A Beginner’s Guide to Thailand Tax Penalties and Surcharge

Taxpayers who fail to fulfil the obligatory statutory requirements or commit tax mistakes will be charged with tax penalties. Common tax mistakes in Thailand are as follows:

• Creating fake invoices
• Forgetting to deduct withholding tax
• Do not issue an invoice intentionally
• Delayed tax payments
• Failure to register an e-commerce website

The tax audit officers in the Revenue Department have the authority to lower the penalty rate. However, they need a written request and have to consider cooperation from the taxpayers.

Penalties can also be lowered if the taxpayers submit an additional tax return and voluntarily pay extra tax. Nevertheless, they must provide these voluntary payments before the Revenue Department issued any notice. The lowered rate for voluntary filings will not be applicable once the Department issues any notice.

A surcharge is defined as the invariable interest charge for late tax payments. The surcharge for corporate tax rate remains constant per the market interest rates; its rate is fixed at 1.5% per month or part of the month wherein the tax remains unsettled.

Unlike penalties, tax audit staff in the Revenue Department does not have the authority to lower surcharges. Still, the Revenue Code stated that the surcharge amount should not be more than the tax shortfall amount.

The following are the most common tax penalties in the country.

Failure to comply with tax regulations in Thailand typically results in penalties in the form of a fine, ranging from THB 1,000 to THB 200,000, depending on the case’s severity. For instance, a delay in filing the monthly tax report with the Revenue Department may result in a THB 1,000 fine, while making a fake invoice may lead to a TB 200,000 fine.

Aside from fixed fines, an interest rate of 1.5% every month will be charged. This interest will be calculated after taxation errors happen. Taxpayers who fail to deduct withholding tax, do not issue invoices or produce fraudulent invoices need to pay twice the tax amount they originally need to pay.

This is a type of indirect penalty which the Thailand Revenue Code does not mention. A minimal tax blunder may slow down the taxpayers’ refund, a process that already takes a long time to complete.

At times, the taxpayers may not be able to get their tax refund at all due to the tax mistake. This undesirable situation will result in a massive loss of money as the amount of tax refund can easily reach over THB 100,000 per month, depending on its revenue.

Imprisonment is another typical penalty that taxpayers may need to face when violating tax laws in the country. A small tax mistake, such as failure to deduct withholding tax in one invoice, may cause taxpayers to spend a month in prison.

Thailand Revenue Department has the authority to seize the taxpayers’ assets when they are incapable of paying taxes and fines. They can immediately seize the assets without waiting for the court judgment.

Failure to pay taxes appropriately may cause the taxpayers’ work permit to be revoked. The latest financial reports and tax certificates are needed for work permit issuance or extension in Thailand.

Professional accounting services provider in Bangkok helps prepare, summarise, and analyse a company’s financials accurately and efficiently, following the country’s accounting standards. They ensure the company stays compliant with Thailand’s current tax regulations.