VAT

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ADempiere VAT implementation

http://ec.europa.eu/taxation_customs/taxation/vat/index_en.htm

VAT in the European Union

Taxable persons

Taxable persons are persons conducting a business, who are defined as those who conduct independent business, including natural persons, corporate bodies, partnerships, associations etc. Combinations of bodies forming a single financial, organizational, and economic entity can be considered as a fiscal unit for vat purposes. In such cases, the supply of goods and services within the unit is not subject to VAT. A public body can also act as a taxable person if its activities do not involve public duties.

VAT Identification Number

To check the VAT identification number http://ec.europa.eu/taxation_customs/taxation/vat/traders/vat_number/index_en.htm#national_web_sites

Tax base

There are four taxable activities:

  1. supplying goods (art. 2)
  2. rendering services (art. 3)
  3. acquisition of goods by businesses (since 1 January 1993)
  4. importing goods.
Supplying goods and services

The term ‘supplying goods’ (goods are all physical objects, but also include electricity, heating, cooling, etc.) is interpreted in its broadest sense. For example, for VAT purposes the following activities are considered as supplying goods

  • the transfer of ownership of goods under an agreement;
  • the transfer of goods on the basis of a hire purchase agreement;
  • the delivery of goods by a manufacturer who has manufactured the goods from materials provided by the consumer;
  • the private use of goods by a business;
  • the self-supply of goods, if the goods are involved in exemption transactions for which prepaid tax cannot be deducted, or is only partly deductible.

Services are defined as all activities performed for remuneration that are not classed as supplying goods.

Location of deliveries and services

Although the difference between supplying goods and rendering services is usually a purely theoretical one, there is a valid reason for distinguishing between them concerning location. Transactions are subject to the conditions and rates applicable at the location concerned. The location at which the goods are supplied is defined as the location of the goods at the time of supply. An exception is made for goods transported in connection with the supply. In such cases, the location of supply is the location at which the transportation began. Another exception is made for a series of supplies of imported goods The location at which services are rendered is generally deemed the place of residence or establishment of the person rendering the services. However, there is a separate regulation for certain services. A few examples include services involving copyrights and advertising, advice, information, banking, insurance and the services of employment agencies etc. The location where the services are rendered is the place of establishment of the person to whom the services are rendered. Services involving immovable property are rendered at the location of the property.

Exemptions (art 10)

Several types of transactions are exempt from VAT. An exemption means that tax for the transactions should not be charged and that prepaid VAT attributable to those transactions cannot be deducted

Tax rates (art 16)

The rate of VAT varies between member states. Please refer to the country specific VAT information.

Right to deduct input VAT (artt. 19 and 19 bis)

A taxable person is allowed to deduct the VAT he paid on his purchases insofar as the goods or services are used for his business activities. However, there is no right to deduct input VAT if he

  • uses them for an exempt activity or
  • is not obliged to charge VAT on his outputs (e.g. schools, banks, insurance companies, small businesses under the registration threshold etc).

In some cases it is possible to deduct just a percentage of the input VAT

The VAT system in the single European market

The single European market became effective from 1 January 1993. From this date onwards, goods, persons, services and capital may move freely within the EU. The transitional arrangements that apply after this date, for which the 1968 Turnover Tax Act of the Netherlands was amended, contain the following main points.

