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Overview of Taxation in Thailand

:: Corporate Income Tax
:: Value Added Tax (VAT)
:: Zero Rated VAT
:: Specified Business Tax (SBT)
:: Personal Income Tax
:: Personal Income Tax Deductions
:: Other Taxes

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Taxation in Thailand - Other Taxes

Petroleum Income Tax
The Petroleum Income Tax Act replaces the Revenue Code in imposing a tax on income from firms which own an interest in a petroleum concession granted by the Thai government or which purchase oil from a concession holder for export. Net income from petroleum operations includes revenue from production, transport or sale of oil and gas, the value of has delivered to the government as a royalty and the proceeds of a transfer of interest in a concession. The tax rate for most operators is not less than 50 percent and not more than 60 percent of profits.

Stamp Tax
The Revenue Code contains a Stamp Duty Schedule listing transactions subject to stamp tax. Rates depend on the nature of the transaction, and fines for failure to stamp documents are very high.

With a few exceptions, only instruments executed in Thailand are subject to stamp duty. However, the provisions in the Revenue Code also require persons who import certain instruments be subject to stamp duty even though they are executed outside Thailand, to pay the stamp duty once these instruments are brought into Thailand.

Excise Tax
Excise tax is levied on the sale of a number of goods, including petroleum products, tobacco, liquor, soft drinks, cement, electrical appliances, and automobiles.

Property Tax
Owners of land and/or buildings in designated areas may be subject to annual tax levies by the local government. Under the Local Development Tax Act of 1965, rates per unit vary according to the appraised value of the land. However, land for the personal residence of the owner animal husbandry, or land cultivation is exempted from this Act. For land taxable under the House and Land Tax Act of 1932, which is based on the value of the land and buildings or any other improvements, annual tax is levied at the rate of 12.5 percent of the assessed assumed rental value of the property, and only owner-occupied residences are exempt.

Tax Courts
Tax cases are considered different in nature from normal civil cases. The Tax Court Establishment and Procedure Act, effective since 1985, provides special and accelerated procedures for tax litigation. Tax courts have authority to judge the following cases:

:: Appeals against the decision of tax officers or committees
:: Disputes over the claims of state tax obligations
:: Disputes over tax refunds
:: Disputes over rights or obligations concerning tax collection obligations.
:: Disputes over the right or obligations regarding tax collection obligations
:: Other cases made subject to the Act as prescribed by other laws

Please note: Decisions of the tax courts may be appealed to the Supreme Court within one month after the date of the judgment.

Tax Clearance Certificates
As of May 1991, requirements for tax clearance certificates have been significantly reduced. Provided that an individual demonstrates compliance with tax laws, he is not required to secure a tax clearance certificate within 15 days before leaving the country. Employees of businesses incorporated under foreign law, but which carry out business in Thailand, must acquire a certificate from the Revenue Department before departure. The requirement is not enforced if the individual has been in Thailand less than 90 days in any tax year and has not received any income.

Other Tax Reforms
Thailand is actively pursuing reform of its tax system and taxes on industrial imports have already been sharply reduced. Over the past five years, the government has consistently moved to reduce import tariffs on machinery and raw materials. In August 1999, the government introduced a number of measures to encourage investment, including tariff cuts. One - hundred and forty-six tariff lines - 85 percent of the total number - had their rates cut to 0 - five percent, notably on raw materials and capital goods.

Customs Duties
Tariff duties on goods are levied on an ad valorem or a specific rate basis. The majority of goods imported by businesses are subject to rates ranging from 5 to 60 percent.

The majority of imported articles are subject to two different taxes: Tariff duty and VAT. Tariff duty is computed by multiplying the CIF value of the goods by the duty rate. The duty thus determined is added to the value of the goods determined with reference to the CIF price. VAT is then levied on the total sum of the CIF value, duty, and excise tax, if any. Goods imported for re-export are generally exempted from import duty and VAT.

As a part of the BIO'S Investment Promotion Program, BOI-promoted companies are eligible to receive exemptions or reductions from import duties on raw and essential materials as well as machinery.

Further, companies that belong to the BIO'S Investor Club Association (IC) are eligible to use the IC's Raw Materials Tracking System. For companies that take advantage of this service, release of raw materials can be done in three hours or less.

Export duties are imposed on only a few items, including rice, hides, skins and leather, scrap iron or steel, rubber, teak and other kinds of wood.

Two exceptions to the obligation to pay customs duties apply to the importation of machinery, equipment, and materials for the use by:

:: Oil and gas concessionaires and their contractors.
:: Certain companies promoted by the BOI

 

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