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Taxation and Intellectual Property

STLO Asia > News & Publications  > Taxation and Intellectual Property

Taxation and Intellectual Property

Intellectual Property means any kind work that created, invented, or made with intellect and expertise of each person, regardless of type of creation or expression way. Intellectual property shall be in forms of tangible asset, such as products, or intangible asset, such as service, business idea, or industrial production process etc.

 

Types of Intellectual Property

  1. Intellectual Property can be divided into the following forms:
  • Patent
  • Layout – design of integrated circuits
  • Trademark
  • Trade Secret
  1. Copyright

Levy of Intellectual Property
Intellectual property shall be taxable when;

  1. There is any use of intellectual property which is permitted by an owner; or
  2. There is any sale, transfer or assign of ownership of intellectual property.

A.  Tax Liability for the Use of Intellectual Property

  1. Pursuant to the Revenue Code, tax liability for use, disposal, sale, or assignment of intellectual property shall be deemed as “Royalty Fee” in section 40(3).

– Section 40(3) of the Revenue Code, fee of goodwill, copyright or any other rights, annuity or annual payment of income derived from a will, any other juristic act, or court decision.

-In addition, there is the clarification of Revenue Department, dated June 24, 2001, with the topic of withholding tax under the Revenue order no. Tor.Por. 101/2544. It describes more  meaning, type and tax liability in terms of payment from using intellectual property which is deemed as “royalty fee” under section 40(3) of the Revenue Department;

(1) Payment of any kind received as consideration for the use of, or the right to use, any copy right of literary, artistic, scientific work including cinematograph films, any patent, trademark, design or model, plan, secret formula or process, or for the use of, or the right to use information concerning industrial, commercial or scientific experience.

(2) Payment from knowledge transfer or computer technology knowledge transfer.

(3) Payment of computer program writing or using computer program, for example, a company A. purchases a software from a company B., and pays a software fee, a maintenance fee upon expiry of warranty, a telephone charge in case of emergency call, a training fee, a consulting fee and a travelling fee to a company B., therefore all received incomes of a company B. shall be taxable under section 40(3) of the Revenue Department.

(4) Payment from using know-how (patent), trademark or technical production knowledge.

(5) Payment of any design work or plan of golf course which the designer is deemed as an owner of such work.

(6) Payment from using any trademark, model, copy right of printing, rights under trade and service agreement.

Tax Liability of Intellectual Property Owner

  • Payment paid to a receiver that is a company or a limited partnership or other juristic entity which operates its business in Thailand shall be deducted a withholding tax at the rate of 3%.
  • Payment that a receiver received from an intellectual property owner must be filed as its taxable income annually. The deduction of withholding tax shall be deemed as tax credit of its annual taxable income.
  • Payment paid to a receiver who is a resident of any countries under a double tax treaty shall be deducted a withholding tax at the rate of 15%.
  • Payment for the use of intellectual property as a royalty fee is deemed as “Service”. A taxpayer who receives money from allowing to use the right of intellectual property shall be liable for value added tax (VAT) at the rate of 7% of payment.
  • In case that an owner of intellectual property who is a resident and lives outside of Thailand receives a payment for the use of intellectual property, a payer shall be liable for VAT at the rate of 7% instead of a non-Thai resident receiver.
Copyright © 2017, STLO Asia Ltd., All right reserved.

Intellectual Property means any kind work that created, invented, or made with intellect and expertise of each person, regardless of type of creation or expression way. Intellectual property shall be in forms of tangible asset, such as products, or intangible asset, such as service, business idea, or industrial production process etc.

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