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Tax Newsletter JANUARY 2022

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DLO’S Tax Newsletter

 

Issue No. 126 January 2022

 

Tax Law Updates

  1. The exchange of information pursuant to Section 10 Ter of the Thai Revenue Code (“TRC”) (The exchange of information pursuant to Tax Information Exchange Agreements (TIEAs)).
  2. Corporate income tax (“CIT”) exemption in equivalence to the expense paid for investments in electronic information arrangement, electronic information input, and tax remittance systems, and the fees paid to the service provider for electronic information arrangement, electronic information transfer, or tax remittance.
  3. The criteria, procedures, and conditions regarding the income tax exemption for the money paid as an expense of ex-offender employment.
  4. The extension of the tax measurement period to promote human resources development for Industry 4.0
  5. The extension of the tax measurement period to encourage investment in automation
  6. The extension of the tax measurement period to encourage the employment of high-skilled personnel (Science, Technology, Engineering, Mathematics (“STEM”))
  7. The extension of the tax measurement period to encourage the development of employees to have better STEM skills
  8. Twice donation deductions are allowed for donations of money or goods made to the Siriraj Foundation or Chulabhorn Foundation via e-Donation
  9. The criteria, procedures, and conditions regarding the CIT exemption for the money paid for the investment or addition, excluding the repair and maintenance, of the asset relating to the business in the Temporary Special Development Area
  10. The extension of the period for filing returns and paying value-added tax (“VAT”) by VAT operators who provide electronic services from overseas or by VAT operators who operate electronic platform businesses from abroad (Issue No. 2)
  11. The extension of the period for filing returns and paying, or remitting on behalf of a taxable person, or remitting tax in the area facing disaster (Issue No. 5)
  12. The extension of the Country-by-Country Report notification period
  13. The criteria, procedures, and conditions regarding the tax exemption for the business of a social enterprise and the person who supports the business of the social enterprise
  14. The criteria, procedures, and conditions regarding the exemption of income tax for the donation of money or property to the Equitable Education Fund
  15. The criteria, procedures, and conditions regarding the income tax exemption of a company or juristic partnership in a Temporary Special Development Area for the business conducting the target industry
  16. The criteria, procedures, and conditions regarding the income tax exemption for the amount of money paid as a unit holding cost and a unit holding in a Retirement Mutual Fund (RMF)
  17. The criteria, procedures, and conditions regarding the income tax exemption for the amount of money paid as a unit holding cost in a Super Savings Fund (SSF)

 

Tax News Updates

  1. Issuances of e-Tax Invoice or e-Receipt
  2. The “Shop Dee Mee Kuen” measurement for the year 2022
  3. Tax Measurements and Fees for the Promotion of Debt Restructuring
  4. The implementation to join the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI)

 

Highlighted Supreme Court Judgment

The Supreme Court Judgment No. 10701/2555

Between                  Mr. P. and et. al.                           Plaintiff

Revenue Department and et. al.        Defendant

Subject                   Should the money derived from the illegal  lottery be subjected to tax?

 

Tax Law Updates

 

  1. The exchange of information pursuant to Section 10 Ter of the TRC (The exchange of information pursuant to International Agreement on Exchange of Information)

The Ministry of Finance issued the Regulation of the Treasury Department on the Exchange of Information in accordance with Section 10 Ter of the TRC (B.E. 2564) so that the Director-General of the Revenue Department and related officers can utilize it on the exchange of information in accordance with Section 10 Ter of the TRC.

In this regard, it shall be subject to the criteria, procedures, and conditions stipulated by law.

Please see further on https://bit.ly/3FzHc2g

 

  1. Corporate income tax (“CIT”) exemption in equivalence to the expense paid for investments in electronic information arrangement, electronic information input, and tax remittance systems, and the fees paid to the service provider for electronic information arrangement, electronic information transfer, or tax remittance

Notification of the Director-General of Revenue Department regarding Income Tax (Issue No. 410), as amended by Notification of the Director-General of Revenue Department regarding Income Tax (Issue No. 406) stating that the company or juristic partnership whose accounting period begins on or after January 2nd, 2019 but not later than August 4th, 2020 shall inform the details of the investment and payment following the submission of income tax filing but not later than December 31st, 2021 in order to claim the tax benefits pursuant to Royal Decree issued under the TRC regarding the tax exemption (Issue No. 718) B.E. 2564.