  1. Private persons buying goods in another Member State pay VAT in the country in which the goods are bought (based on the country of origin principle). Exemption on exports from the Member State and the obligation to pay VAT on goods upon arrival in the Netherlands do not apply.
  2. VAT is levied in the Member State to which the goods are transported for trade in goods between businesses in Member States (based on the country of destination principle) at the rates and under the conditions of that Member State. The business supplying the goods applies the zero rate. The business receiving the goods submits a tax return with regard to the goods purchased in another Member State. (This transitional arrangement applies up to the date on which transactions become subject to the country of origin principle).
  3. The country of destination principle also applies to intra-community deliveries to exempted parties, farmers falling under a lump-sum compensation scheme and legal entities not liable for taxation (authorities), unless the total value of the goods purchased exceeds the threshold of € 10,437.
  4. A similar provision to the one referred to in point 3 applies for mail order transactions or teleshopping involving private persons, exempted businesses, legal entities not liable for taxation and farmers entitled to a lump-sum compensation scheme.
  5. The country of destination principle always applies to the purchase of new, or almost new, motor cars by private persons or businesses in another Member State.
  6. Every business making intra-community deliveries to another Member State must submit regular reports regarding deliveries subject to taxation in that Member State (known as the listing requirement). The business will be required to supply further details if this is necessary for intra-community checks on imposing vat.
  7. Because border controls for tax purposes have been discontinued within the EU, VAT levies on imports and the zero rate for exports apply only to goods outside the EU.
Imports

Imports are confined to bringing goods from countries outside the EU into free circulation in the Netherlands. The rates to be applied are the same as those applicable to supplies of goods in the Netherlands. VAT will be levied either in the same way as import duties or, after the appropriate license has been granted, in accordance with the deferred payment system. The customs procedure applies to the first situation. This means that the declarant must pay the tax due when submitting an import declaration, or else provide security for this purpose. In the second situation, the tax due is collected from the business that is the destination of the goods.The time of payment is then deferred until the time at which the business must submit a periodic domestic VAT return. In such cases, the time of payment coincides with the right to deduct the same tax. There are exemptions on imports, but these do not affect the right to deduct VAT on input.

Tax returns and assessments

Tax returns may be for monthly periods, quarterly periods, or annually, depending on the amount of VAT due. The system checks that the forms are returned and the amounts in question are paid in good time. The return must be submitted within one month from the end of the period to which it relates. The tax owed must also be paid within this period. When no tax is due, or a refund is requested, returns should be submitted within one month. A significant percentage of retrospective assessments is caused by returns being submitted too late, or the relevant payment not being made in good time. As mentioned above, these are monitored by a computer system, which automatically prepares a retrospective assessment if a payment is not made, or a return is not submitted in good time. The system uses information from returns relating to previous periods to determine the amount of the assessment for the period in question. In addition to assessments resulting from failure to file a return or pay the tax owed in good time, retrospective assessments are also issued if checks reveal that insufficient VAT has been paid. Taxpayers can object and lodge an appeal against retrospective assessments. However, this does not suspend the obligation to pay the tax deemed to be payable.

INVOICE
Obligatory information for all invoices

An invoice must contain the following information:

  1. the date of issue;
  2. a sequential number that uniquely identifies the invoice;
  3. the supplier's VAT identification number;
  4. the customer's VAT identification number (only when the customer is liable to pay the tax on the supply);
  5. the supplier's full name and address;
  6. the customer's full name and address;
  7. a description of the quantity and nature of the goods supplied or services rendered;
  8. the date of the supply or payment (if different from the date of supply);
  9. the VAT rate applied;
  10. the VAT amount payable;
  11. a break-down of the VAT amount payable per VAT rate or exemption;
  12. the unit price of the goods or services exclusive of tax, discounts or rebates (unless included in the unit price);
Supplementary information required in certain cases

In some cases, additional information must be included on the invoice:

  • where:
    • the supply is exempted; or
    • the customer is liable to pay the tax (the supply is subject to the 'reverse charge procedure')
    • the invoice must contain
      • a statement explaining that this is the case; or
      • a reference to the appropriate (Community or national) legislation that deems the supply exempt or subject to the reverse charge procedure;
  • where the intra-Community supply of a new means of transport is involved, the particulars specified in Article 28a(2) of Directive 77/388/EEC (for example, for a car: its age and its mileage);
  • where the margin scheme is applied,
    • a statement explaining that this is the case; or
    • a reference to the relevant (Community or national) legislation; and
  • where the person liable to pay the tax is a tax representative, his VAT identification number, full name and address.

