Tax Newsletter JUNE 2015

DLO’S Tax Newsletter

Issue 55 – June 2015

Tax Law Update

Tax Benefits for Business Transactions in a Special Ad Hoc Development Zone 

The Cabinet has issued Royal Decree (No. 584) B.E. 2558; this decree provides several tax advantages to ordinary persons or juristic persons who have received income from the sale of goods, providing services, and the sale of properties that occur in a special ad hoc development zone between B.E. 2558 to B.E. 2560. There are many benefits under this Royal Decree, for example, an ordinary person will receive the right to choose to pay tax at the rate of 0.1 percent of their income, while a juristic person will receive a reduction in corporate income tax from the original rate to 3 percent.  Moreover, it also provides advantages with regard to withholding tax as well as  reducing the rate of special business tax. This Royal Decree is effective on 2 May, 2015.

For more details, please visit: http://goo.gl/4zecPv

The Exemption of Value Add Tax (VAT) for some Business Categories

The Cabinet has issued Royal Decree (No. 585) B.E. 2558 in order to revise Royal Decree (No. 239) B.E. 2534. The revision prescribes the services for newspapers, magazines or education books, which are in the form of electronic data and accessed through the internet system, it makes them exempt from VAT. This Royal Decree is effective on 2 May, 2015.

For more details, please visit: http://goo.gl/kkRSPe

Providing Tax Benefits for International Head Quarter (IHQ)

The Cabinet has issued Royal Decree (No. 586) B.E. 2558 in order to provide tax benefits for IHQs. There are several benefits provided under this Royal Decree, including;

–          Reduction of withholding tax rate to 15 percent for hiring alien workers.

–          The right to choose to pay personal tax without bringing tax (which has been already deducted) to be included in calculating tax again.

–          The right to reduce the tax rate to 10 percent for corporate income tax and the exemption of corporate income tax for some categories of income.

However, to enjoy these benefits IHQs  must follow the rules and conditions prescribed by this Royal Decree. This Royal Decree is effective on 2 May, 2015.

For more details, please visit: http://goo.gl/jk9SHC

Providing Tax Benefits for InternationalTradeCenter (ITC)

The Cabinet has issued Royal Decree (No. 587) B.E. 2558 in order to provide tax benefits for ITCs. There are many advantages provided under this Royal Decree, for example:

–          Reduction of withholding tax to 15 percent for hiring alien workers.

–          The right to choose to pay personal tax for alien workers without bringing tax (which has been already deducted) to be included in calculating tax again.

–          The exemption of corporate income tax for trading abroad in accordance with the prescribed conditions and the exemption of corporate income tax for dividends.

However, to enjoy these benefits ITCs must follow the rules and conditions prescribed by this Royal Decree. This Royal Decree is effective on 2 May, 2015.

For more details, please visit: http://goo.gl/NLgfzg

Tax News

Inheritance Tax Bill

The National Legislative Assembly has passed the Inheritance Tax Bill. This new law shall be effective 180 days after the announcement in the government gazette. This approval has amended the Inheritance tax bill such that heirs shall be taxed at the rate of 10 % of amounts inherited that exceed 100 million Baht. However, if the heir is a parent or a descendant, the applicable tax rate shall instead be 5%.

For more details, please visit: http://goo.gl/4LOj21

Interesting Dika (Supreme Court) Judgments

Dika (Supreme) Court Judgment No. 8369/2551, in re:

Miss N                                                                        Plaintiff

Revenue Department                                               Defendant

The Plaintiff received income from being a TV host. The plaintiff’s role  as a TV host in the show could not be separated between the dual roles of being a moderator and an actress, however it appeared that her role as an actor was less than her role as a  moderator.

According to the law an act of the plaintiff is not equal as an actor or public entertainer under Section 8 (43) of the Royal Decree (No.11) B.E. 2502. Therefore, the payment she received  was an income under Section 40 (2) of the Revenue Code. Thus the plaintiff was not allowed to deduct the expenses under Section 8 (43) of the Royal Decree (No.11).

Legal Opinion

To consider the words under Section 8 (43) of the Royal Decree (No.11), “Show or service of play, motion picture, radio or television actors and actresses, singers, musicians or any artistes for entertainment”, it shows the intention of the law that  income permitted to have expenses deducted under this Section must be  income that occurs from a written act by law. It can not include unrelated acts that are mixed up with a written act by law.

In this case, it appeared that the plaintiff’s role as an actress was quite minor in nature. In every disputed TV show, the plaintiff’s main role was a TV host rather than as an actress. Given this finding, it was determined that the received income of the plaintiff was deemed to come from her role as a TV host. Therefore, the plaintiff was not permitted to deduct expense from this income under Section 8 (43) of Royal Decree (No.11).

To consider paragraphs 1 and 2 of clause 1, and clause 3 of Departmental Instruction No. Paw. 102/2544, it shows that received income which is derived from being a public entertainer can have expenses deducted expenses under Section 8 (43) of the Royal Decree (No.11).

Therefore, we must consider on a case by case basis whether the received income of the public entertainer is an act under Section 8 (43) of the Royal Decree (No.11). In this case the plaintiff’s occupation was mainly as a public entertainer, however in this case, the plaintiff received the income as a TV host. Thus, the received income was not the income of a public entertainer, hence it was decided that the plaintiff was not entitled to deduct the expense from such income under 8 (43) of the Royal Decree (No.11).

Mr. Taradol Chantarasap
Lawyer

Should you require any legal advice on tax in the workplace then please contact us at Dharmniti Law Office Co., Ltd. 2/2 Bhakdi Building 2^nd Floor, Witthayu Road, Lumphini, Pathumwan, Bangkok, Tel : (66) 2680 9751, (66) 2680 9753 Email: budhimak@dlo.co.th or sureelukt@dlo.co.th