DLO’S Tax Newsletter
No. 120 – July 2021
Tax Law Update
1. Decreasing the withholding tax rate to 2% for the remittance via electronic system.
Tax News
1. CIT exemption for The Stock Exchange of Thailand (“SET”) for the subsidy received from the Capital Market Development Fund (“CMDF”)
2. Tax measure for donations to Equitable Education Fund (“EEF”)
3. Tax measure to support donations for resolving the Coronavirus Disease 2019 (COVID-19)
4. Extending the duration of tax measures to encourage investment in southern border provinces
Interesting Supreme Court Judgment
Supreme Court Judgment No. 702/2552 (2009)
Between Company Dor. Plaintiff; and
Revenue Department Defendant
Issue: The interest assessment in case the company lends money without interest or with interest lower than the market value without justifiable ground
Tax Law Update
1. Decreasing the withholding tax rate to 2% for remittance via electronic system
Ministerial Regulations No. 373 (B.E. 2564) stipulates to decrease the rate of withholding tax to 2% for the money paid from 1 October 2020 to 31 December 2022 provided that the withholding tax is remitted via electronic system.
To be eligible, a taxpayer must comply with the rules, procedures and conditions prescribed by the Director-General of the Revenue Department.
For more details, please see: https://bit.ly/3AswCsH
Tax News
1. CIT exemption for SET for the subsidy received from CMDF
On 22 June 2021, the Cabinet passed a resolution regarding CIT exemption for SET. This is significant CIT exemption of SET for grants receiving from CMDF in accordance with the Securities and Exchange law for the income receiving from 1 January 2021 onwards.
To be eligible for this measure, a taxpayer must comply with the rules, procedures and conditions prescribed by the Director-General of the Revenue Department.
For more details, please see: https://bit.ly/36crRWb
2. Tax measure for donations to EEF
On 29 June 2021, the Cabinet passed a resolution regarding PIT and CIT exemption 2 times for donations by money or assets made to EEF via e-Donation from 1 January 2021 to 31 December 2023.
To be eligible for this measure, a taxpayer must comply with the rules, procedures and conditions prescribed by the Director-General of the Revenue Department.
For more details, please see: https://bit.ly/3Am2hMi
3. Tax measure to support donations for resolving the Coronavirus Disease 2019 (COVID-19)
On 29 June 2021, the Cabinet passed a resolution regarding PIT and CIT exemption for the actual donation from 6 March 2021 to 5 March 2022 for resolving the Coronavirus Disease 2019 (COVID-19) via e-Donation made to the Office of the Permanent Secretary, The Prime Minister’s Office.
To be eligible for this measure, a taxpayer must comply with the rules, procedures and conditions prescribed by the Director-General of the Revenue Department.
For more details, please see: https://bit.ly/3Am2hMi
4. Extending the duration of tax measures to encourage investment in southern border provinces
On 29 June 2021, the Cabinet passed a resolution regarding the duration extension of 6 tax measures to encourage investment in southern border provinces from the previously targeted ending date 31 December 2020 to 31 December 2023.
To be eligible for this measure, a taxpayer must comply with the rules, procedures and conditions prescribed by the Director-General of the Revenue Department.
For more details, please see: https://bit.ly/3Am2hMi
Interesting Supreme Court Judgment
Supreme Court Judgment No. 702/2552 (2009)
Between Company Dor. Plaintiff; and
Revenue Department Defendant
Issue: The interest assessment in case the company lends money without interest or with interest lower than the market value without justifiable ground
Issue in Dispute: Whether the interest assessment of the assessment officer in case the company lends money without interest or with interest lower than the market value is lawful.
Fact: On 10 March 1995, the plaintiff recorded cash receipts from the sale of land totaling 66,492,563 baht and possessed such cash at the office whereby the money was not deposited into the bank or used to pay debts to the directors or the Company Sor. even the plaintiff was obliged to pay interest to the Company Sor. at a rate of 13.5% per year. On 11 September 1995, the plaintiff repaid the debt to the directors in the amount of 30,000,000 baht. On 13 September 1995, the plaintiff repaid the debt to the Company Sor. in the amount of 32,130,287.95 baht.
Summary of Judgment: In the event that the plaintiff received cash from the sale of land 66,492,563 baht in total whereby the plaintiff did not use the money to pay off debts that the plaintiff borrowed with its interest, or did not deposit such money in a bank to generate its interest, the assessment officers deemed that the plaintiff allowed the directors to use such money as a loan without justifiable ground and charge of its interest. The assessment officer had the power to assess (non-physical) interest received from such money in accordance with Section 65 bis (4) of the Revenue Code. This is not the case that the assessment officer determines the income by misrepresenting the facts as it is in violation of accounting principles.
Legal opinion: There is an interesting point on the Supreme Court’s judgment. Although the plaintiff did not lend money to the directors, once the facts shown that the plaintiff had the financial costs to pay an interest on the loan to the Company Sor. at a rate of 13.5% per year and once the plaintiff received money from the sale of land totaling 66,492,563 baht, the plaintiff selected to hold 66,492,563 baht in cash up to 6 months instead of bringing the money to repay the loan and its interest or depositing it in the bank to earn the interest or using the money for any other benefits as unusual for the entrepreneurs to seek the most benefits for the company. The assessment officer considered the case that the plaintiff allowed the directors to use the money as a loan given to the directors without justifiable ground and charge of its interest. In this respect, the assessment officer had the power to assess (non-physical) interest (at market value) in accordance with Section 65 bis (4) of the Revenue Code. Therefore, the Supreme Court’s judgment No. 702/2552 (2009) is an example showing that even though the company does not actually have a loan, the assessment officer has the power to assess (make) the interest at the market value.
In addition, there is also an interesting point. If the facts change that the plaintiff had brought the money to pay off the loan or to seek benefits in other ways, it would have not been possible to be heard that the plaintiff gave the money to the directors to use. In this respect, it should not be deemed that the plaintiff gives the director loans without interest and without justifiable ground. As a result, the assessment officer would have no power to assess the interest in accordance with Section 65 bis (4) of the Revenue Code. However, this is just one of the author’s legal opinions and the tax law is complicated having to consider the law and facts as a case-by-case basis. Bringing up this Supreme Court’s judgment is for the reader to more understand the tax law and pay taxes correctly only.
Mr. Rattawut Chitchana
If you have any further questions relating to Tax Law, please contact
Dharmniti Law Office.
2nd Floor, Bhakdi Building, 2/2 Wireless Road, Lumphini, Pathumwan, Bangkok 10330
or Tel. 00-2680-9753, 0-2680-9777
Email: rattawutc@dlo.co.th
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