht/month profit.

He goes to see the tax department every 6 months. He doesn't lie to the tax department about his sales. He tell them he sells almost 100000 baht/month. He pays income tax twice a year, every time only a bit more than 1000 Baht.

He didn't register for VAT because his sales are lower than 1.2 million/year.

He pays a "gross sales tax" of 1.5% on his turnover. This is about 2000 baht tax every 1.5 month.

The income tax part doesn't match with Sunbelts calculations. But it would match if his accessable income would be his profit on sales (selling price - buying price) and not his turnover. So, I am still a bit confused why he pays almost no income tax.

He must be using the "actual expense method" and has high expenses. He also could be having someone from the tax revenue office come around and tells him how much to pay.

If I read into this correctly then...

If the wife is shown to be earning all of this money as a noodler shop owner and it equates to nett 40k per month taxable less any discounts she can get on her tax return etc... then you as her husband are able to get a visa based on marriage and are just able to sit outside the whole process from a showing funds / salary perspective and basically the onus is all on the wife to do the leg work.

Am I correct in this assessment?

correct

www.sunbeltasiagroup.com

[meatgrowler]

A Thai friend of mine says is self employed. He has a monthly sales of almost 100.000 Baht (turnover), with about 35000 baht/month profit.

He goes to see the tax department every 6 months. He doesn't lie to the tax department about his sales. He tell them he sells almost 100000 baht/month. He pays income tax twice a year, every time only a bit more than 1000 Baht.

He didn't register for VAT because his sales are lower than 1.2 million/year.

He pays a "gross sales tax" of 1.5% on his turnover. This is about 2000 baht tax every 1.5 month.

The income tax part doesn't match with Sunbelts calculations. But it would match if his accessable income would be his profit on sales (selling price - buying price) and not his turnover. So, I am still a bit confused why he pays almost no income tax.

He must be using the "actual expense method" and has high expenses. He also could be having someone from the tax revenue office come around and tells him how much to pay.

well this is great news for me and my wife,we want to open a noodle,or similar shop..andx ive been worrid sick how i was gonna show a 40k income and live legally enough to get my non imm o visa each year....so with an initial outlay for the noodle shop and goodwill,we will be ok if we can or "she" i should say,can earn the 40k or more each month..is this right??/ tha nks

If I read into this correctly then...

If the wife is shown to be earning all of this money as a noodler shop owner and it equates to nett 40k per month taxable less any discounts she can get on her tax return etc... then you as her husband are able to get a visa based on marriage and are just able to sit outside the whole process from a showing funds / salary perspective and basically the onus is all on the wife to do the leg work.

Am I correct in this assessment?

correct

www.sunbeltasiagroup.com

[Sunbelt Asia]

well this is great news for me and my wife,we want to open a noodle,or similar shop..andx ive been worrid sick how i was gonna show a 40k income and live legally enough to get my non imm o visa each year....so with an initial outlay for the noodle shop and goodwill,we will be ok if we can or "she" i should say,can earn the 40k or more each month..is this right??/ tha nks

Correct

www.sunbeltasiagroup.com