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HEADLINES [click on headline to view story]: 

Expressway and Rapid Transit Authority must pay substantial damages

Tourism loses 10 billion baht monthly from tsunamis

Nurseries to be built in industrial estates

Fishermen affected by tsunami to be compensated

Thailand opts for new beach management

Personal income tax of expats in Thailand

Forecasters put tsunami damage at 30-50 billion baht

Advertorial: A secure alternative - Safe Independent

Expressway and Rapid Transit Authority must pay substantial damages

A Thai government body which supervises the country’s expressways has lost a damage lawsuit, and has been ordered to pay more than one billion baht compensation to a private company.

The Bangkok Civil Court has ruled that the Expressway and Rapid Transit Authority of Thailand (ERTAT) should pay more than one billion baht compensation to Bangkok Express Way Co. Ltd. (BECL).

BECL, an operator involved in Bangkok’s second phase expressway, filed a lawsuit against the ERTAT six years ago for breach of contract and causing the company severe damage by ordering BECL to lower its fee on the second phase of the expressway, which had cost the company 360.90 million baht.

In addition, the court has ruled that BECL be also compensated for its loss of revenue equivalent to the difference between the contracted fee and the lower fee ordered by the ERTAT since 16 July 2000, which was estimated at 500,000 baht a day on average. These total more than one billion baht.

The ERTAT will appeal, said the lawyer acting for the authority, Issara Limsiriwong. The case became notorious after local newspapers published the contract. Critics claimed the contract had been written so that only the BECL could benefit. (TNA)


Tourism loses 10 billion baht monthly from tsunamis

Thailand estimates that the tourist industry in Thailand’s southern Andaman provinces will lose ten billion baht a month as a result of last month’s tsunami disaster.

“In order to keep the losses to a minimum, efforts to restore the affected tourist spots must be carried out as quickly as possible,” the governor of the Tourism Authority of Thailand (TAT), Juthamas Siriwan said.

Many European tourists have cancelled their trips to Thailand, and others have sought reassurance about the quality of the drinking water in the areas following the tsunami disaster.

The TAT’s most urgent task is to restore consumer confidence in Thailand’s major markets, including Sweden and Japan. Juthamas plans to travel to Sweden later this month to offer Thailand’s condolences to the country’s government and people. A number of Swedish tourists perished in the tsunami disaster.

The TAT governor plans to take a group of Japanese journalists and tour agents to the affected provinces, including Phuket, Phang-nga, Krabi, Trang, Ranong and Satun, on January 24 to see first-hand the affected areas. (TNA)


Nurseries to be built in industrial estates

Nurseries will be built in industrial estates across Thailand to provide care for young children of low-income laborers.

Another 30 industrial estates in the country will have new nurseries this year under a joint ministerial child welfare program, the permanent secretary for Labor, Charupong Ruangsuwan, recently announced. There are already 66 nurseries in industrial estates and large construction sites across the country.

Under the program, the provision of child care should allow their parents to work efficiently, without worrying about the children. Conditions in more than 16,000 existing nurseries will also be improved under the child-welfare development scheme, Charupong said.

The program is a join project involving the Ministries of Labor, Interior, Education, Public Health, and Social Development and Human Security.

A women’s rights activist, Wilaiwan Sae-Tia has urged the government to be flexible and admit children registered in different areas to attend the nurseries. Nurseries should also be allowed to operate at odd hours to accommodate children whose parents are working overtime, she suggested. Representatives of laborers should also be allowed to take part in operating these nurseries, Wilaiwan added. (TNA)


Fishermen affected by tsunami to be compensated

Thailand’s government plans to compensate the country’s fisherman for their losses as a result of last week’s tsunami disaster according to a government minister. The deputy agriculture minister, Newin Chidchob has finished an early assessment of the damages done to the fishing and coastal farming by the tidal waves.

“In principal, we can compensate them right away. A small fishing boat will get 30,000 baht, a big ship will get within 95,000 baht and we will pay 12,000 baht to each damaged coastal fish farms. But compensation for damage on a larger scale will need further discussion,’’ Newin said.

