You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

August 21, 2020

Thailand Officially Promulgates and Clarifies Previously Announced Tax Relief Measures

Subscribe to Updates

The Thai government’s various COVID-19-related tax relief measures—most of which were approved by the cabinet in March of this year—have now been formally promulgated and clarified in a series of royal decrees and notifications.

On July 12, 2020, Royal Decrees Nos. 707, 708, and 709 Issued under the Revenue Code Governing Exemption from Revenue Tax B.E. 2563 (2020) were published in the Government Gazette. On July 29, the RD further released notifications to clarify some of the measures granted under Decree No. 709. The tax relief measures, which are mostly aimed at easing financial challenges for small and medium enterprises (SMEs), are summarized below.

Increased Tax Deductibility for SMEs’ Soft Loan Interest

Royal Decree No. 707 allows eligible SMEs that have paid interest on a low-interest “soft loan” to be exempted from corporate income tax for income equal to 50% of the amount of interest paid under the soft loan scheme. The loan interest must be incurred between April and December 2020, according to criteria, methods, and conditions to be announced by the director general of the Revenue Department. To be eligible, SMEs must, in the twelve-month accounting period ending on or before September 30, 2019, have a total income of no more than THB 500 million (approximately USD 15.9 million) and a maximum of 200 employees.

Increased Tax Deductibility for SMEs’ Salary Costs

Royal Decree No. 708 allows eligible SMEs to be exempted from corporate income tax for income equal to 200% of the salary costs paid to qualifying employees between April and July 2020. Qualifying employees must be registered under the social security system (Social Security Act B.E. 2533 (1990), section 33), and their wages must not exceed THB 15,000 (approximately USD 475) each per month, according to criteria, methods, and conditions to be prescribed by the director general of the Revenue Department. To be eligible for this deduction, SMEs must meet all of the following criteria:

  1. Total income of THB 500 million (approximately USD 15.9 million) or less, and 200 or fewer employees, in the twelve-month accounting period that ended on or before September 30, 2019.
  2. The number of qualifying employees between April and July 2020 must not be less than the number of qualifying employees as of March 2020, unless there is a justifiable reason (to be prescribed by the director general of the Revenue Department).
  3. No application may have been made for corporate income tax exemption on wage expenses, under other royal decrees.
  4. All other criteria, methods, and conditions prescribed by the director general of the Revenue Department must be complied with. Failure to comply could result in revocation of tax relief and forced repayment of the amount of income tax exempted, plus penalties.

Tax Exemption for Debt Restructuring

Royal Decree No. 709 provides tax relief to stimulate debt restructuring as follows:

  • For debtors and creditors (of financial institutions and others), exemption from income tax, VAT, specific business tax, and stamp duty imposed on transfers of assets, sale of goods, or provision of services, and any instrument executed in relation to restructuring of qualifying debts;
  • For debtors of non-financial-institution creditors, exemption from income tax on the amount of qualifying debts forgiven; and
  • For debtors (of both financial institutions and others), exemption from income tax, VAT, specific business tax, and stamp duty imposed on transfers of immoveable property used as collateral for qualifying debts to a third party, and any instrument executed in relation to the same, on the condition that the proceeds from sale be used to settle the qualifying debts. The exemption is capped at the amount of outstanding debt or the amount of guaranteed liabilities.

The transfer of assets and immovable property, provision of services, related instrument execution, and debt forgiveness must take place between January 1, 2020, and December 31, 2021. Qualifying debts are those under a debt restructuring plan that comply with the scheme implemented by the Bank of Thailand (BOT), which include:

  • debts classified as substandard, doubtful, doubtful of loss, or loss according to the BOT’s regulations on asset classification and provisioning of financial institutions; and
  • debts that are classified as doubtful of loss for which provision has been set up against 100 percent and which have been written off from the account but have not been reverted back (to the account).

Creditors and debtors must mutually prepare a letter certifying that the debts qualify under the BOT scheme. If there is a transfer of immovable property collateral to third party, creditors and debtors must mutually prepare another letter together with the transferee to certify that the proceeds from the transfer will be used to repay the debt owed to the creditor. Both letters must be in the format prescribed by the Revenue Department, and must be submitted to the land official before registration at the land office (if applicable) and submitted to the area revenue office where the debtor operates its business, or where the immovable property is situated.

Under Royal Decree No. 709, “other creditors” refers to non-financial institutions engaging in credit card issuance, personal loans under supervision, nano- or pico-finance under supervision, or—if the company is listed on the Stock Exchange of Thailand—hire-purchase or leasing. “Other creditors” also covers any other creditors that enter into an agreement with a financial-institution creditor for involvement in the debt restructuring.