In this regard, it shall be subject to the criteria, procedures, and conditions stipulated by law.

Please see further on https://bit.ly/3fvzmw9 and https://bit.ly/33i0Y5D

 

  1. The criteria, procedures, and conditions regarding the exemption of income tax for the money paid as an expense of ex-offender employment

Notification of the Director-General of the Revenue Department regarding Income Tax (Issue No. 409) prescribing the company or juristic partnership wishing to utilize the tax benefits on income tax exemption in accordance with Royal Decree (Issue No. 726) shall be subject to the criteria, procedures, and conditions as follows:

  1. Employ an ex-offender that has been released from prison no more than 3 years from the date of release.
  2. A report on the employment of an ex-offender shall be prepared in order to claim the income tax exemption for the expense paid as a monthly cost of employing an ex-offender in accordance with the law, and shall be stored, along with its supporting documentation, at a place of business readily accessible to the inspection officer.
  3. There must be the following documents to release an ex-offender:

1) Credentials for Release (Ror.Thor.25)

2) Credentials for Release and Reduction of Imprisonment Period (Lor.Wor.Thor.3)

3) Credentials for Suspension of Punishment (Phor.7)

4) Credentials for Suspension of Punishment in Special Cases (Phor.8)

Please see further on https://bit.ly/3fsQClG and https://bit.ly/33LUkEA

 

  1. The extension of the tax measurement period to promote human resources development for Industry 4.0

Royal Decree (Issue No. 737) B.E. 2564 extends the period of the tax measurements to promote human resources development for Industry 4.0, as stipulated in Royal Decree (Issue No. 699) B.E. 2563, which is effective until December 31st, 2020, so that the company or juristic partnership donating the property to a Personnel Development Institution for Industry 4.0 founded by educational institutions from January 1st, 2021 to December 31st, 2022 is exempted from CIT and VAT.

In this regard, it shall be subject to the criteria, procedures, and conditions stipulated by law.

Please see further on https://bit.ly/3IhmE0x

 

  1. The extension of the tax measurement period to encourage investment in automation

Royal Decree (Issue No. 738) B.E. 2564 extends the period of the tax measurements to encourage the investment in automation as stipulated in Royal Decree (Issue No. 710) B.E. 2020 which is effective until December 31st, 2020 so that the company or juristic partnership that invests in machinery and computer program connected to the machinery in automation system from January 1st, 2021 to December 31st, 2022 shall gain the benefit of the CIT exemption at the rate of 100 percent of the actual expense paid.

In this regard, it shall be subject to the criteria, procedures, and conditions stipulated by law.

Please see further on https://bit.ly/3rqoc1m

 

  1. The extension of the tax measurement period to encourage the employment of high-skilled personnel (Science, Technology, Engineering, Mathematics (“STEM”))

Royal Decree (Issue No. 739) B.E. 2564 extends the period of the tax measurements to encourage the employment of the high-skilled personnel, STEM, as stipulated in Royal Decree (Issue No. 711) B.E. 2563 which is effective until December 31st, 2020 so that the company or juristic partnership conducting its business of the target industry and paying salaries pursuant to the employment contracts to the high-skilled employees, STEM, from January 1st, 2021 to December 31st, 2022 shall gain the benefit of CIT exemption at the rate of 50 percent of the actual salary paid but not over 100,000 Baht per month.

In this regard, it shall be subject to the criteria, procedures, and conditions stipulated by law.