References

http://www.csmb.unimo.it/index/nazionale/DPR_N.633_1972.pdf http://www.expatax.nl/vatrules.htm --Rsimoni 04:48, 4 November 2006 (EST)--Rsimoni 04:48, 4 November 2006 (EST)


Italian VAT

Following the rule nr 7 of the Bazaar I post my first draft on Italian VAT rules

VAT rules In Italy the reference law is D.P.R. October, 26 1972, nr 633

Imposta sul Valore Aggiunto (IVA):

Value added tax (VAT, in Italian ‘IVA’) is levied in the Italy at each stage in the chain of production and distribution of goods and services. The tax base is the total amount charged for the transaction excluding VAT, with certain exceptions. Because of deductions in previous stages of the chain, VAT is not cumulative. Every taxable person is liable for VAT on his or her turnover (the output tax), from which the VAT charged on expenses and investments (the input tax) may be deducted. If the balance is positive, tax must be paid to the tax authorities. If the balance is negative, a refund is received. The tax paid by the ultimate consumers of the goods or services is not tax-deductible. The tax is based on the VAT rate applicable to the price of the goods or services received, exclusive VAT.

The general rate is 20%. A reduced rate of 10% is applicable to the supply, import, and acquisition of goods and services mentioned in Annex A to the VAT Act.There is also a zero rate for goods that are transported to another EU Member State on which VAT is levied because of the acquisition in that Member State.

Belgian VAT

Indian VAT

In India the VAT (Value Added Tax) is a replacement for Sales Tax on goods. It is essentially a tax on sale of goods at the point of sale. But the taxability depends on the resident location of buyer. It is tax levied and collected by state governments and India has 26 states. E.g. person 'A' buys goods in the state of Maharastra and he also resides in the State of Maharastra then he pays VAT or local VAT but if 'A' resides outside the state of Maharastha then he will pay CST or Central Sales Tax (@2-4% or NIL).

The accounting difference of VAT and CST is very important. While a VAT or local VAT may qualify for input credit of VAT amount to the seller, CST does not qualify for input credit on the amount of CST paid for purchases and is a cost added in full to the purchase. While in the case of VAT, only the difference of VAT levied on the purchase and value is the additional cost of goods.

The rates of VAT vary from commodity to commodity and state to state but 5% is quite a common rate.

The VAT in India is strictly a tax on goods and not on services. For services there is a separate tax called service tax(@12.36%) is levied.

The other import and significant domestic tax in India is called Excise Tax, this is a tax on production or manufacturing of goods.

Polish VAT

Greek VAT

  • Standard rate 19%
  • Category 1 rate 9%
  • Category 2 rate 4.5%
  • Concessional Island Rate 13%


Hungarian VAT (ÁFA)

  • Standard Rate 20.0%
  • Reduced Rate 5.0%
  • Zero Rate 0.0%
  • Exempt Rate 0.0%

In Hungary VAT is (currently) fully realized in all cases (invoice paid or not).

Slovakia VAT

For Slovakia VAT (DPH) rules applies all mentioned in previous posts. I try to post here other factors that must be fulfilled in Adempiere to comply with slovaks legislation.

Valid VAT 31/12/2010 VAT rates:

  • 19% - Standard rate
  • 10% - Reduced rate
  • 6% -Reduced rate ("sell from home") - valid from 1.5.2010.
  • 0% - Exempt rate

Valid VAT 01/01/2011 Tax rates:

  • 20% - Standard rate (replace 19 %)
  • 10% - Reduced rate
  • 6% -Reduced rate
  • 0% - Exempt rate

Spain VAT (IVA)

01/07/2010 Tax rates:

  • 18% - Standar rate
  • 8% - Reduced rate
  • 4% - Super Reduced rate
  • 0% - Exempt rate

Swedish VAT

Swedish VAT basics. Tax rates are as follows:

  • 25% - full rate
  • 12% - half rate
  • 6% - low rate
  • 0% - no VAT

Unrealized and Realized VAT

Unrealized VAT is calculated TAX but not due until the invoice is paid. The unrealized VAT type determines how a payment is allocated to the invoice amount (excluding VAT) and the VAT amount itself, and how VAT amounts are transferred from the unrealized VAT account to the (realized) VAT account.