Related Professionals

Practices

Tax

Location

RELATED INSIGHTS​ 

March 22, 2024
Laos has returned its value-added tax rate to 10% from the 7% rate that had been observed for the last two years. The new rate was specified in Ordinance No. 003/PDT, dated March 19, 2024, and announced on the website of the Ministry of Trade and Commerce. Prior to this, the last announcement of an adjustment in the VAT rate came in the last week of December 2021, when the Ministry of Justice published the Law Amending Certain Provisions of the Laws on Tax No. 01/NA, dated August 7, 2021, in the Government Gazette. This law, which entered into force in January 2022, amended the VAT rate from 10% to 7%. Under Lao law, the ordinance is effective from its date of signing by the president of Laos (i.e., March 19, 2024). However, the tax authorities have indicated that the new rate will not be enforced immediately but will be implemented in the near future, such as when it is published in the Lao Official Gazette. This change of the VAT rate to 10% does not come as a surprise. Some international experts and organizations had been recommending that Laos adopt a 10% VAT rate given its current economic challenges, arguing that Laos should prioritize collecting tax and replenishing the state budget. This was, for instance, recommended by the World Bank in the November 2023 Lao PDR Economic Monitor. Tilleke & Gibbins will continue to monitor the situation to determine when the 10% VAT rate will be enforced. For more details on the rate changes, or on any aspect of tax law in Laos, please contact Tilleke & Gibbins at [email protected].
Read More
January 12, 2024
Thailand’s Revenue Department (RD) has issued a notification requiring electronic platforms to report their revenue from business operators on their platform. With this information, the RD intends to track business operators’ income from the sale of goods and services through electronic platforms in order to facilitate accurate and efficient tax collection. The notification, which was enacted on December 27, 2023, took effect on January 1, 2024. Under the notification, electronic platforms are required to compile a “special account” containing information on the revenue received from each business operator on their platform and submit it to the RD through the department’s electronic reporting system within 150 days of the end of the fiscal year. The notification defines “electronic platforms” as entities that intermediate between business operators (i.e., sellers of goods or providers of services via the electronic platform) and consumers for the purpose of enabling electronic transactions between the parties. This covers online marketplace operators, ride-hailing operators, food delivery operators, and so on. This reporting requirement applies to electronic platforms registered in Thailand that have (or previously had, starting from the notification’s effective date) annual revenue exceeding THB 1 billion (approx. USD 28.5 million), except for electronic platforms under the supervision of the Bank of Thailand or the Office of the Securities and Exchange Commission, such as payment service providers and cryptocurrency exchanges. Electronic platforms can appoint a third party to prepare and submit the required special account information to the RD on their behalf. Compliance Steps As the requirements established by this notification mean that the RD will now have direct access to information on the income earned by vendors and merchants on electronic platforms, these business operators—whether corporate or individual—should ensure that they faithfully disclose their earnings, submit tax payments correctly, and file income tax returns in a
Read More
December 15, 2023
As part of its membership in Lex Mundi, Tilleke & Gibbins has published an updated edition of its Guide to Doing Business in Thailand for 2023. This guide outlines the key factors for starting and operating a business in the Thai market. Issues covered include: Investment incentives Financial facilities Exchange controls Import and export regulations Structures for doing business Requirements for the Establishment of a Business Operation of the Business Cessation or Termination of the Business Labor legislation, relations, and supply Tax Immigration requirements This publication is part of Lex Mundi’s Country Guides series prepared by member firms in more than 100 jurisdictions worldwide. The guides serve as a useful resource for planning international business strategy and researching new markets. The full Guide to Doing Business in Thailand is available through the button below.
Read More
December 8, 2023
Thailand’s Ministry of Interior has extended the deadlines for payment of the 2024 land and building tax and related procedures by two months. The announcement was published in the Government Gazette on November 30, 2023. According to the new timeline in the ministry’s announcement, the official land and building tax assessment forms will be sent to taxpayers by the end of April 2024 (extended from February 2024) while the deadline for payment of land and building tax has been extended to June 30, 2024 (from April 30, 2024). For payments made in installments, the announcement also extended the deadline for each installment as follows: For more details on these measures, or any aspect of Thailand’s land and building tax, please contact Chaiwat Keratisuthisathorn at [email protected] or Supranee Arjjit at [email protected].
Read More