Tax Consideration for

Entrepreneur

Assoc. Prof. Dr. Thamrongsak Svetalekth

August 2024

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 Contents
1. What is tax?
2. Objective of tax collection
3. Principle of good tax administration
4. Tax Structure
5. Tax Classification
6. Thai Taxation
7. Tax Planning, Tax Avoidance and Tax Evasion
8. Tax Consideration for Entrepreneur
 A compulsory levy, imposed by
1. What government on income,
expenditure, wealth or
people, for which the
is Tax? taxpayers receives nothing
specific in return.
 Tax system
• The collection of all the taxes in operation in
an economy at a specific point in time, and
the rules related to these taxes
 Increase government
revenue

Control consumption
2. Objectives
of Tax
Collection Distribute revenues and
assets fairly

Maintain economic stability

 Adam Smith (1776) said in Wealth
of Nations 1776

3. Principle of • A good tax system is designed on

good tax the basis of an appropriate set of
administration rules

• The system should strike a

balance between the interests of
the taxpayer and the tax authorities
 Equity Certainty
Adam
Smith
(1776) Convenience Economy
 Equity
• Every person should pay depending on the
individuals ability to pay
• Higher income individuals should pay more
because without protection of government
they could not have earned and enjoyed their
income
• Taxes should be proportionate to income
 Certainty
• The tax a person should pay should not be
arbitrary
• Taxpayer should know in advance
• How much is to be paid
• What time the tax is to be paid
• The form the tax is to be paid
• The government should also be certain of the
amount it will collect from the tax
 Convenience
• The method and timing of tax payment should
be convenient for the taxpayer
• If based on income should be paid at the time
the income is earned
• If based on sales at the time the transaction
takes place
• If based on wealth (gift, inheritance, property)
at the time of transfer
 Economy
• The cost of collection should be low compared
to the tax collected
• Tax collection should be efficient taking no
more from the taxpayer than is necessary to
defray the cost of providing services
• The amount collected should cover the full
cost of providing governmental services.
(balanced budget)
 - Collecting the amount of revenue

- Gathering or processing the

information of taxpayers efficiently
Good Tax
- Interacting with tax organisations
Administration in other countries
(OECD,2001)
- Paying or refunding taxes and
verifying the clients’ taxation status

- Decreasing tax avoidance and tax

evasion

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 Good Tax Administration
(Guidance from OECD)

- Full Voluntary Tax compliance

- Compliance is neither costly and/or complex
- Transparency, fairness and equity
- Provision of timely information between
taxpayers and agencies
 Tax Burden

Tax Base
4. Tax
Tax Rate
Structure
Tax Payment

Tax Appeal
 Tax Burden
• The degree to which a tax, specific collection
of taxes, or a tax system viewed in its entirely,
affect a taxpayer or group of taxpayers.
• Government may try to spread this burden
evenly throughout society.
• It is fairer if the wealthy in society are asked to
bear a higher burden than those who are
poorer.
 Tax Burden
• Law tax burden – tax burden of taxpayers that
they may push burden towards consumers
such as VAT
• Real tax burden – tax burden in the last
procedures and person can not push burden
to anyone
 Tax Base
• The rules used to decide what is taxed, and
what is not, under each of these categories
• Based on income, consumption, asset and
privilege
 Tax Rate
• Proportional – the rate of tax to be paid
increases directly in line with increases in the
tax base
• Progressive – the rate of tax to be paid
increases faster than the increase in the tax
base
• Regressive – the rate of tax to be paid
increases more slowly than increases in the
tax base
 Tax Payment
• Self-Assessment – The taxpayer rather than
the revenue service is responsible for the
following calculations each year
• Assessment by tax authority – the taxpayer
submits tax forms to show details for tax
calculation without payments
• Withholding Tax- a deduction from payments
made to suppliers who provide a service.
Whether WHT is applicable and what rate to
deduct depends on the nature of the service
provided.
 Tax Appeal
• A common way to resolve disagreements with
tax assessment.
• It has the process of tax appeal. Start from
Appeal committee, Civil Court, Court of
Appeal, Supreme Court and Central Tax Court
 By level that government collection –
central tax or local tax

By tax burden – direct tax or indirect

tax
5. Tax By tax assessment – Ad Valorem or
Classification Specific tax

By using tax revenue – general or

specific

By permanent of tax law – normal tax

or temporary tax (emergency tax)
6. Thai Taxation
in Overall
 กระทรวงการคลัง
The Ministry of Finance

Revenue Department Excise Department Custom Department

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 Revenue Department

• Highest tax collection agency under the Ministry

of Finance. It is responsible for collecting taxes
according to the rules and regulations prescribed
in the Revenue Code.
 Revenue Department
1. Personal Income Tax
2. Corporate Income Tax
3. Value Added Tax
4. Specific Business Tax
5. Stamp Duties
6. Petroleum Income Tax
 Customs Department

• Has the responsibility of the administration of

customs duties.
• Related with imported and selected export goods
 Excise Department

• Has the responsibility of the administration of excise tax

• Indirect tax that levies from narrow base of goods and
services such as liquor, tobacco, petroleum products,
yachts horse racing and so on.
Excise Tax

