Tax Newsletter MARCH 2022

DLO’S Tax Newsletter

Issue 128 March 2022

Tax Law Update

1. Tax exemption for debtors for income gained from debt restructuring

Tax News

1. Corrective measures to the rules and conditions governing the payment of interest to tax refund recipients
2. Tax measures to encourage attracting high-potential foreigners to Thailand

Interesting Supreme Court Judgment

Deka (Supreme Court Judgement) No. 7536/2554

Between        Mr. Sor.                                                Plaintiff; and

The Revenue Department                         Defendant

Issue:            Travel expenses paid at a flat rate in lieu of providing a company car are subject to PIT

Tax Law Update 

1. Tax exemption for debtors for income gained from debt restructuring

Royal Decree (No. 742) prescribes an exemption from income tax, VAT, SBT, and duty stamp to debtors for income gained from debt restructuring according to the rules of the Bank of Thailand.

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

Tax News

1. Corrective measures to the rules and conditions governing the payment of interest to tax refund recipients

On 1 February 2022 the Cabinet passed a resolution giving in principle approval to an amendment of the rules and condition of paying interest to a person receiving a tax refund in the case where the tax is withheld and in the case of conduct in accordance with MAP of agreements.

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

2. Tax measures to encourage attracting high-potential foreigners to Thailand

On 22 February 2022 the Cabinet passed a resolution giving in principle approval to a PIT exemption for a holder of a long-term resident visa of wealthy global citizens, foreign retirees, or work-from-Thailand professionals, as well as a resolution giving in principle approval to reduce the PIT rate of withholding tax and exempt the assessable income from inclusion in the PIT computation for a holder of a long-term resident visa of highly-skilled professionals.

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

Interesting Supreme Court Judgment

Deka (Supreme Court Judgement) No. 7536/2554

Between        Mr. Sor.                                                Plaintiff; and

The Revenue Department                         Defendant

Issue:            Travel expenses paid at a flat rate in lieu of providing a company car are subject to PIT

Issue to consider: Whether or not the remuneration received in the form of a flat rate in lieu of providing a company car constitutes assessable income subject to PIT

Fact: The plaintiff filed a PIT return (PND 91) showing assessable income received as salary, position allowance, and consideration paid at a flat rate in lieu of providing a company car, by specifying the lists of exempted income, which included the cumulative of the Government Pension Fund (GPF) and remuneration paid at a flat rate in lieu of providing a company car in the amount of 492,000 baht, because the plaintiff considered that the said remuneration paid at a flat rate in lieu of providing a company car has the same characteristics as a company car according to the regulations of the Prime Minister’s Office on Government Vehicles, B.E. 2523, Article 13 that does not qualify as a property or any other benefit derived from employment, which shall be regarded as assessable income. However, after that, the assessment official sent a letter informing the plaintiff’s PIT assessment, claiming that the plaintiff should include the remuneration paid at a flat rate in lieu of providing a company car in the amount of 492,000 baht in the computation as assessable income and shall pay taxes and surcharges for a total of 92,374 baht.

Summary of Judgment: In this case, the Supreme Court held that the Revenue Code, Section 39, prescribes that “Assessable Income” means income that is taxable in this Chapter. Such income mentioned herein includes a property or any other benefit received which may be computed into a monetary value …”. In addition, Section 40 prescribes that the categories of income include: (1) income derived from employment, whether in the form of salary, wages… or any money, property, or benefit derived from employment. When the facts show that the plaintiff received a consideration paid at a flat rate in lieu of providing a company car on an equal monthly basis, the consideration paid at a flat rate in lieu of providing a company car is the money that the plaintiff had received as an additional benefit from employment apart from salary and position allowance, which could be computed into a monetary value. It is, therefore, deemed as assessable income according to Section 39 of the Revenue Code, in which this assessable income is not exempt from the computation of income tax according to Section 42 of the Revenue Code and the Ministerial Regulation No. 126 (B.E. 2509) issued under the Revenue Code concerning Tax Exemption dated February 23, 1966.

Therefore, despite the fact that a flat rate payment is paid in lieu of providing a company car, which being provided with a company car would result in a case where the plaintiff is exempt from paying income tax, as the plaintiff claimed, the consideration paid at a flat rate and received by the plaintiff has already been vested in the plaintiff without any restrictions on its use, and the plaintiff can spend it freely and may use it to purchase or lease a car of any type or price. Additionally, if any funds remain, they may be utilized to the plaintiff’s advantage. Following retirement, the plaintiff still retains possession of the car. Such consideration is deemed income of the same type as the plaintiff’s salary, which the plaintiff shall include it in the computation to pay PIT.

Legal opinion: The author agrees with the judgment of the Supreme Court because the consideration paid at a flat rate in lieu of providing a company car is different from being provided with a company car which is a provision for the convenient of only high-ranking officials at the level of Deputy Director-General, Director-General, or Permanent Secretary. For the said company car, the law requires it to be used in the performance of official duties or as assigned by the like or work that is directly related to the job in that position, including the use for travelling to and from the accommodation and the office and for other purposes that are necessary and appropriate for holding a position in the government and society. Therefore, the company car must be used primarily for the benefit of performing official duties; this is comparable to the case in which government officials use office equipment or air conditioner in the course of performing duties in order to accomplish the government’s objectives, and there is no entitlement to the company car upon retirement. The receipt of a company car is therefore not a personal benefit which shall be regarded as assessable income, which is consistent with the case where companies pay their employees for phone bills or car fuel expenses according to company regulations, because the employees use the phone or fuel only for the purpose of performing their duties and it is all paid for the performance of duties directly related to the company, and the payment of phone bills or car fuel expenses shall not be deemed as property or any benefits derived from the employment of the employees which are considered assessable income under Section 40 (1) of the Revenue Code.

Therefore, when the right to receive consideration is paid at a flat rate in lieu of providing a company car, and the right to receive a company car are significantly different in terms of their legal effect being regarded as assessable income. Although the consideration paid at a flat rate in lieu of providing a company car has an origin from a company car as claimed by the plaintiff, this is not a legal reason why the consideration paid at a flat rate in lieu of providing a company car shall not be considered assessable income. It is, therefore, deemed as property or any other benefit derived from employment that is considered as assessable income under Section 40 (1) of the Revenue Code, and when there is no law that prescribes a PIT exemption for the consideration paid at a flat rate in lieu of providing a company car, the plaintiff is obliged to pay PIT for such consideration paid at a flat rate in lieu of providing a company car.

Author: Mr. Warinthorn Saruno

Translator: Sakawbun Kunsuk

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. 00-2680-9751 Email: warinthorns@dlo.co.th