Please see further on https://bit.ly/3FMjmAN

 

  1. The extension of the tax measurement period to encourage the development of employees to have better STEM skills

Royal Decree (Issue No. 740) B.E. 2564 extends the period of the tax measurements to encourage the development of employees to have the better skills in STEM, as stipulated in Royal Decree (Issue no. 712) B.E. 2563 which shall be in force until December 31st, 2020 so that the company or juristic partnership having its employees studied or trained for the certified curriculum stipulated by the Director-General from January 1st, 2021 to December 31st, 2022 shall gain the benefit of CIT exemption at the rate of 150 percent of the expense paid as a tuition fee.

In this regard, it shall be subject to the criteria, procedures, and conditions stipulated by law.

Please see further on https://bit.ly/3FAG6DJ

 

  1. Twice donation deductions are allowed for donations of money or goods made to the Siriraj Foundation or Chulabhorn Foundation via e-Donation

Royal Decree (Issue No. 741) B.E. 2564 regarding the exemption of income tax (2 times the money donated), VAT, Specific Business Tax (“SBT”), and stamp duty (“SD”) for the individual and the company or juristic partnership donating the money via e-Donation to Siriraj Foundation or Chulabhorn Foundation from November 30th, 2021 to December 31st, 2022.

In this regard, it shall be subject to the criteria, procedures, and conditions specified in the Notification of the Director-General of the Revenue Department (Issue No. 37).

Please see further on https://bit.ly/3qxnAYh and https://bit.ly/3Gzqvpe

 

  1. The criteria, procedures, and conditions regarding the CIT exemption for the money paid for the investment or addition, excluding the repair and maintenance, of the asset relating to the business in the Temporary Special Development Area

Notification of the Director-General of Revenue Department regarding Income Tax (Issue No. 411) prescribing the criteria, procedures, and conditions regarding the right of CIT exemption pursuant to Royal Decree (Issue No. 729) B.E. 2564 for the investment, addition, change, expansion, or improvement of the asset relating to the business conducted in a Temporary Special Development Area but not for repair in order to maintain its present condition pursuant to Section 65 Ter (5) of the TRC, which is specified for the asset as follows:

  1. Machinery, components, apparatus, tools, decorations, and furniture
  2. Computer programme
  3. Vehicle registered in a Temporary Special Development Area in accordance with the law on certain vehicles, excluding a private car or a bus having no more than 10 seats, which is not for the purpose of leasing in accordance with the Excise Act.
  4. Permanent building, excluding land and permanent residential building

All of the above assets shall be subject to the Notification of the Director-General of the Revenue Department (Issue No. 411) and the criteria, procedures, and conditions stipulated by law.

Please see further on https://bit.ly/3FBilLI

 

  1. The extension of the period for filing returns and paying value-added tax (“VAT”) by VAT operators who provide electronic services from overseas or by VAT operators who operate electronic platform businesses from abroad (Issue No. 2)

Ministry of Finance extended the period for filing and paying VAT for Form P.P.30.9 which shall be submitted within the date of 23 next month as follows:

  1. The period for filing and paying VAT in September 2021 which shall be submitted within October 25th, 2021 is extended to October 29th, 2021.
  2. The period for filing and paying VAT in October 2021 which shall be submitted within November 23th, 2021 is extended to November 30th, 2021.
  3. The period for filing and paying VAT in November 2021 which shall be submitted within December 23th, 2021 is extended to December 30th, 2021.

Please see further on https://bit.ly/3qB9SUB

 

  1. The extension of the period for filing returns and paying, or remitting on behalf of a taxable person, or remitting tax in the area facing disaster (Issue No. 5)

The Ministry of Finance extended the period of tax filing and payment or remittance stipulated in the Thai Revenue Code to the areas facing disaster in some provinces in the following central and northeastern regions:

  1. The areas in which the Revenue Regional Office 4 is responsible

1) Every Area Revenue Branch Office of which Lop Buri Area Revenue Branch Office is in charge.

2) Five Area Revenue Branch Offices affiliated with Ang Thong Area Revenue Branch Office, namely, Pa Mok, Sam Ko, Mueang Ang Thong, Chaiyo, and Sawaeng Ha Area Revenue Branch Offices.

