Tax Newsletter APRIL 2023

Tax Newsletter

Dharmniti Law Office Co., Ltd.

Issue No. 141, in April 2023

Tax Law Updates

1. Exemption of assessable income in the case that taxpayers receive subsidies or other benefits derived from the government.

Ministerial Regulation No. 388 (2566) regarding tax exemptions prescribes that the following types of assessable income received in 2022 shall be exempt from the calculation of tax:

1. 1. Subsidies or other benefits received for accommodation, meal allowance, entrance fees to tourism attractions, cost of One Tambon One Products (OTOP), spa or massage fees, car or ship rental fees, or airfares pursuant to the Rao Thiew Duay Gun Scheme;
   2. Other benefits received for transportation fees and the cost of package tours from business operators conducting business relating to travel services pursuant to the Tour Thiew Thai Scheme;
   3. Other benefits received for meal allowance, cost of beverages, cost of goods or services paid via the e-payment system;
   4. Other benefits received for the cost of goods purchased from Thong Fah Shop with moderate pricing to develop the local economy, and the cost of goods or services from sellers or service providers participating in phases 4 and 5 of the 50-50 Co-Payment Scheme or involved in phases 4 and 5 of the Scheme on the Increase in the Purchasing Power for Holders of Welfare Card;
   5. Other benefits received for the cost of goods from the Thong Fah shop with moderate pricing to develop the local economy, and the cost of goods or services from sellers or service providers participating in Phases 4 and 5 of the 50-50 Co-Payment Scheme or involved in Phases 2 and 3 of the Scheme relating to the Increase in the Purchasing Power for Those Who are In Need of Special Assistance;
   6. Other benefits received for the cost of Benzene that is paid via the e-payment system pursuant to the Scheme on the Reduction of Benzene Price to Public Motorcyclists;
   7. Risk compensation for the monitoring, investigation, prevention, control, and treatment of
      COVID-19 patients paid by the Ministry of Health to government officials working with respect to COVID-19 matters as permitted by the Ministry of Finance;
   8. Compensation derived from acting in areas of medicine or public health in order to counter the spread of COVID-19 that is paid by the Ministry of Health to government officials working with respect to COVID-19 matters as permitted by the Ministry of Finance; and
   9. Compensation derived from the provision of COVID-19 vaccinations that were paid by the Ministry of Health to government officials working with respect to COVID-19 matters (outside hospitals) as permitted by the Ministry of Finance.

For more details, please see https://bit.ly/417RvG9

2. Value-added tax (VAT) exemption for information center services.

The Notification of the Director-General of the Revenue Department on VAT (Issue No. 251) imposes criteria, procedures, and conditions on VAT exemptions for information center services that are provided by business operators conducting business relating to information centers which filed a request pursuant to the form as attached to this Notification together with related documents and who have received an approval letter from the Director-General of the Revenue Department.

For more details, please see https://bit.ly/3Gkt0O8

3. Corporate income tax (CIT) exemption for companies and juristic partnerships having net profit arising from the sale of carbon credits in Thailand

Decree (Issue No. 760) prescribes the criteria, procedures, and conditions relating to the exemption of CIT for companies or juristic partnerships having net profit arising from the sale of carbon credits in Thailand pursuant to the Thailand Voluntary Emission Reduction Program registered with the Thailand Greenhouse Gas Management Organization (public organization) from May 20^th, 2023 through until December 31^st, 2027 (three consecutive accounting periods).

This CIT exemption shall be subject to the criteria, procedures, and conditions stipulated by the Director-General of the Revenue Department. For more details, please see https://bit.ly/3mbQiPj

4. Personal and corporate income tax exemptions for donations made to the Royal Forest Department via the e-Donation channel

Decree (Issue No. 761) stipulates the criteria, procedures, and conditions relating to personal income tax (PIT) and CIT exemptions for donations made to the Royal Forest Department via the e-Donation channel which support the Ministry of Natural Resources and Environment in relation to its project on the Creation of Community Forests and the Reduction in Global Warming from January 1^st, 2023 through until December 31^st, 2027.

The PIT and CIT exemptions shall be subject to the criteria, procedures, and conditions stipulated by the Director-General of the Revenue Department. For more details, please see https://bit.ly/3KGkQC6

5. Additional specification details on those businesses which are exempt from specific business tax.

Decree (Issue No. 762) prescribes that “businesses under the Office of Small and Medium Enterprise Promotion only with respect to income derived from lending pursuant to supporting projects of SMEs through capital under the Office of Small and Medium Enterprise Promotion stipulated by the Cabinet Resolution from September 1^st, 2020” shall be deemed as business which are exempt from specific business tax.

