In our last column, we looked at a common legal misnomer regarding businesses organized as a Thai limited company — the claim that “you must have ‘company, limited’ on your business sign.” In this column, we examine a second common misnomer about business signs in Thailand: that “all business signs must have Thai words meaning the same thing as any non-Thai words, and positioned above any such non-Thai words.” As a general proposition, this is incorrect — though there are indeed specific cases where Thai language requirements may apply to your business’s sign. In our view, this misnomer stems from an inadequate understanding of the Signboard Tax Act (1967), as amended (the “STA”). So once again, we turn to the relevant law itself.
Under Section 9 of the STA, the signboard tax is a local administrative tax collected by the relevant local administrative office (i.e., Tessabaan, Or. Bor. Tor., or District Office, depending on your location in Thailand). The STA is a “self-assessing tax.” In general, subject to some specific exceptions and applicability rules, when you put up your business sign you must report it to the competent local administrative office and pay the tax within fifteen days.
Section 12 of the STA provides that the tax is payable annually in advance, no later than 31 March of that year. However, under Section 7 of the STA, if it is the sign’s first year of use, the tax payable is a pro-rata proportion of the annual tax for that sign — for example, if the tax becomes payable in May (the second quarter of the calendar year), you would pay three-quarters of the annual tax for that sign.
Under Section 25 of the STA, late payment of your annual sign tax is subject to a fine of 2% per month of the total tax payable. Failure to file the tax return by the due date carries a fine of 10% of the tax payable, reduced to 5% if the sign owner files before receiving official notice of the failure. A fine of 10% of the arrears tax applies if the sign owner files an incorrect return, unless the owner requests a correction before assessment. Under Section 35 of the STA, a penalty of THB 5,000 to 50,000 applies for intentionally failing to file the sign tax payment application.
Under Section 7bis of the STA, the tax payable (subject to a minimum of THB 200) is calculated by multiplying the sign’s area by the applicable per-area rate. Pursuant to Ministerial Regulation No. 5 (1992) under the STA, the tax rate per 500 square centimeters of sign area is currently one of three reduced amounts:
- THB 3;
- THB 20; or
- THB 40.
Here is the key point: the rates apply as follows:
- Rate (1) applies if the sign is in Thai only;
- Rate (2) applies if the sign is in Thai and any other non-Thai language, and/or includes a picture and/or logo;
- Rate (3) applies if any part or all of the Thai language on the sign is positioned below or lower than any non-Thai language on the sign.
This, in our opinion, is the source of the confusion regarding a supposed legal requirement to include Thai on your business sign. It’s true that if your sign contains only a non-Thai language, or both Thai and non-Thai language but the Thai is not entirely above the non-Thai text, you become liable for a higher tax rate under the STA.
However, two things are worth noting carefully. First, once calculated, the higher tax amount for a sign with Thai positioned lower than non-Thai wording — or even a sign with no Thai at all — is relatively negligible in practical terms. Second, you are generally not required to position any Thai wording above non-Thai wording on your business sign. In fact, you are generally not required to include any Thai language on your sign at all.
That said, there are specific exceptions regarding which business signs the signboard tax applies to, as well as certain cases where Thai language use is genuinely required. To clarify whether and how your sign is liable for this tax — and whether Thai wording is required in your particular case — you should consult competent tax and legal counsel directly.