 

  1. The areas in which the Revenue Regional Office 9 is responsible

1) Three Area Revenue Branch Offices affiliated with Nakhon Ratchasima Area Revenue Branch Office 1, namely, Phimai, Non-Thai, and Non Sung Area Revenue Branch Offices

2) One Area Revenue Branch Office affiliated with Nakhon Ratchasima Area Revenue Branch Office 2, namely, Dan Khun Thot Area Revenue Branch Office

3) Four Revenue Branch Offices affiliated with Chaiyaphum Area Revenue Branch Office, namely, Mueang Chaiyaphum, Kaset Sombun, Bamnet Narong, and Chatturat Area Revenue Branch Offices.

The extended period of tax filing and payment or remittance can be further seen on https://bit.ly/3A7YF0B.

 

  1. The extension of the Country-by-Country Report notification period

The Ministry of Finance extended the period of notification of the Country-by-Country Report stipulated by Notification of the Director-General of Revenue Department regarding Income Tax (Issue No. 408) for the accounting period starting on or after January 1st, 2021 as follows:

  1. In the case of the company or juristic partnership that is on the highest level and the representative of the company or juristic partnership who is on the highest level, together with the notification and the submission of Form P.N.D.50, the period is extended to be within 12 months from the end date of the accounting period.
  2. In the case of the company or juristic partnership conducting business in Thailand and subject to the notification and the submission of Form P.N.D.50, the period is extended to be within 60 days from the date of the notification receipt from the officer.

For more details, please see:  https://bit.ly/3Fzsatz

 

  1. The criteria, procedures, and conditions regarding the tax exemption for the business of a social enterprise and the person promoting the business of the social enterprise

Notification of the Director-General of Revenue Department (Issue No. 38) prescribing the criteria, procedures, and conditions regarding the tax exemption for the business of social enterprises and the person promoting the business of social enterprises in case the aforesaid parties wish to utilize the tax benefits pursuant to Royal Decree (Issue No. 735) B.E. 2564.

For more details, please see: https://bit.ly/3qyEm9x and https://bit.ly/325YC9h

 

  1. The criteria, procedures, and conditions regarding the exemption of income tax for the donation of money or property to the Equitable Education Fund

Notification of the Director-General of Revenue Department (Issue No. 412) prescribing the criteria, procedures, and conditions for the donation via electronic donation system to the Equitable Education Fund pursuant to Sections 4 (1) and 4 (2) of Royal Decree (Issue No. 732) as follows:

  1. The donation via electronic donation system to the Equitable Education Fund pursuant to Section 4 (1) of Royal Decree (Issue No. 732) must be made with money only.
  2. The donation via electronic donation system to the Equitable Education Fund pursuant to Section 4 (2) of Royal Decree (Issue No. 732) must be made with money, assets, or goods. However, the donation of assets or goods shall be subject to the criteria and conditions stipulated by law.

For more details, please see: https://bit.ly/3FBJiyN and https://bit.ly/3KjVmrW

 

  1. The criteria, procedures, and conditions regarding the income tax exemption of a company or juristic partnership in a Temporary Special Development Area for the business conducting the target industry

Notification of the Director-General of the Revenue Department regarding Income Tax (Issue No. 413) prescribing the criteria, procedures, and conditions regarding the income tax exemption in case the company or juristic partnership in a Temporary Special Development Area for the business conducting the target industry wishes to utilize the tax benefits pursuant to Royal Decree (Issue No. 730) B.E. 2564.

For more details, please see: https://bit.ly/3nypk1B and https://bit.ly/3IcRAic

 

  1. The criteria, procedures, and conditions regarding the income tax exemption for the amount of money paid as a unit holding cost and a unit holding in Retirement Mutual Fund (RMF)

Notification of the Director-General of Revenue Department regarding Income Tax (Issue No. 414) amended the criteria, procedures, and conditions regarding the income tax exemption for the amount of money paid as a unit holding cost and a unit holding in a Retirement Mutual Fund (RMF) in accordance with Clauses 8, 8/1, 9 paragraph 2, and 10 paragraph 1 of Notification of the Director-General of Revenue Department regarding Income Tax (Issue No. 401) and the statements pursuant to Notification of the Director-General of Revenue Department regarding Income Tax (Issue No. 414) shall be applied instead.