For more details, please see https://bit.ly/40UW5rK

6. Exchange of information in compliance with the international agreements on taxation.

The Royal Act regarding the exchange of information in compliance with international agreements on taxation dated B.E. 2566 prescribes that government authorities shall have the power to exchange information pursuant to the covenants or conventions that Thailand has entered into.

For more details, please see https://bit.ly/3nNG87P

Tax News Updates

1. Corporate income tax exemption for income derived as a subsidy from support measures for the utilization of e-vehicles in the form of vehicles and motorcycles.

On March 7^th, 2023, the Cabinet passed a resolution approving the draft Decree (Issue No. …) B.E. ……, which consisted of the following details:

1) There shall be a CIT exemption for companies or juristic partnerships for subsidies derived from government which support the utilization of e-vehicles (cars and motorcycles) during the accounting period that is entitled to be applied to this measure.

In this regard, this CIT tax exemption shall be subject to the criteria, procedures, and conditions stipulated by the Director-General of the Excise Department.

2) Companies and juristic partnerships applying for the CIT exemption and subsequently not complying with the relevant criteria, procedures, and conditions stipulated by the Director-General of the Excise Department shall be required to include the exempted amount of tax when calculating CIT (based on net profit) for the accounting period of such exemption.

In this regard, it shall be subject to the criteria, procedures, and conditions stipulated by the Director-General of the Revenue Department. For more details, please see https://bit.ly/40NNbMx

2. Extension of tax measures regarding the relocation of foreign investment (Thailand Plus Package).

On March 7^th, 2023, the Cabinet passed a resolution approving draft Decree (Issue No. …) B.E. ……, which consisted of the following details:

1) The draft Decree (Issue No. …) B.E. …… (regarding tax measures supporting investment via automatic systems), extends the tax exemption period for companies or juristic partnerships with respect to expenses paid as capital for machines and computer programs operating via automatic system but such tax exemption shall not apply to repairs performed to maintain them at their present condition. The expiry date of the tax exemption period shall be amended from31^st, 2022 to instead be December 31^st, 2025.

2) The draft Decree (Issue No. …) B.E. …… (regarding tax measures supporting the employment of highly skilled staff) extends the tax exemption period for companies or juristic partnerships conducting their business in certain target industries (automotive and agriculture and biotechnology industries). The Decree provides that the measure shall be applied to expenses paid for the employment of highly skilled staff working in relation to science, technology, engineering or mathematics from January 1^st, 2023 through until December 31^st, 2025.

3) The draft Decree (Issue No. …) B.E. …… (regarding tax measures supporting the development of staff to be highly skilled) extends the tax exemption period for companies or juristic partnerships that utilize expenses for their staff members’ educational or training fees, or certified programs that are imposed by government agencies from January 1^st, 2023 through until December 31^st, 2025.

For more details, please see https://bit.ly/40NNbMx

3. Extension of tax measures supporting donations to the Research, Development, and Innovation Funds.

On March 7^th, 2023, the Cabinet passed a resolution approving draft Decree (Issue No. …) B.E. ……, stipulating the extension of a tax exemption for natural persons, companies, or juristic partnerships that donate to the Research, Development, and Innovation funds (4 funds in total). Such measure can be applied (deducted) at the rate of twice the amount of the allowance or expenses paid or donated via the e-Donation system, from January 1^st, 2023 through until December 31^st, 2025. (3 years in total).

For more details, please see https://bit.ly/40NNbMx

4. Tax measures supporting sport related matters.

On March 7^th, 2023, the Cabinet passed a resolution approving draft Decree (Issue No. …) B.E……, stipulating tax exemptions with respect to PIT, CIT, VAT, specific business tax, and stamp duty for natural persons, companies, or juristic partnerships which donate money or assets which support sport. This tax exemption can be applied (deducted) at the rate of twice the amount of the allowance or expenses that is donated, provided that such donation is made via the e-Donation system from January 1^st, 2023 through until December 31^st, 2025 (2 tax years in total).

