What Are Back Taxes, and How Do You Avoid Them?

Back taxes are additional taxes the Revenue Department assesses for past tax years when it finds a business has underpaid or filed incorrectly. On top of the missing tax, there is usually a surcharge and a penalty. Businesses face more types of tax than individuals, so owners should understand them fully from the start.

1. Know every tax your business pays

A Thai juristic person deals with five main taxes:

• Corporate income tax, calculated on net profit for the accounting period.
• Withholding tax: when paying certain items such as wages, rent or service fees, the business must withhold tax and remit it correctly.
• Value added tax (VAT): output and input VAT, filed every month, with the difference paid when output VAT exceeds input VAT.
• Stamp duty, due on certain instruments such as lease agreements.
• Specific business tax, for certain types of business defined by law — check whether yours is one of them.

2. Commit to paying tax correctly

Incorrect tax payments usually come from one of two causes: not knowing what is taxable, or deliberate avoidance. Either way, the result is the same — a back-tax assessment with penalties — and “I didn’t know” is not a defence.

Evasion is the biggest risk of all. Data is increasingly linked and easy to check, and once it is discovered, the penalties and damage to the business usually outweigh any tax saved.

3. Talk to an expert regularly

The Revenue Department keeps updating laws and practice to match how business is done. If you are unsure about anything, speaking early to an accounting firm or your local Revenue office helps prevent problems later.

The A Plus team can help with tax planning, year-end financial statements, audit, company registration and company dissolution.

This article is general information. Thai tax law and Revenue Department practice can change; consult an expert before making decisions for your own case.