On the prime minister’s instructions, the committee which oversees the compensation scheme is reviewing its regulations and conditions to help fishermen get back on their feet, said Newin. The official preliminary estimate of the cost of the disaster to ships and coastal fishing is over one billion baht. ‘’I understand that 70 percent of affected fishermen have registered for help,” he said. (TNA)


Thailand opts for new beach management

Thailand’s provincial authorities are considering a new plan to regulate major beaches on the country’s southern island resort of Phuket. The plan will initially involve Patong and Kamala beaches, Phuket Governor Udomsak Asavarangura has advised Prime Minister Thaksin Shinawatra.

Businesses on the beaches, including the rental of parasols and beach chairs, have long been conducted haphazardly, said the governor. Most of Phuket’s beaches were severely damaged by tsunamis on the morning of 26 December.

The Phuket governor met representatives of relevant state agencies and private organizations to discuss ways to help improve conditions on the beaches, starting with Patong and Kamala. Details of the plan would be ready in a week, and it should be successfully implemented within two months, the governor said.

Business on the beaches must be conducted in a transparent way, with no intervention from local influential figures, as was the case before, the governor warned. (TNA)


Personal income tax of expats in Thailand

Graham Macdonald
MBMG International Ltd.

Expatriates living in Thailand are sometimes able to enjoy favourable tax treatment, but at other times not. As we enter a New Year and therefore a New Thai Tax Year, it’s worth reminding ourselves about Thai taxation rules and principles to ensure that our arrangements are as tax-efficient as possible.

The starting point should always be the Thai Revenue Code (RC) to ascertain whether or not the income is taxable in the Kingdom of Thailand, at which rate, and how. Secondly, we should also consider whether any taxation liability arising under the RC is modified in any way by the operation of the many and various tax treaty laws (such as double taxation agreements).

Thai Revenue Code

Under the RC, every person (whether or not they are resident or non-resident) who derives income from employment in Thailand, or from the business of an employer in Thailand, will be subject to Thai tax irrespective of where that income is actually paid or received (whether or not that income is paid within or outside of Thailand).

Any individual who resides for 180 days or more in Thailand for any tax year (i.e. calendar year) is deemed to be Thai resident for income tax purposes. Thai residents are taxed in Thailand on their worldwide income (i.e. including not only income from Thailand but also income from abroad). However, income derived from employment carried on abroad is only subject to tax in Thailand if it is remitted to Thailand within the same taxable year. In other words, if a salary corresponds to a work performed outside Thailand and it is not paid in Thailand and then it is also not remitted to Thailand in the same tax year, it isn’t liable to tax in Thailand. This provides tremendous tax-planning opportunities for employees who perform some or all of their work outside Thailand, can be paid outside Thailand for that work and do not need to remit the money received to Thailand during the same calendar year.

For that income which is liable to Thai tax, Thai residents pay a progressive tax rate ranging from 5-37%, which applies to personal income tax of resident individuals (although any expatriate who works at a designated Regional Operating Headquarters (ROH) established in Thailand can opt to be taxed at a flat rate of 15% for 2 years instead of the normal progressive tax rates).

From the above it follows that non-residents are taxable in Thailand only for the income derived from employment or business in Thailand, and this income is taxed at a flat rate of 15% (again for those spending less than 180 days a year in Thailand, this presents excellent planning opportunities, especially bearing in mind that all income for work performed outside of Thailand [even for an employer established in Thailand etc] is not subject to Thai tax.).

Once the liability has been determined under the RC, then the effect of DTAs needs to be considered.

Double Taxation Agreements

Thailand has executed Double Taxation Agreements (DTAs) with 45 countries. These can significantly mitigate the amount of tax payable to the Thai Revenue (although not necessarily the overall tax payable). As a general rule, Thailand has taxing power for employment income derived from working in Thailand by a resident of the other treaty country. An exception to this general principle is the “183-day rule.” If this rule applies, Thailand has no taxing power for the income of a DTA country resident whose income is derived from employment in Thailand.

Under the 183-day rule, Thailand will not have taxing power if all of the following three conditions are met:

1. The employee is present in Thailand for no more than 183 days in any 12 month period; and

2. The income was not paid by or on behalf of a Thai resident. Normally, when an expatriate is on the payroll of an enterprise in Thailand, Thailand will have taxing power and the 183-day rule cannot be invoked; and

3. The income was not borne by a Thai Permanent Establishment (PE) of the foreign employer. A PE is a fixed place in which the business (registered or not) is either wholly or partially undertaken and usually includes a branch, office, factory, warehouse or mine.

