Jerrold
Kippen & Olaf Duensing
Duensing Kippen Tax and
Law
In our last column we had a look at the common legal
misnomer regarding businesses organized under a Thai limited company that
asserts: “You must have ‘company, limited’ on your business sign.” In this
column, we examine a second very common legal misnomer regarding business
signs in Thailand. It goes something like: “All business signs must
have Thai words that mean the same thing as any non-Thai words and above any
such non-Thai words.”
Once again, as a generalized proposition, this is
incorrect (note, there are indeed cases where Thai language requirements
may apply to your business’ sign). In our opinion, it is clear that this
legal misnomer is based on an inadequate understanding of the Signboard Tax
Act (1967) and as amended (the “STA”). Thus, once again, we turn to this,
the relevant law.
Pursuant to Section 9 of the STA, the signboard tax is a
local administrative tax collected by the relevant local administrative
office (i.e. Testsabaan, Or. Bor. Tor or District Office, depending on where
you are located in Thailand). The STA is as “self-assessing tax”. In
general, with some specific exceptions and applicability rules, when you put
up your business sign you are required to report to the competent local
administrative office and pay the tax within fifteen days thereafter.
Section 12 of STA provides that the tax is payable
annually in advance no later than 31 March for that year. However, pursuant
to Section 7 of the STA, if this is the first year of your business sign is
used, then the tax payable is a pro-rata proportion of the annual tax
payable for that sign. Depending on which quarter of the first year the the
tax becomes payable i.e. if the tax becomes payable in May (the second
quarter of the calendar year) then you pay three quarters of the annual tax
payable for such a sign.
Under Section 25 of the STA, a late payment of your
annual sign tax is subject to a fine of 2% per month of your total payable
sign tax. Failure to file the tax return by the due date is punishable by a
fine of 10% of the tax payable, which will be reduced to 5% if the sign
owner files before he given official notice of the failure to file. A fine
of 10% of the arrears tax is applicable if the sign owner files an incorrect
return, unless the sign owner requests to correct such before assessment.
And, under Section 35 of the STA, a penalty of Thai baht five to fifty
thousand is applicable for “intentionally” not filing the sign tax payment
application.
Under Section 7bis of the STA, the tax payable (subject
to a minimum tax payable of Thai baht two hundred) is calculated by the area
of the sign multiplied by the applicable per area rate. Pursuant to
Ministerial Regulation 5 (1992) under the STA, the tax rate per each
five hundred square centimetres of sign used, is one of three following,
currently reduced, amounts:
1) Thai baht three;
2) Thai baht twenty; or
3) Thai baht forty;
And here is the key point for our purposes; the rates are
applicable as follows:
(1) is applied, if the sign is in the Thai language only;
(2) is applied, if the sign is in the Thai language
and any other non-Thai language and/or has any picture
and/or has any logo is also in the sign;
(3) is applied, if any part or all of the Thai language
in the sign is under/lower down the sign than any non-Thai language in the
sign.
And this is, in our opinion, the source of the confusion
regarding a supposed legal requirement to include Thai in your business
sign. True, if your sign contains only a non-Thai language or a non-Thai
language and Thai but the Thai is not completely above the non-Thai
language, you are liable to a higher a tax amount under the STA. However,
two things should be carefully noted. First, once you calculate it, the
payable tax amount for a sign that has Thai wording lower than non-Thai
wording or even for a sign that contains only non-Thai wording is, indeed
higher but the difference is relatively negligible. Second, you are
generally not required to include any Thai language wording
above any non-Thai language in your business sign. Indeed, you are generally
not required to include any Thai language in your sign
at all.
In closing and as noted above, however, there are some
specific exceptions with regard to what business signs the signboard tax
applies and also some cases where Thai language must be used in business
signs. To clarify if and how your business sign is liable to this tax, and
whether and how Thai language wording must be used in your case, you should
to consult competent tax and legal counsel directly.
Duensing Kippen is a multi-service boutique law firm
specializing in property and corporate/commercial matters and is also the
only such firm in Thailand that compliments its property and
corporate/commercial legal expertise with a core tax law practice. Duensing
Kippen can be reached at: [email protected] or for information, visit
them at: www.dktaxandlaw.com.