There are more posibilities when the countries legislation accept when can be unrealized VAT transferred to realized.

  • VAT covered - payments will cover VAT first , so after payment we can transfer the ammount of VAT from unrealized to realized , until the total VAT has been paid
  • VAT fully covered - payments will cover VAT first , but we can transfer the ammount of VAT from unrealized to realized , only after the total amount of VAT has been paid
  • Liability - payments cover the invoice amount first and then VAT. In this case, no amount will be transferred from the unrealized VAT account to the VAT account until the total amount of the invoice, exclusive VAT, has been paid.
  • Liability fully covered - As in previous case , but VAT can be realized only after the total amount of VAT has been paid
  • Percentage - each payments cover both VAT and invoice amount in proportion to the payment's percentage of the remaining invoice amount. The paid VAT amount is transferred from the unrealized VAT account to the VAT account.

VAT Date

- date when VAT is realized for tax purposes can be different from accounting date or invoice date.

VAT Documents

There are more types of tax documents accepted for VAT entry.

  • Invoice
  • Petty Cash
  • Prepayment
  • GL Journal entries

United Kingdom VAT

Information on VAT can be found on the VAT website and does change from time to time.

This section is edited by Michael Judd Last Updated: 29/03/2008

Rates of VAT

  • Standard Rate 17.5%
  • Reduced Rate 5.0%
  • Zero Rate 0.0%
  • Exempt Rate 0.0%

Thresholds for Registration

If the value of your taxable supplies in the past 12 months or less has exceeded the current VAT registration threshold of £64,000 (2008), or the value of your taxable supplies in the next 30 days alone is expected to exceed this threshold, you should register for VAT.

HMRC VAT registration thresholds
Period From Period To Annual limit £
21.03.90 19.03.91 25,400
20.03.91 10.03.92 35,000
11.03.92 16.03.93 36,600
17.03.93 30.11.93 37,600
01.12.93 29.11.94 45,000
30.11.94 28.11.95 46,000
29.11.95 26.11.96 47,000
27.11.96 30.11.97 48,000
01.12.97 31.03.98 49,000
01.04.98 31.03.99 50,000
01.04.99 31.03.00 51,000
01.04.00 31.03.01 52,000
01.04.01 24.04.02 54,000
25.04.02 09.04.03 55,000
10.04.03 31.03.04 56,000
01.04.04 31.03.05 58,000
01.04.05 31.03.06 60,000
01.04.06 31.03.07 61,000
01.04.07 64,000

If you are a supplier in another EC country and the value of your distance sales to the UK has exceeded £70,000 in the calendar year, or part year, from 1 January, you should register for VAT.

If the value of your acquisitions from other EC countries in the calendar year, or part year, from 1 January has exceeded £64,000 (2007), or the value of your acquisitions in the next 30 days alone is expected to exceed this threshold, you should register for VAT.

If you dispose, or intend to dispose, of assets on which you (or a predecessor) have recovered, or intend to recover, VAT under the 8th or 13th Directive refund arrangements, you should register for VAT.

Services Taxed

Services are taxed in the supplier’s country unless they are covered by one of the special rules described below:

  • services relating to land and property - taxed in the country where the land is;
  • services involving physical performance - taxed in the country where the physical performance takes place;
  • valuation of, or work on goods for an EC VAT registered customer where the goods are subsequently removed to another country - taxed in the customer’s country;
  • freight and passenger transport - taxed in the country or countries where the transport takes place;
  • intra-EC freight transport and related ancillary services and the services of intermediaries arranging those supplies - see Notice 741
  • certain intermediary services - see Notice 741
  • certain services, including those of a professional and intellectual character, listed in paragraphs 1 to 8 of Schedule 5 of the VAT Act - normally taxed in the supplier’s or customer’s country depending on the circumstances. But in the case of telecommunications services and the hiring of goods, additional rules may apply which tax such services in the country where they are used and enjoyed or
  • hiring of means of transport- taxed in the supplier’s country or where the transport is used and enjoyed, depending on the circumstances.

