DLO’S Tax Newsletter

Issue 64 April 2016

 

Tax Law Update

Extending for Filing Tax Return for Juristic Person Registered with Revenue Department

The Royal Act of Exemption and Supporting for tax operation under the Revenue Code B.E. 2558 which is to exempt from some processes of tax examination to juristic person registered with Revenue Department according to the Act.

In order to help juristic persons with respect to  accounting adjustments (in the accounting period of B.E. 2558), the Minister of Finance has agreed to extend the period of filing a tax return until June 30, 2016 according to the  following conditions:

  1. Value Added Tax Return (Por. Phor. 30) (Por. Phor. 36) (Only for additional filing)
  2. Witholding Tax Return (Phor. Ngor. Dor. 1, Phor. Ngor. Dor. 2, Phor. Ngor. Dor. 3, Phor. Ngor. Dor. 53 and Phor. Ngor. Dor. 54)
  3. Special Business Tax Return (Phor. Thor. 40)
  4. Application for stamp duty paid in cash related to some categories of instrument (Aor. Sor. 4 Khor. And Aor.Sor. 4 Kor.)

There is no need to pay relevant fines and surcharges which arose due to late submission for the tax months between January 2015 through until March 2016.

For more details please see: http://goo.gl/gkw8ce and http://goo.gl/e5Ba9e

 

Criteria and Conditions for Restraining or Reducing of Fine on Inheritance Tax

The General – Director of Revenue Department has issued the Notification of the Revenue Department regarding Inheritance Tax (No. 4) in order to prescribe the criteria and conditions for waiving or reducing a fine related to failure to pay inheritance tax. The notification provides that such fine may be waived or reduced by filing a written petition to an assessment officer if a notice of assessment has not yet been sent to a taxpayer. However, if the taxpayer has received a fine notification, then if they wish to contest it they must file a petition to the Board of Appeal.

This criteria and conditions have been effective since February 1, 2016.

For more details see: http://goo.gl/vZuUeG

 

 

Tax News Update

Restructuring Personal Income Tax in 2017

The Cabinet has agreed to restructure personal income tax (PIT) by increasing the deduction for expenses and allowances. Furthermore, PIT tier, PIT Rate Schedule and the minimum rate of assessable income for filing a tax return reporting will also be changed.

This change will be effective for assessable income in 2017.

For more details please see: http:// goo.gl/zZYnRn

 

Increase of Value Added Tax Rate (VIT)

The Minister of Finance has held discussions with the Revenue Department regarding increasing the VAT rate in order to increase the Thailand’s income in order to use such funds  to further develop the country given that  the government has currently reduced the VAT rate from 10 percent to 7 percent. If the government changed its policy regarding the VAT rate to change it to 10%, then Government revenue is estimated to increase to be 200,000 million Baht per year. However, the Government notes that before implementing such change it must be carefully consider the societal impacts such change would likely make.

For more details: http://goo.gl/hH6pOs

 

 

Interesting Dika (Supreme Court) Judgments

Dika (Supreme) Court Judgment No. 2470/2552, in re:

Issue: Hire for work contract

ABC Company                           Plaintiff

XYZ Company, et al.                  Defendant

The Plaintiff’s Authorized Director signed a security contract without stamping/ affixing the Company’s seal on the contract, however when the plaintiff was assigned by this contract, it assumed that the director was an authorized representative of the company. The security contract was a hire for work contract which is not required to be made in writing/ or evidenced in writing according to  the law, therefore the appointment of the representative did not require such appointment to be made in writing or evidenced in writing. It was held that the plaintiff was entitled to institute the civil case in the Court.

 

Legal Opinion

According to the above mentioned lawsuit, the issue which should be considered is that what kind of the security contract is. In this case, section 587 of Civil and Commercial Code states that “The hire of work is a contract whereby a person, called contractor, agrees to accomplish a definite work of another person, called employer, who agrees to pay him a remuneration of the result of the work”

The security contract was a contract whereby the employer intended to engage the contractor to secure the employer’s property irrespective of whether the contractor has to provide any staff for working as a security guard. The contract indicates that the result of the work which the employer demands is the security of the specified premises. However, if the contractor fails to comply with the terms of the contract or causes any injury, then the employer only has the right to recover the damages from the contractor but it has no right to punish, or warn the contractor’s employee. Thus the security contract is qualified as a hire of work contract.

With respect to tax law, a contract is qualified as a hire of work contract if it is made in writing in accordance with section 103 of the Revenue Code combined with Clause 4 of the Stamp Duty Schedule which specifies that the contractor is a person who pays the stamp duty fee at the rate of 1 Baht for every 1,000 Baht or the fraction thereof using 2 payment options, which are:

  1. Affixing a stamp on the paper and canceling such stamp; and
  2. Payment of stamp duty by cash at the Revenue Dept. before signing a contract or within 15 days from the date following the date signing such contract.

However, the hire for work contract made on April 5, 2015, will be subject to clause 2(3) of the Notification Regarding Stamp Duty (No. 37) which provides that the hire of work contract having a total remuneration of 1,000,000 Baht or more must pay the stamp duty fee in cash, with the Contractor being able to pay the stamp duty fee by affixing a stamp on the paper and canceling such stamp.

Furthermore, if such contract is made verbally, then the contractor will have no liability to pay the stamp duty because both of the parties have not made a document which requires that stamp duty be paid given sections 103 and 104 of the Revenue Code. However, the writer is of the opinion that if the parties made a contract verbally, without the details of such contract being made this would be risky to the parties as it may result in a an argument or issue arising between the parties with respect to each parties’ respective rights and obligations. Moreover, if the contract is only verbal and not made in writing it could be problematic should a party wish to sue for breach of contract in court given that it could be difficult to prove a contract existed and the respective rights and obligations of each party. Therefore, when comparing the pros and cons of not putting the hire for work contract in writing or not parties should carefully consider the above points as the stamp duty savings if the agreement is only made verbally may be outweighed by the potential risks of not having such agreement in writing.

Mr. Taradol Chantarasap
Lawyer

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

    Legal Services in Taxation: –

1. Tax Advice

2. Tax Returning

3. Tax Planning

4. Tax Inspection

5. Tax Filing

6. Testifying to the Officer

7. Tax Assessment Appeal

8. Tax Litigation

 

Contacts:

Kamphol Sapprung

+662 680-9724

kamphols@dlo.co.th

 

Budhima Kerdsiri

+662 680-9751

budhimak@dlo.co.th

 

Sureeluk Thanakitphaisan

+662 680-9753

sureelukt@dlo.co.th