Tax Law Updates (February)

This tax newsletter covers the following issues:
1.    Exemptions on income tax for supporting educational institutions; and
2.    Exemptions on income tax, VAT, specific business tax and stamp duty for income that comes from the transfer of assets, the sale of goods, or the issuance of instruments for supporting educational institutions from 1 January 2013 until 31 December 2015.
3.    Exemption on income tax for Special Payments to Government Officers working in specified Southern Provinces applicable to assessable income received from 1 January 2012;
4.    Prescription of Rules for Computation and Deduction of Withholding Tax 1% for purchases of specified uncut precious stones & gems. Effective until 31 December 2014.

Exemptions on income tax for supporting educational institutions
Royal Decree Number 558 (2013) deals with the exemption on income tax for personal income tax and corporate income tax for charitable donations to educational institutions. The details of this Royal Decree are as follows:

(1) In the case of natural persons, there shall be an exemption from income tax on assessable income after deducted expenses and allowances under section 47(1) (2) (3) (4) (5) or (6) of the Revenue Code, at the rate of two times the amount paid to support educational institutions; but, this amount plus the expenses to support  educational institutions, must not exceed 10% of the assessable income after deducting such expenses and allowances.

(2) In the case of juristic companies or partnerships, there shall be an exemption from income tax on income, this exemption shall be calculated at the rate of two times the expenses paid to support educational institutions, regardless of whether it is a monetary or asset contribution; but, this amount plus the expenses to support educational institutions and the expenses to construct and maintain a playground, public park, or private stadium being open for public usage must not exceed 10% of the net profit before deducting expenses on charity, public benefits and expenses to support educational or sporting activities under section 65 ter (3) of the Revenue Code. The above is subject to the requirement that it shall comply with the rules, procedures and conditions as designated by the Director General of the Revenue Department.

A natural person or juristic person or partnership shall be exempt from income tax, VAT, specific business tax and stamp duty on income from the transfer of assets, the sale of goods, or the issuance of instruments by the reason of supporting educational institutions as mentioned above, whereby the transferor must not deduct the cost of the asset(s) or goods exempt from such tax as expenses in the computation of personal income tax or corporate income tax, provided that it shall comply with the rules, procedures and conditions as designated by the Director General of the Revenue Department.

If the exemptions detailed under Royal Decree Number 558 are used, then the exemptions detailed under Royal Decree Number 420 are not permitted to be used. For more information please see: http://goo.gl/XUdcs

Exemption on income tax for Special Payments to Government Officers working in specified Southern Provinces applicable to assessable income received from 1 January 2012 afterward.

Ministerial Regulation Number 295 (2012) This regulation amends the previous Ministerial Regulation Number 126 (1996) in the following way:

Clause 2 subsection (86) – Special payments to Government Officers who work in specified Southern Provinces who receive ‘special payments’ by the regulation on special remuneration for government officers working in specified Southern Provinces B.E. 2007 of the Office of the Prime Minister shall receive a tax emption on their special payments. For more information see: http://goo.gl/glTKI

Prescription of Rules for Computation and Deduction of Withholding Tax 1% for purchases of specified uncut precious stones. Effective until 31 December 2014.

Ministerial Regulation Number 296 (2012) Amending clause 2 subsection (17/2) of Ministerial Regulation Number 144 (1979) by computing and deducting withholding tax at the rate of 1% for payments of assessable income under section 40 (8) of the Revenue Code, specifically income received from the purchase of the following uncut precious stones & gems: ruby, emerald, topaz, garnet, opal, sapphire, zircon, chrysoberyl, jade and similar uncut precious stones but not including imitation uncut precious stones or diamonds, pearls as well as imitation diamonds and imitation pearls. This 1% withholding tax rate is only applicable to natural persons that are not VAT registered that have the right to a VAT exemption under Royal Decree Number 311 (1997). This 1% withholding tax rate shall be applicable to purchases made for specified uncut precious stones & gems until 31 December 2014. For more information see: http://goo.gl/OvpUd