For more details, please see https://bit.ly/40NNbMx

5. Extension of tax measures supporting the employment of ex-convicts.

On March 7^th, 2023, the Cabinet passed a resolution approving the draft Decree (Issue No. …) B.E…, providing for a CIT exemption for companies or juristic partnerships that employ ex-convicts that were released from prison, with such exemption to apply for a period not exceeding 3 years from the convict’s release date. This measure shall exempt a company’s or juristic partnership’s income at the rate of 50 percent of the expense paid for the cost of the ex-convicts’ employment (provided that it does not exceed 15,000 baht per month/per person). This tax measure shall be applied to the accounting period starting within or after January 1^st, 2022 through until December 31^st, 2025 (4 tax years in total). For more details, please see https://bit.ly/40NNbMx

6. The amendment of tax collection from investment tokens.

On March 7^th, 2023, the Cabinet passed a resolution approving draft Decree (Issue No. …) B.E. ……, which contained the following details:

1) An exemption of CIT and VAT for companies or juristic partnerships issuing and offering the sale of investment tokens to the public (in the primary market). Such exemption shall apply to the income and tax base owing to the transfer of investment tokens that were offered for sale to the public under the Digital Assets Law.

2) A VAT exemption with respect to the transfer of investment tokens (in the secondary market) to natural persons, and companies or juristic partnerships that sell or buy investment tokens (in the secondary market).

In this regard, the above exemptions shall be subject to the criteria, procedures, and conditions stipulated by the Director-General of the Revenue Department. For more details, please see https://bit.ly/40NNbMx

7. Tax measures to support investment in the Depository Receipt (DR).

On March 14^th, 2566, the Cabinet passed a resolution approving draft Decree (Issue No. …) B.E. …, which consisted of the following details:

1) A CIT exemption for companies or juristic partnerships registered under Thai law that issued and offered Depository Receipts shall be applied to income that was deemed as compensation derived from the holding of foreign securities for the purpose of issuing Depository Receipts. In this regard, companies and juristic partnerships shall not use such income paid to payees, who are the holders of the Depository Receipt, as an expense when calculating tax (based on net profit).

2) A decrease in the withholding tax rate to be 10 percent of income for assessable income which a taxpayers holding a Depository Receipt derived from companies or juristic partnerships that were exempted from CIT pursuant to Clause 1. For more details, please see https://bit.ly/3GpnSIj

Highlighted Supreme Court Judgment

Supreme Court Judgment No. 123/2540

Between                     Company Bo.                    Plaintiff

and                           Revenue Department           Defendant

Subject: Free food welfare for employees

Disputed issue: Is free food welfare that the Plaintiff provided to its employee deemed as other benefits excluding salary received?

Judgment: The Supreme Court held that the provision of free food provided by the Plaintiff to its employees on a mining vessel was deemed to be considered as other benefits provided to the employees in terms of assets excluding the salary received, based on their employment.

Thus, such expense shall be deemed as the employee’s income that is derived from their employment in accordance with Sections 39 and 40 (1) of the Thai Revenue Code.

Hence, the Court decided that the Plaintiff shall be required to collect such expense in order to calculate applicable withholding tax and remit it to the Defendant.

Legal Opinion: I, the author, do not agree with the abovementioned Supreme Court Judgment given that when considering the taxpayer’s financial wealth and other conditions, especially the employee’s working conditions, the Court should consider such issues collectively rather than looking at each issue in isolation.

This case involves special circumstances, given that the employees were working offshore for several days at a time in order to complete their work and as such, the employer could not provide them with transport to the mainland due to the high cost. Therefore, such employees had no option but stay in the accommodation prepared by their employer (onboard the mining vessel) and to consume the food provided by their employer. Hence, the employees in this case had no choice or reasonable alternative with respect to their accommodation and their meals while they were working on the mining vessel.

In terms of the principle regarding the interpretation of the additional benefit, in such a case the employer’s benefit is deemed superior to the employees. Hence, such welfare provided by the employer in this case should not in the writer’s view be deemed as being other benefits that are considered as the employees’ income.

Please note that the above opinion only reflects the author’s personal view. When considering tax law and its application it is necessary to carefully consider the individual facts of each case.
The application of the aforementioned Supreme Court Judgment is made for the purpose of the readers’ better understanding about tax law.

Author: Mr. Napat Wonglimpiyarat

Translator: Ms. Jitrada Suetrakoonwong

Dharmniti Law Office Co., Ltd. (DLO),

Address: No. 2/2 Bhakdi Building, 2nd Floor, Wireless Road, Lumpini Sub-district, Pathumwan District, Bangkok 10330

Tel: 0-2680-9753, 0-2680-9777

Email: Rattawutc@dlo.co.th