More detailed information can be found in Notice 741 Place of supply of services. Guidance on electronic commerce and place of supply is available.

In practice, many services will be subject to tax in the UK because the supplier and/or customer are located here and/or because the services are effectively carried out here.

Once you have determined the country where the services are subject to tax, you will need to know the rate of tax that applies. In the UK most services are taxed at the standard rate of VAT (17.5%) unless they exempted or zero rated.

VAT Returns

For information about filling in your VAT return please refer to the Link.

VAT Exchange Rates

HMRC publishes a list of exchange rates to be used for conversion of currencies in accounting for VAT. HMRC Exchange Rates. You should use these in Adempiere to ensure currencies are converted in to your reporting currency. This can cause conflicts where you are part of a group and and are required to use group reporting exchange rates.

UK VAT Schemes

A mnumber of VAT schemes exist in the UK that can be beneficial in reducing the cost of compliance such as the Flat Rate Scheme and Simplified Import VAT Accounting schemes.

More information is available on these schemes on the HMRC Website.

UK Software Certification for VAT

In the UK, the BSI certify software as being compliant with PAS 76 - the standard on VAT software compliance. Although Adempiere is has not undegone this compliance test, partners in the UK were consulted and contributed towards the development of this standard and they are working towards ensuring Adempiere is fuly compliant.

There is a pilot scheme in the UK for businesss to submit VAT information to the HMRC in an XML format. More information is available here.


UK VAT Compliance

There are a number of issues with regards to Adempiere and how it conforms to VAT within the UK. Whilst these have been solved in customer implementations, the code has not yet fully made it's way back in to the repository and hence the releases because of issues about how to implement functionality that is country specific. See Discussion

There is some work going on in Localisations See Repository but this only works for the UK - i.e. if you do business outside of the UK it will break compliance in other areas.

Here are the issues as they stand:

  1. The VAT rules to be applied should depend on what Organisation that owns the transaction.
    1. If an organisation is a legal entity, it should belong to a country and that country's VAT rule should be applied to transactions made in that organisation
    2. Where the organisation is a division, cost centre or otherwise non legal entity, then this organisation should be owned by a legal entity (as a parent in the hierarchy) and the VAT rule of the parent's country should be applied to the transaction.
    3. This requires the system to have a special organisation type (or implement a flag on Organisation) to mark an Organisation as a Legal Entity and some code to check to see what Legal Entity and Country any Organisation belongs to (by querying the flag on the Organisation to the Parent's Organisation)
  2. VAT Can be calculated on either a document level, line item level, unit level or as part of a retail scheme.
    1. Where the VAT is calculated on the Document level, then the net invoice total has VAT applied at the appropriate rate and the resutl is rounded to the penny (this can be up or down). Adempiere handles this currently and rounds half up. A sample of invoices from the UK prepared on a document level reveals that equal measures of systems round as as they do round down.
    2. Where the VAT is calculated on a Line level it should be calculated to 4 decimal places, rounded to 3 decimal places and then summed up over the invoice and then the total rounded to two decimal places. Adempiere needs modifications to deal with this. The 4 decimal places can be derived from the currency costing precision although this should really be the country VAT/Tax precision as currency's can be used outside of their country. i.e. A company can be registered in Luxembourg and therefore is required to comply with Luxembourg law but their share capital and accounts may be denominated in British Pounds (GBP).
    3. Where the VAT is calculated on the Unit level, the system should round the VAT to 3 decimal places although it is not valid to round it to zero. Adempiere does not support this method.
  3. When discounts are offered for early settlement of debt, the VAT calculation (whether it be on a line item or document level basis) should be on the discounted total (assuming that the customer will take the discount) regardless of whether they do or not. VAT is not re-calculated if the customer does not take the discount.
    1. Adempiere does not support this at the moment either when calculating VAT nor when receiving payment (the discount is calculated on the Gross invoice value, not the net invoice value)

Steps to UK VAT Compliance

  • Add concept of legal entity

I think we need a concept of Legal Entity to be linked against an organisation somewhere so we can flag the organisation as belonging to a jurisdiction for legal/statutory compliance. However, this shouldn't be required for organisations that are not legal entities but at some point every organisation should be owned by a legal entity or be a summary org.