Other Methods of tax planning

Recent legislative changes have created tax-planning opportunities using Thai life insurance based savings and annuity schemes. In this scenario the tax breaks can mean that a higher rate taxpayer who effects an investment into a deposit type fund allied to a 37% tax saving, invests the annual married couple maximum and ends up in 10 years with a tax-free amount in excess of THB 530,000 in return for a total net investment of THB 315,000. In other words, the tax benefits can enhance a deposit style investment with a rate of return of say 3% per year to over 25% per year simply by making use of the tax breaks, or even with no growth a guaranteed return in excess of 22.7% per year.

For further information please contact Graham Macdonald at [email protected]

The above is produced for guidance only and the data and research was produced from sources and articles that are believed to be reliable. However, neither MBMG International nor its officers can accept any liability for any errors or omissions in the above article not bear any responsibility for any losses achieved as a result of any actions taken or not taken as a consequence of reading the above article. The above is produced for guidance only and neither MBMG International nor its officers can be held responsible for the consequences of any action taken or not taken as a result of reading the above article.


Forecasters put tsunami damage at 30-50 billion baht

On January 5 the Economic and Business Forecasting Center at the University of the Thai Chamber of Commerce cut its 2005 growth forecast to 5.2-5.8 percent, while estimating that the tsunamis had slashed 30-50 billion baht off the Thai economy.

Announcing the estimate, the center’s director Thanawat Polvichai said that the tsunamis would mainly affect sectors such as fisheries and tourism, and would serve to cut the country’s gross domestic product (GDP) growth next year by around 0.3 percent.

This figure accords with earlier estimates by the government’s Fiscal Policy Office (FPO), and represents a considerably more optimistic outlook than that put out by an international investment bank, JP Morgan, which has predicted that the tsunamis could slash Thailand’s GDP growth to zero.

Thanawat said that as a result of the tsunamis, Thailand’s current account balance was likely to fall from an estimated US$3 billion to around US$2.3-2.5 billion.

However, he also noted that a budget of 30-40 billion baht needed to repair the country’s six southern provinces affected by the tsunamis—Phuket, Phang-nga, Krabi, Trang, Ranong and Satun would ensure that money and employment would flow into the region.

The university’s Economic and Business Forecasting Center predicts that the local tourism industry will suffer by between 15 billion and 30 billion baht as a result of the tsunamis, with tourist numbers down by 25-50 percent over the coming six months.

The retail industry is also likely to lose around 10 billion baht due to the lower purchasing power of people living in the tsunami-hit areas, while the fisheries industry looks set to lose around 3-5 billion baht. (TNA)


Advertorial: A secure alternative - Safe Independent

For many residents and visitors to Pattaya the question of where to safely store those important items and documents is perplexing, particularly given the level of security in some hotels. However, there is an alternative available - Safe Independent.

The friendly staff at Safety Independent offer peace of mind.

This new company in Jomtien is the brainchild of a Dutch expat who had experienced losses here in Pattaya.

Located in the Jomtien Complex Condotel, the company offers a variety of services including safety deposit boxes from 300 baht per month. The added security features to this particular service extend beyond the unique 2 key system, which customers must log each time they access their deposit box, as the premises in under constant 24 hour surveillance through closed circuit TV and security guards. There is also an alarm system on site that is linked directly to the Dongtan police box and the boxes are both insured and fireproof.

“I wanted to provide a secure alternative for both residents and visitors. There are only two authorized users for each box and it is recorded on the photo ID database. We take every precaution and do not recommend that people keep cash or jewelry in the safety deposit boxes,” says the owner.

There are also private cubicles in which people can privately place their items inside, as well as lock the boxes for extra protection.

“If someone needs to get to their box, we have a 24 hour emergency number and in the event they lose their key we have a spare which is kept outside the premises,” added the owner.

Mailboxes from 1,000 baht per year and DHL Courier services are also available for those who require them, as well as lockable storage space from 1 cubic meter up to 15 cubic meters.

“Some people stay here only a few months per year and need a place to store their golf clubs, so we provide that as well.”

Safe Independent is open Monday to Saturday from 8.30 a.m. to 6 p.m. It is located at the Jomtien Complex Condotel, 414/20 Thappraya Road, Jomtien. Tel. 038 303 863.