In the business world, everywhere...including on the Internet, it's not uncommon to hear people willing to trade their goods or services for your goods or services which can take various forms, “ebartering”, if you're looking for the Internet term; or "barter trade" by using barter card member services; or message boards where people post ads saying they are willing to exchange their goods and services

In the exchange business, it is common to use a central location, where people from all over sell their goods and services for “barter credits” that they can then use to purchase goods and services from other members.

When you do barter in your business, you may exchange IT services (or whatever you have to offer) in exchange for printing or advertising (or whatever they want that you have to offer).

Some businesses are under the assumption that since no cash is trading hands there are no tax concerns to these transactions but their understanding is incorrect.

The Revenue Department considers barter exchanges as if they were “cash exchanges” and therefore they are completely taxable and possibly deductible from your business.

When you exchange your goods or services with barter credit points, you are required to report the barter transaction of your goods or services as income received and you have to issue receipt or tax invoice and pay VAT by using the date mentioned in the barter slip or when you purchase any goods or services by using barter credit points, you must ask for the receipt or tax invoice as well, so that you may use these as evidence in your book-keeping.

If you purchase any services by using barter trade, the responsibility for withholding tax still exists, you have to withhold as if you were paying by cash. The tax point for barter trade is the date in your barter slip.

If you exchange your goods or services for a deductible business expense, like office supplies or advertising, then they can be considered deductible expenses, but if you exchange your goods or services for something personal in nature, like a free lunch, then you are not allowed to deduct this as expense in your business.

For corporate income tax, the Revenue Department requires you to report and pay taxes on your barter income in the year in which it accrues, this is why businesses try to spend all their barter credits before the year ends; otherwise, they will be reporting income from the barter, but no related expense.

Sirirat C. is the managing Director of NAT accounting firm. Phuket: 076-212-989 Bangkok: 02-513-7151 Pattaya: 038-378-178 www.thaiaccounting.com