chiangmai
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Post by chiangmai on Nov 23, 2020 7:32:11 GMT 7
Does anyone have reliable knowledge about Thai Revenue taxation of sole traders? I'm going to try asking here before going down to ask the Revenue.
Mrs CM has been operating a pledging bakery business from home for the past six months and its now grown into a lucrative business. That growth along with a drive by Revenue Dept. to capture more people in the tax net has forced me to look at her tax position and her options.
She operates as a sole proprietor which I think means she is taxed according to the personal taxation tables. I think she has two options, the first is for tax to be calculated on the basis of proven expenses, the second may be to take a standard 70% deduction from the value of sales, in lieu of detailing her expenses...the initial preference is to use detailed expenses.
Questions are:
- what is the threshold to file a return, I've read that it might be 25,000 per month but is that annualized or in any one month of the year. And is that gross sales or net profit?
- her customer deliveries involve using her own car, is there a mileage rate she can deduct or must it be on the basis of detailed receipts only....I think 7 baht per k/m is appropriate.
- can we depreciate her vehicle costs, 5 years is the standard for business but for a sole proprietor???
- can we charge use of part of the home for business related expense?
Any tips or inputs gratefully received.
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chiangmai
Crazy Mango Extraordinaire
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Post by chiangmai on Nov 29, 2020 14:39:30 GMT 7
Here are some of the answers, file this under trivia:
There are two main ways to run a business in Thailand, the first is using a limited company and the second is as a sole proprietor.
A limited company means limited liability which is restricted to the value of assets held in the company. But a limited company also means annual returns and accountancy fees.
A sole proprietor means earning income in a business whereby the business and personal assets are viewed as one and profits are taxable using the personal taxation tables, there are no requirements for accountants or to file company returns each year.
Tax-deductible expenses or costs using the sole proprietor route can be calculated one of two ways, either by submitting actual receipts or by taking the standard cost deduction against sales of 70%.....yes, that was seventy per cent. The net profit that ensues is then taxed against the personal income tax tables, that means a person can sell and earn to the tune of almost THB 42k per month before there's any tax to pay. Above 42k, profit is taxable at 5% and subsequently increase in bands. I did a quick back of the fag packet calculation and the standard deduction remains the best approach, up to sales of 63k per month.
All in all, a person can make a fairly decent income here and pay little or no tax, especially when you consider the average wage here is around 18k per month.
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Post by Fletchsmile on Nov 30, 2020 16:41:54 GMT 7
Chiangmai, That sounds about right. The two main choices are operate as a soul trader based on personaal income or set up a copany and be taxed at company tax rates. There used to be different rates (lower) that could be applied to small companies, and definitions of what consistuted small. Also consider whether she needs to register for VAT. There is a 1.8 million threshold above which she must register. If I recall though you can register voluntarily below that level (similar to the UK) if it would be in your interests to do so, and you have a lot of input VAT on purchases. www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Tax/Value-Added-Tax-VAT-in-Thailand |
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chiangmai
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Post by chiangmai on Nov 30, 2020 18:21:26 GMT 7
Thanks for the tip but it will be a while before she hits the VAT threshold....I hope.
I'm slightly surprised the standard deduction for a sole trader is so high. But having done a comparison against actual costs I see that it's not that far off what a person would deduct if they had all the receipts.
And the realisation that a person can trade free of income tax, up to about 60k per month was an eye-opener and explains why everyone here wants to operate their own business, who wouldn't.
For me, the key issue is the liability which is open-ended as a sole proprietor and extends to personal assets, I shall need to consider this aspect carefully.
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Post by rgs2001uk on Dec 1, 2020 21:01:14 GMT 7
Chiangmai, That sounds about right. The two main choices are operate as a soul trader based on personaal income or set up a copany and be taxed at company tax rates. There used to be different rates (lower) that could be applied to small companies, and definitions of what consistuted small. Also consider whether she needs to register for VAT. There is a 1.8 million threshold above which she must register. If I recall though you can register voluntarily below that level (similar to the UK) if it would be in your interests to do so, and you have a lot of input VAT on purchases. www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Tax/Value-Added-Tax-VAT-in-ThailandWOW, a post from Fletch, they are about as rare these days as smokes getting his hand in his sporran to buy a round. Hope you are well and the markets are kind to you. We must get on the p**s sometime after the new year. Take care. |
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chiangmai
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Post by chiangmai on Dec 2, 2020 9:30:49 GMT 7
Chiangmai, That sounds about right. The two main choices are operate as a soul trader based on personaal income or set up a copany and be taxed at company tax rates. There used to be different rates (lower) that could be applied to small companies, and definitions of what consistuted small. Also consider whether she needs to register for VAT. There is a 1.8 million threshold above which she must register. If I recall though you can register voluntarily below that level (similar to the UK) if it would be in your interests to do so, and you have a lot of input VAT on purchases. www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Tax/Value-Added-Tax-VAT-in-ThailandWOW, a post from Fletch, they are about as rare these days as smokes getting his hand in his sporran to buy a round. Hope you are well and the markets are kind to you. We must get on the p**s sometime after the new year. Take care. I have this image in my mind of a man in long robes, long hair and white beard, emerging from his cave on the mountain once every century and saying...."yes, it is so", before going back inside. Am I close?  |
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chiangmai
Crazy Mango Extraordinaire
Posts: 6,234
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Post by chiangmai on Dec 2, 2020 9:39:15 GMT 7
Talking of people starting their own business:
A friend started a restaurant after her farang husband died, he was a chef who made some amazing meals and she learned much. She did well, she worked hard and grew the business to a sustainable level that allowed her to work and look after the kids and home. Then one day the Tessabahn arrived in force and inspected everything, nothing was right and the doodo was deep. An enforced three-day course followed and re-education was nearly complete, she now knows what she must do to make the business conform to standards, all she has to do is make the changes and until then she can't serve customers on the premises, it's take out food only.......her business model changed overnight, shame really.
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Post by rgs2001uk on Dec 3, 2020 20:57:04 GMT 7
WOW, a post from Fletch, they are about as rare these days as smokes getting his hand in his sporran to buy a round. Hope you are well and the markets are kind to you. We must get on the p**s sometime after the new year. Take care. I have this image in my mind of a man in long robes, long hair and white beard, emerging from his cave on the mountain once every century and saying...."yes, it is so", before going back inside. Am I close?  , not so far from the truth. He has that much money it takes him a hundred years to count it all, 5555 |
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, not so far from the truth.
