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|Business, Finance & Economics in Thailand All about money and finances in Thailand and Asia; interest rates, stock market & commodities investing, banking and buying shares.|
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|22-01-2013, 03:05 PM||#1 (permalink)|
Join Date: Aug 2007
Thailand Tax Refund Claims - 10 Truths to Share with Foreigners
Over my 32 years of tax investigations work (the first half, as a Thailand Revenue Dept Audit Division officer and the second half, as a Tax Investigations Consultant in the private sector), I’ve heard many foreign CFOs and CEOs complain about getting tax refunds out of the Thailand Revenue Dept, describing it as being awkward, backward, archaic (and even, communist).
To assist foreign CFOs and CEOs to try to understand the mindset of the Thailand Revenue Dept officers a little bit more, I should like to share with you the following 10 truths:
1. There is no automatic tax refund system in Thailand, you will always be audited
The first truth to note that is, unlike the more advanced countries around the world, there is no system of automatic processing of tax refunds by the Thailand Revenue Dept. In Thailand, you will never receive a cheque back from the Revenue Dept within 2 weeks or 4 weeks as you may have received back home. Instead, all tax refund claims are sent to a special unit within the Revenue Dept, called the “Tax Refund Division”, which will, for 99% of the time, direct the tax refund claim to the Audit Division for investigation, and will not do anything more until the Audit Division has completed its tax audit and has reported back to the Tax Refund Division. This is a 'must do' directive of the Thailand Revenue Dept to the Tax Refund Division, and unless you are a famous-name businessman or you have political connections, you will not be able to short-cut the tax investigation by the Audit Division.
2. There is no "taxpayer rights" directive in Thailand
Irrespective of the tax law giving you “rights” to make tax refund claims as well as “rights” to claim interest on tax refund claims that have not been refunded within three months, and irrespective of any civil law "rights" you may have over your money that's in the Revenue Dept's pocket, until such time the Revenue Dept issues a 'must do' directive to Audit Division officers to recognize "taxpayer rights", they will continue to think their "rights" are more important than your "rights".
3. Why should a resource owner refund money to a resource user
From way back when foreigners first started doing business in Thailand, Thailand Revenue officers have believed foreigners come to Thailand to use the resources of Thailand for their own benefit (not for the country’s benefit). And when confronted by a foreigner claiming a tax refund from them, Revenue officers cannot reconcile in their minds why they should.
4. Ways will be found to delay and avoid paying tax refund claims
From the very moment your tax refund claim is referred to the Audit Division officers, they will be looking for ways to delay and avoid paying tax refund claims. Audit Division officers are very well trained (by the older officers) in delay and avoidance tactics, such as extending tax refund claim cases, and even freezing tax refund claim cases.
5. Be aware of your own staff’s co-operation with Thailand Revenue officers
Which brings me to the next truth to share with foreign CFOs and CEOs. Another way Revenue Audit officers delay and avoid paying tax refund claims, particularly to profit-making companies in Thailand, is getting close to the foreigner’s own Thai staff and convincing them to shorten the audit process work and time, save tax liability for the company, and the good of the country etc.
6. The Thailand Revenue Department is a fully 100% compliant bureaucracy
The Thailand Revenue Department epitomizes (and even defines) a fully 100% compliant bureaucracy. There are so many levels within the Revenue Department for Audit Division officers to “satisfy”, and the requirement to “satisfy” the many upper levels is more important than any refund claim.
7. Never expect Thailand Revenue Department officers to have to follow the laws
Another truth to share is that foreign CFOs and CEOs should never expect the Audit Division officers in Thailand to have to follow the laws. Even in the case of a foreigner managing to convince one particular Audit Division officer regarding a particular matter of law, if that Audit Division officer is a member of a particular Audit Division team that needs to “satisfy” the upper levels, again this is more important than any particular matter of law.
8. Know when to outsource tax refund claim assistance work
Thai tax refund claim assistance is certainly often needed when a foreign CFO or CEO is really wanting his or her tax refund back from the Thailand Revenue Department. But it is also a truth that foreign CFOs or CEOs need to know when that assistance is required. For tax refund matters in Thailand it is really necessary to assess the capabilities of Thai staff, and if the assessment is that its just too much for the Thai staff to handle, then the outsource assistance work really does need to start at the very beginning before the Revenue officers are able to control the Thai staff.
9. Know who to outsource tax refund claim assistance work
Another truth to note is that in Thailand, Thai tax experts are not experts at all when it comes to tax refund claims. Foreign CFOs and CEOs need to note that not only do Thai tax experts have to submit to the Thai-cultural “superiority” of Revenue officers (just the same as Thai company staff have to), they have the added burden of fear-of-causing harm to their consulting firms.
10. Manage Thai taxes in order to avoid having to claim refunds
My final truth to share with foreign CFOs and CEOs is that it is necessary in Thailand for foreign CFOs and CEOs to spend more time than what they would do back home, managing Thailand tax refund positions. For instance, for withholding tax refund positions whereby withholding tax deductions are greater than expected corporate income tax payable at year-end, a plan to delay or defer a head office expense charge to save having to claim a withholding tax refund can often be beneficial. Similarly, for value added tax refund positions, if the company is doing a particular type of business whereby Input VAT will always exceed Output VAT on a monthly basis, a plan to manage this position through the filing of the appropriate Revenue Dept application forms (for example the good exporter application forms) can again often be beneficial.
|22-01-2013, 04:54 PM||#2 (permalink)|
disturbance in the Turnip
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|22-01-2013, 07:55 PM||#6 (permalink)|
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|22-01-2013, 08:25 PM||#8 (permalink)|
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Make sure you use broader strokes in your assessments and stereotypes.
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