For more details, please see: https://bit.ly/3Gw4lUG

 

  1. The criteria, procedures, and conditions regarding the income tax exemption for the amount of money paid as a unit holding cost in a Super Savings Fund (SSF)

Notification of the Director-General of Revenue Department regarding Income Tax (Issue No. 415) amended the criteria, procedures, and conditions regarding the income tax exemption for the amount of money paid as a unit holding cost in a Super Savings Fund (SSF) in accordance with Clauses 5, 5/1, and 7 paragraph 1 of Notification of the Director-General of Revenue Department regarding Income Tax (Issue No. 369) and the statements pursuant to Notification of the Director-General of Revenue Department regarding Income Tax (Issue No. 415) shall be applied instead.

For more details, please see: https://bit.ly/3nwDosJ

 

 

Tax News Updates

 

  1. Issuances of e-Tax Invoice or e-Receipt

 

On December 21st, 2021, the Cabinet passed a resolution on the draft of a Ministerial Regulation issued under the TRC regarding the issuance of e-Tax Invoice or e-Receipt, proposed by the Ministry of Finance (MOF), and had it reviewed by the Office of the Council of State in conjunction with the opinion of the Ministry of Digital Economy and Society. After that, the Ministry of Finance and related government offices further consider the opinion of the Ministry of Commerce.

For more details, please see: https://bit.ly/3KsLzA6

 

  1. The “Shop Dee Mee Kuen” measurement for the year 2022

 

On December 21st, 2021, the Cabinet passed a resolution on the project “Go Shopping, Gain Refund” for the year 2022 in order to increase domestic consumption and support business operators running their businesses under the tax system and the OTOP business operators by prescribing that a taxable person subject to Personal Income Tax (“PIT”) (excluding a juristic partnership and a non-juristic body of persons) shall deduct the cost of goods or services at the actual amount paid as a cost of domestic goods or service pursuant to the actual amount paid but not over 30,000 Baht from January 1st, 2022 to February 15th, 2022.

In this regard, it shall be subject to the criteria, procedures, and conditions stipulated by law.

For more details, please see: https://bit.ly/3KsLzA6

 

 

  1. Tax Measurements and Fee for the Promotion of Debt Restructuring

 

On December 21st, 2021, the Cabinet passed a resolution on the tax and fee measurements for the promotion of debt restructuring and for the assistance of the affected debtors. This tax measurement starts from January 1st, 2021 to December 31st, 2026 (5 years) and the fee measurement prescribes that the registration fee of the right and juristic act to promote the debt restructuring shall come into force from the following date of its publication in the Government Gazette to December 31st, 2022.

In this regard, it shall be subject to the criteria, procedures, and conditions stipulated by law.

For more details, please see: https://bit.ly/3KsLzA6

 

  1. The implementation to join the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI)

 

On December 28th, 2021, the Cabinet passed a resolution pursuant to the proposal of the Ministry of Finance (MOF) as follows:

  1. Thailand participates in the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI)
  2. The agreement on the draft of MLI (English version)
  3. The Minister of Finance is the undersigned in the letter of intent to participate in the MLI, and the ambassador of the Royal Thai Embassy in Paris, France is the undersigned in the MLI at the Organisation for Economic Cooperation and Development (OECD), Paris, France. The Ministry of Foreign Affairs (MFA) issues the full power of attorney prescribed by the OECD to provide the ambassador of the Royal Thai Embassy in Paris, France with the power to sign the MLI and forward the signed MLI to the OECD, including the submission of the ratification documents and the implementation of the ratification processes respectively, so that the MLI shall come into force.

For more details, please see: https://bit.ly/3IbehU5

 

 

 

Highlighted Supreme Court Judgment

The Supreme Court Judgment No. 10701/2555

Between                  Mr. P. and et. al.                           Plaintiff

Revenue Department and et. al.        Defendant

Subject                   Should the money derived from the illegal lottery be subjected to tax?