For example - these would be valid:

Client X
- X PLC (Org - Legal Entity - Summary)
 +-Marketing (Org - Department)
 +-Sales (Org - Department)
 +-Finance (Org - Department)
 +- X UK Ltd (Org - Legal Entity)
 +- X Europe (Org - Division - Summary)
    +- X France sa (Org - Legal Entity)
    +- X Luxembourg sarl (Org - Legal Entity)

If we are going to mess about with Organisations, we should allow them to be classified as Subsidiary, Joint Venture, Associate, Investment and include an ownership percentage that may change over time (period from - period to - percentage ownership) to assist with business combinations (consolidation etc)

An important note is the current system with determining the from/to country for determining tax/VAT is only partially correct as this depends on the country where the organisation is VAT registered. This is because you may deliver from the UK to France, but be registered for VAT in Luxembourg and hence the Luxembourg rules apply. This is also true for European wide 'Societas Europeae' (SE) companies.

  • Link in MInvoiceTax & MInvoiceLine to respect Organisation Countries - for calculating VAT on discounted amounts, correct decimal places, and rounding
  • Fix CaloutPayment for calculating Discount for those countries where the discount offered excludes VAT
  • Add IsSOTrx to C_TaxDeclarationLine
alter table c_taxdeclarationline add column issotrx boolean;
  • Create C_TaxDeclaration_v
create or replace view c_taxdeclaration_v as select td.name, tdl.* from c_taxdeclaration td join c_taxdeclarationline tdl on td.c_taxdeclaration_id =    tdl.c_taxdeclaration_id;
  • Add Multiplier to TaxDeclarationCreate (for correction of TaxBaseAmt and TaxAmt)
  • Add report and print format for Tax Return
  • Link report to Window TaxDeclaration (Tax Declaration Tab)

(These have been done and tested for UK)

Other issues: VAT on customer deposits

Thai VAT

The value added tax (VAT) system, is subject to 7% tax rate. Producers, wholesalers, providers of services, retailers, exporters and importers are affected as with Thai companies employing foreigners. When you apply you will receive back an A4 size certificate which you frame on your Office wall. However please photocopy and use a copy because only 20% Thais pay income tax and these certificates can be copied, sold and altered. The same goes for your Company registration. VAT is paid monthly, calculated as: Output tax - Input tax = Tax paid where output tax is VAT which the business collects from the purchaser when a sale is made, input tax is VAT a business pays to the seller of a goods or service which is then used in the business. If the calculation is a plus figure, the business sends the remaining tax to the Revenue Department no later than 15 days after the end of each month. If a negative balance, the business gets a refund in the form of cash or a tax credit, which must be paid the next month. Please remember foreigners who now want a work permit must file for VAT as well so therefore all companies with foreign workers with work permit are subject to register for VAT before a work permit is issued. When you pay your monthly VAT you normally receive back the receipt via registered mail. It pays also to have copies of these receipts as well as another set of books just to make sure. remember if you use electronic accounts this is not allowed. Invoice books are still used & there must be 4 copies per invoice.If you make a mistake filling out an invoice you must fold that invoice and start again.

WHO IS EXEMPT:

  1. Exports
  2. Services provided in Thailand for persons in foreign countries
  3. International transportation by air and sea by Thai juristic persons. Foreign juristic persons may enjoy zero percent when its country applies zero percent to Thai juristic persons operating there
  4. Sale of goods or services to civil service or state enterprises under foreign loan or aid schemes
  5. Sale of goods or services to the UN and its agencies, foreign embassies and consulates
  6. Sale of goods or services between bonded warehouses, between operators in export processing zones, or between the former and the latter. Operators whose gross earnings from the domestic sale of goods and services exceed 600,000 baht, but are less than 1,200,000 baht per year, can choose between paying a gross turnover tax of 1.5 percent or the normal VAT. However, operators paying the gross turnover tax may not offset this tax by charging VAT to their customers in any step of production. The above is now clear due to foreigners who now must be registered for VAT.

