Deputy Prime Minister Korbsak Sabhavasu visited Phuket recently to check on the progress of a project to build a MICE (Meetings, Incentives, Conferences, and Exhibitions) centre at Maikhao beach in Thalang.

The deputy prime minister was welcomed by the Phuket Governor, Wichai Praisa-ngob and related officers at the Phuket Provincial Hall.

The Deputy Prime Minister said, “We have approved a budget of three billion baht for the MICE project, which is a part of the 150,000 billion baht ‘Strong Thailand’ project. I would like to see something of the same functionality and magnitude of the Queen Sirikit National Convention Center in Bangkok.”

The Treasury Department, whose responsibility this project falls under is currently trying to remedy issues concerning space and location and are discussing such issues with local developers and residents.

A particular concern is the fact the proposed site is right next to Maikhao’s National
Park and a decision must be made as to whether to incorporate the forest in the designs, “I can confirm 100% that MICE is going to happen in Phuket, but we must be careful with the design of the site, it needs to be functional, practical and beautiful, once we start it can’t be redesigned.”

The centre, which will be able to accommodate up to 4,000 visitors a time, is something that the President of Phuket Toursim Association, Somboon Jirayus believes is a positive step for Phuket, “It’s good that the government will support the project to build up Phuket’s MICE business, because this will be help develop tourism potential and expand the seminar market group.”

K Somboon said that although Phuket generates about 100 billion baht for the Thai economy, it always receives a small budget. He compares Phuket to a hard working animal that needs more treats.

Phuket’s MICE industry is under the responsibility of the Treasury Department and the assigned 150 rai will include a conference hall able to seat 4,000 people, a medium room for up to 2,500 people, and four small rooms for up to 500 people each. There will also be 20 smaller sized rooms for private seminars or meetings of 10-30 people.

Other facilities include a large car park for up to 450 cars or 30 buses. A 3-4 star hotel with 350 rooms complete with a luxurious swimming pool will also be on site.

Contractors are cuyrrently being sort for the construction of teh convention centre and, although the project is still in the design stages, it is estimated that it will be finished within two years.

TOT is expecting to generate 20% more profit after recently launching its high speed Fiber Optic broadband service around the island.

The ‘TOT Fiber 2 U’ service, which has cost 200 million baht to implement and runs at a speed of 10-100 Mbps is the first to be used in Phuket.

TOT Managing Director, Warut Suwakorn said “the launch of this service is to upgrade the
communication potential and speed and safety in sending and receiving information.”

Demand from hotel customers, tourism, financial and banking businesses, transportation and
high-end level housing has led to an opening in the market and need for high speed Internet use.

TOT Fiber 2 U’s FTTx technology enables users to communicate faster and with better quality. The multimedia service comes in triple play format, which refers to a combination of Internet access, voice communication (telephony), and entertainment services, such as IP television and video on demand.

Feedback from trials in Bangkok have been positive, which has led to plans to make up to 12000 ‘fiber to the home’ (FTTH) ports in the capital.

Noppanat Hutacharoen, TOT’s Senior Executive Vice President said there have been service
trials in Phuket for some time. There are over 1200 FTTH ports in Phuket town, 1000 ports in Kathu and 1000 in Thalang. There are currently around 100 clients using the service, with most of them in the hotel and resort business.

Running a business here in Thailand, we all know that we have to pay VAT when providing services locally but not everybody knows whether VAT must be paid on income attached to services provided abroad.

It is interesting to note that not all kinds of service fees received are subject to VAT. In fact, paragraph two of Section 77/2 of the Revenue Code imposes VAT only on services that are performed in Thailand or performed outside Thailand where the revenue of which
is used in the country.

Based on the above principle, if your company is providing services to overseas customers whereby the performance of such service takes place outside of Thailand, then there is no VAT even if you are required to declare the income in the corporate income tax base.

If this kind of case applies to you or your business, please keep the following ruling
as a reference to show the tax auditor when they call for a tax audit so that you don’t need to collect VAT from such customers:

Ruling No. Gor Khor 0 8 11 /Phor. Gor. 1184 dated 3 October 2000
Company informaton & Questions: The Company provided services to a Singapore company by
constructing a station to check the air quality in Singapore. The Company provided
equipment and sent its officials to work in Singapore.

The Company would like to know whether such services were subject to VAT at the rate of
zero percent and whether there was any other tax?

The Revenue Dept. answer: The provision of services where the Company constructed the station to check the air quality in a foreign country and no service was used in Thailand was not subject to VAT under Section 77/2 paragraph 3 of the Revenue Code. The Company was
not required to pay VAT on the payment received under the agreement. However, the Company was required to include income received from such construction business for the calculation of corporate income tax under Section 65 of the Revenue Code.

If you have any questions concerning the Revenue Department, please feel free to e-mail: sirirat@thaiaccounting. com. We will select an appropriate question and publish it in Thai
Tax Tips.