 

Disputed issue                     : Should the money that the three plaintiffs gained from the illegal lottery be deemed an assessable income?

 

Fact                             : The first defendant sent the notification letter on personal income tax (P.N.D. 12) no. 11830010-25481129-001-00004 to 11830010-25481129-001-00006 for the tax years 2002 (half year), 2002, and 2003 (half year) to the three plaintiffs, which assessed the income from the illegal lottery, totaling three issues, and calculated the tax liability, fine, and surcharge, totaling 6,980,005 Baht each. The three plaintiffs appealed the assessment. The Commission of Appeal had the decision pursuant to the Letter of Notification on the Decision of the Commission of Appeal No. SorPhor.3 (AorThor.1.2)/148/2549 to SorPhor.3 (AorThor.1.2)/150/2549, stating that the tax and fine for the aforesaid three issues shall be collected totaling 18,301,740.91 Baht. The three plaintiffs disagreed and therefore brought a lawsuit in this case.

 

Abbreviated judgment         : The first issue that had to be considered pursuant to the three plaintiffs’ appeal was whether or not the money that the three plaintiffs gained from the illegal lottery was considered assessable income. The three plaintiffs appealed that the income that the first defendant is entitled to levy must be a legitimate income. If the first defendant levied a tax on the income gained illegally, it was deemed that the first defendant had received a part of the illegal income. As per Section 39 of the Thai Revenue Code, “Assessable income means income that is taxable under the Chapter of Income Tax”. With respect to the assessable income levy from individuals, Section 40 (8) of the Thai Revenue Code prescribes that assessable income is income derived from business, commerce, agriculture, transport, or any other activity not specified in (1)–(7). When the three plaintiffs admitted that they had income from the illegal lottery, although such income derived from illegal acts, it was deemed other assessable income not specified in (1)-(7). Thus, such income is an assessable income under Section 40 (8) of the Thai Revenue Code. The appeal of the three plaintiffs was rejected.

Legal opinion           : This Supreme Court Judgment can show the principle of income tax collection pursuant to the Thai Revenue Code well, stating that the income tax is a tax collected from “income” or “wealth” generated. The critical aspect is whether or not such income or wealth is actually generated, regardless of its source, manner of acquisition, or legitimacy of such wealth. This can be seen from the analysis of Section 39 of the Thai Revenue Code, which defines “Assessable income” means income that is taxable under this Chapter. Such income also includes a property or any other benefit received which may be computed into a monetary value, any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer, and tax credit under Section 47 Bis.”, without mentioning the matter of the legitimacy of such income gained.

If the law is taken to interpret that taxable income must be solely legitimate income, such interpretation is considered overly restrictive and would result in unfairness to those who earn an honest living. Furthermore, such interpretations tend to encourage people to commit illegal acts, since anybody seeking to avoid paying taxes will undoubtedly commit illegal acts and would not be held liable for tax. This kind of interpretation is seen as extremely untenable.

I, the author, agree with the Supreme Court Judgment that the income gained from the illegal lottery is an income by Section 39, which is deemed an assessable income according to Section 40 (8) of the Thai Revenue Code. Such interpretation is not seen as a way to encourage illegal acts, but as a way to protect and suspend them. When someone earns money through unlawful activity, they are not only subject to criminal penalties but also taxation. Nonetheless, this is merely the author’s perspective; tax law is naturally complex and intricate, in which laws and circumstances must be considered on a case-by-case basis. The presentation made through the discussion of the Supreme Court Judgment is solely intended to provide readers with a better knowledge of tax law and the accuracy of tax payments.

 

Author: Rattawut Chitchana

Translator: Raqsabhumi Chotmanodham

 

Should you have any further questions relating to tax law, please do not hesitate to contact Dharmniti Law Office Co., Ltd. (DLO), 2/2 Bhakdi Building, 2nd Floor, Wireless Road, Lumpini Sub-district, Pathumwan District, Bangkok 10330, or Tel: 0-2680-9753, 0-2680-9777, or Email: Rattawutc@dlo.co.th

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