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 Thai Tax Revenue (Fiscal Year 2023)
Tax Revenue Million Baht Tax Revenue
Proportion (%)
Personal Income 395,744 14.06
Corporate 767,320 27.25
Petroleum 48,792 1.73
VAT 913,581 32.45
SBT 67,632 2.40
Inheritance 741 0.03
Stamp Duties 17,129 0.61
Excise 477,132 16.95
Customs 126,754 4.50
Others 618 0.02
Total Tax Revenue 2,815,443 100.00
 Thai Tax Revenue (Fiscal Year 2023)
Revenue in Revenue Proportion
Fiscal Year 2023 Million Baht (%)

Tax Revenue 2,815,443 88.02

Non-Tax Revenue* 383,085 11.98

Total Revenue 3,198,528 100

*Non-tax revenue consists of Treasury Dep (9,130M), State-

enterprises (150,392 M) and others (223,563 M)
 Thai Tax Revenue (Fiscal Year 2022)
Revenue in Revenue Proportion
Fiscal Year 2022 Million Baht (%)

Tax Revenue 2,780,231 90.54

Non-Tax Revenue* 290,559 9.46

Total Revenue 3,070,790 100

*Non-tax revenue consists of Treasury Dep (8,053M), State-

enterprises (143,658 M) and others (138,847 M)
 Thai Tax Revenue (Fiscal Year 2021)
Revenue in Revenue Proportion
Fiscal Year 2021 Million Baht (%)

Tax Revenue 2,509,760 88.71

Non-Tax Revenue* 319,250 11.29

Total Revenue 2,829,010 100

*Non-tax revenue consists of Treasury Dep (7,236M), State-

enterprises (160,070 M) and others (151,944 M)
 Thai Tax Revenue (Fiscal Year 2022)
Tax Revenue Million Baht Tax Revenue
Proportion (%)
Personal Income 368,079 13.24
Corporate 728,108 26.19
Petroleum 62,858 2.26
VAT 930,121 33.45
SBT 59,286 2.13
Inheritance 474 0.02
Stamp Duties 16,899 0.61
Excise 503,465 18.11
Customs 110,452 3.97
Others 489 0.02
Total Tax Revenue 2,780,231 100.00
 Thai Tax Revenue (Fiscal Year 2021)
Tax Revenue Million Baht Tax Revenue
Proportion (%)
Personal Income 334,409 13.32
Corporate 625,382 24.92
Petroleum 50,446 2.01
VAT 793,243 31.61
SBT 56,636 2.26
Inheritance 409 0.02
Stamp Duties 14,773 0.59
Excise 531,606 21.18
Customs 102,395 4.08
Others 462 0.02
Total Tax Revenue 2,509,760 100.00
 Thai Tax Revenue (Fiscal Year 2020)
Tax Revenue Million Baht Tax Revenue
Proportion (%)
Personal Income 336,178 13.58
Corporate 608,205 24.56
Petroleum 71,239 2.88
VAT 745,017 30.09
SBT 57,587 2.33
Inheritance 159 0.01
Stamp Duties 15,072 0.61
Excise 548,362 22.14
Customs 93,898 3.79
Others 355 0.01
Total Tax Revenue 2,476,072 100.00
 Thai Tax Revenue (Fiscal Year 2019)
Tax Revenue Million Baht Tax Revenue
Proportion (%)
Personal Income 336,227 12.44
Corporate 694,607 25.70
Petroleum 99,687 3.69
VAT 799,621 29.58
SBT 62,034 2.29
Inheritance 451 0.02
Stamp Duties 16,068 0.59
Excise 585,408 21.66
Customs 108,522 4.01
Others 450 0.02
Total Tax Revenue 2,703,075 100.00
 Thai Tax Revenue (Fiscal Year 2018)
Tax Revenue Million Baht Tax Revenue
Proportion (%)
Personal Income 319,022 12.25
Corporate 663,526 25.47
Petroleum 63,679 2.44
VAT 792,999 30.45
SBT 60,375 2.32
Stamp Duties 15,199 0.58
Excise 580,422 22.29
Customs 108,722 4.17
Others 657 0.03
Total Tax Revenue 2,604,621 100.00
7. Tax Planning, Tax Avoidance
and Tax Evasion
How are they different?

• Tax Planning
• Tax Avoidance
• Tax Evasion
 Tax Planning

Deferring and flat out avoiding taxes by taking

advantage of beneficial tax-law provisions, increasing
and accelerating tax deductions and tax credits, and
generally making maximum use of all applicable breaks
available under our beloved Internal Revenue Code
 Tax Avoidance

• An individual’s manipulation of his affairs within the

law in order to decrease tax liability
(James and Nobes, 2005).

• Many people escape paying taxes on a portion of

their income within the loopholes in tax laws
( Peters, 1991).

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 Tax Evasion
• Illegal manipulation to decrease tax paid
(James and Nobes, 2005).
• Tax evasion incorporates criminal and
illegal methods of lowering tax
payments such as under-reporting
income or taking higher deduction rates
(Kirchler et al., 2003).

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 Tax Evasion

• Tax evasion has been often found in developing

countries.
• Governments in developing countries do not
always want high levels of enforcement. So, they
are willing to accept a variety of evasion and
have loopholes for tax avoidance.

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 Tax Avoidance / Tax Evasion

Tax Avoidance • Legal

Tax Evasion • Illegal

“ Tax avoidance is legal tax

planning whereas Tax
evasion is fraud” 44
 Tax
Evasion
Tax Planning

Acceptable Tax
Avoidance
8. What are Tax
Consideration for
Entrepreneur?