VAT Special exemptions:

  1. Operators earning less than 600,000 baht a year
  2. Sale or import of agricultural products, livestock, and agricultural inputs, such as fertilizer, and feed
  3. Sale or import of published materials and books
  4. Auditing, legal services, health services plus other professional services
  5. Cultural and religious services
  6. Educational services
  7. Services provided by employees under employment contracts
  8. The sale of goods as specified by Royal Decree
  9. Goods exempt from import duties under the Industrial Estate Authority o Thailand (IEAT) Act
  10. Domestic transport (excluding airlines) and international transport (excluding air and sea lines).

SPECIFIC Business Tax (SBT)

A specific business tax of 3% is levied, in lieu of VAT, on the following:

  1. Commercial banks and similar businesses
  2. Insurance companies
  3. Financial securities firms and credit financiers
  4. Sales on the stock exchange
  5. Sales of non-movable properties
  6. Pawn shops.

The SBT is computed on the monthly gross receipts at the following rates:

Type of BusinessTax Rate Banking or similar business: finance, securities and credit finance business3% Insurance - Life 2.5%- Insurance against loss 3% Sale of immovable property in commercial manner for profit 3%

TAX REMITTANCE ON PROFITS:

Remittance tax applies to profits transferred from a Thailand branch to its head office overseas rated at 10% remitted before tax, and must be paid by the remitting office of the offshore company within seven days of the date of remittance. Outward remittances for purchase of goods, certain business expenses, principal on loans to different entities and returns on capital investment, are not subject to an outward remittance tax. The tax does not apply to dividends or interest payments remitted out of Thailand by a company or partnership; these are taxed at the time of payment. Section 70 of the Revenue Code addresses income paid to foreign juristic persons. When a company or partnership incorporated under a foreign law and not carrying on business in Thailand receives “assessable income” paid either from or in Thailand, the payer is usually required to deduct income tax at a rate of 15% of the gross remittance. A flat 15 percent rate is effective on all assessable income except dividend income being 10%. There is no withholding tax on capital gains or on the share of profit paid to foreign investors in mutual funds, if in the SET. Remittance of funds may not be necessary in order to incur either the dividend or interest tax liabilities, which may be incurred by making book entries.

PAYING TAXES ONLINE:

Taxes may be paid on-line. You will be able to make electronic payments (e-payments) for all categories of taxes, including income tax, following the department's launch of VAT payments, its first online service. Paying taxes online, you must apply for the service at http://www.rd.go.th . The Revenue Department will then ask to check a taxpayer's identity in person before they receive a user ID and password. But you must have an account with one of three commercial banks - Krung Thai Bank, Siam Commercial Bank or Bank of Asia. Later the service will be extended to those with accounts with Thai Farmers Bank, Citibank and Bangkok Bank. A lack of basic computer skills of the taxpayer rather than lack of confidence in e-transaction security were reasons why this isn't popular. The Revenue Department now provides an electronic manual with step-by-step procedures.

In May, some 135 companies had registered to use the service, but only 43 submitted all the requested information. 24 companies had made e-payment transactions, with the value of e-tax payments being approx Baht 300,000.- In June, 128 companies had applied for the service, & 1 company conducting a transaction this month so far.

Corporate taxpayers are also encouraged to use the online VAT payment system. If companies paid VAT on-line and were eligible for a VAT refund, they would receive it within 30 days, compared to 60 days. --Sureeraya 12:47, 9 August 2007 (EDT)

Cross Border VAT

VAT for Non EU Domicilied Businesses

If you are located outside of the European Union (EU) and you supply electronic services to EU Consumers (that is, private individuals and non-business organisations), you are required to account for VAT.

In order the reduce the administrative issues of accounting for VAT in each of the member states, you can utilise the (Dead Link!) on e-Services (VOES) scheme.

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