Tax Newsletter JULY 2015

DLO’S Tax Newsletter

Issue 56 – July 2015

Tax Law Update

Giving the Right of Tax Reduction in Special Economic Zone

Royal Decree (No. 584) B.E. 2558 has been issued, it provided a privilege on tax for an ordinary person or a juristic person who earns income from the sale of goods, providing services including the sale of property in Special Economic Zone occurred only from 2015 to 2017.

The Director – General of the Revenue Department has issued the Notification of the Director of Revenue Department regarding to Income Tax (No. 254) which prescribes the guidelines and conditions on whether such persons as mentioned above are entitled to such privileges. To do so they need  to inform and submit the required documents in the prescribed form within 60 days from the first day of the tax year or the first day of the accounting period. However, for taxable year 2015, this process has to be done within 60 day from the date of this Notification appearing in the Government Gazette.

This Royal Decree has been effective since 1 January 2015.

For more details, please visit: http://goo.gl/S9M0r4

Filing Personal Income Tax Return on Withholding Tax

The  Director-General of the Revenue Department has issued the Notification regarding Income Tax (No. 255) which prescribes  guidelines for filing personal income tax returns on withholding tax as follows:

1. Por. Ngor. Dor. 1, Por. Ngor. Dor. 1 Kor, Por. Ngor. Dor. 1 Kor Special, Por. Ngor. Dor. 3 and Por. Ngor. Dor. 3 Kor forms are to be used according to the orders of the Revenue Department,  unless the Director-General determines otherwise; such forms may be submitted on recordable media in a computer system or on other electronic data which has the minimum details as are prescribed under this Notification, without the need for proposing this to the Director-General of the Revenue Department.
2. Forms Por. Ngor. Dor 2 and Por. Ngor. Dor 2 Kor formats must be submitted on recordable media in a computer system or other electronic data which meets the minimum details as prescribed under this Notification, unless the Director-General determines otherwise. Furthermore, form Por. Ngor. Dor. 2  is to be used for submission from July 2015 and form Por. Ngor. Dor. 2 Kor is to be used for submission in taxable year 2015, and thereafter.

Persons liable to deduct withholding tax who have already submitted the form on recordable media in a computer system in accordance with the former format, which has been requested by such person and allowed by the Director-General of the Revenue Department, can continue to  use this approach. However,the previous version of form Por Ngor. Dor. 2 can only use the former format from July 2015 until December  2015 and form Por. Ngor. Dor. 2 Kor can use the former form format only in taxable year  2015. This Notification has been effective since 24 June, 2015.

In addition, the Revenue Department has issued a statement of clarification regarding to the methods of filing Por. Ngor. Dor. 2 and Por. Ngor. Dor. 2 Kor. Persons liable to deduct withholding tax can submit form Por. Ngor. Dor. 2 in paper form together with recordable media in a computer system indicating withholding tax lists or through an application service in the form of a software package or through the internet network system. These methods shall be effective from July 2015. However, if a person is liable for submitting form Por. Ngor. Dor. 2 they cannot submit it in accordance with such method, but must  instead submit it in paper format and can only submit it between July and August 2015.

While form Por. Ngor. Dor. 2 Kor may be submitted in paper form together with recordable media in a computer system that indicates the withholding tax lists or through an application service in the form of software package. These methods shall be effective in taxable year 2015. However, these methods must comply with the statement of clarification issued by the Revenue Department.

For more details, please visit: http://goo.gl/D4XznE and http://goo.gl/1xPJw8

Amendment for filing Por. Ngor.Dor 53 on Record Media in Computer System or Electronic Information

According to the Notification of the Director-General of the Revenue Department regarding Income Tax (No. 16), it prescribes that a person liable to deduct withholding tax for a company or an ordinary partnership is required to file it on recordable media in a computer system,  they must then handover their requests to the Director – General of the Revenue Department.

However, the Notification of the Director of Revenue Department concerning Income Tax (No. 256) has amended the Notification above by providing  that if a person is liable to deduct withholding tax they are required to submit form Por. Ngor. Dor 53 through recordable media in a computer system or other electronic data which meets the minimum requirements as prescribed under this Notification. Furthermore, they can submit form Por. Ngor. Dor. 53 without the need to make a proposal to the Director-General of the Revenue Department.

This Notification was effective on 24 June 2015.

For more details, please visit: http://goo.gl/cu9GDD

Tax News

Increasing Personal Allowance and Child Allowance

The Director-General of the Revenue Department has announced  that the Revenue Department is  proposing to  amend the law in order to increase certain tax benefits. The proposed changes are as follows:

1. Personal allowance, which is currently 40% of personal income but not exceeding 60,000 Baht, is proposed to be increased to 40% of personal income but not exceeding 120,000 Baht.
2. Child allowance is currently set at 17,000 Baht per child who is educated in Thailand or 15,000 Baht for those children educated abroad with  the maximum number of children able to be claimed for being capped at  2. This allowance  is proposed to be changed by removing the cap on the number of children that can be claimed as well as increasing the allowance to instead be 30,000 Baht per child.

For more details, please visit: http://goo.gl/gCYLJU

Note: DLO is of the opinion that the statements on the above proposed changes relating to child allowance that appeared on the news are inaccurate given that section 47 of the Revenue Code, provides that the right to the child allowance deduction is capped at 3 children rather than 2 as stated in the news.

Interesting Dika (Supreme Court) Judgments

Dika (Supreme) Court Judgment No. 13721/2557, in re:

Right to Cancel a Fraudulent Juristic Act

Revenue Department                                               Plaintiff

Company K and et al.                                               Defendants

Withdraw a fraud

According to Section 67 Bis and Section 68, the 1^st defendant who is a juristic person is required  file a tax return together with their first tax payment within 2 months from the last day of a six month period from the first day of an accounting period with the  second tax payment due within 150 days from the last day of an accounting period.

Although, the plaintiff’s officer issued a notice of assessment to the 1^st defendant after the mentioned day, it was held by the Court that the 1^st defendant was the plaintiff’s debtor from the day that the 1^st defendant had the duty to file a tax return together with the tax payment according to the meaning in the Revenue code and Section 237 of the Civil and Commercial Code. Hence, the Court found that the duty didn’t arise from the day that the plaintiff received their notice of assessment.

After the 1^st defendant incorrectly filed their tax return together with their tax payment, the 1^st defendant registered a decrease in the registered capital of the company and returned the money  to the 3^rd – 11^th defendants. The Court found that  this was a one-sided act which was prejudicial and  disadvantageous to the plaintiff. Therefore, the Court found that the plaintiff was entitled to claim the cancellation of the capital decrease. In addition to the change in capital, the 1^st defendant  also sold immoveable property to the 2^nd, 16^th and 17^th defendants in order to disadvantage the plaintiff and the 2^nd, 16^th and 17^th defendants were aware that such transaction would  disadvantage the plaintiff. Hence, the Court found that the plaintiff was entitled to claim the cancellation of this transaction too.

The rejection letter relating to  the deferral of tax payment that was issued to the 1^st defendant as well as the memorandum of the plaintiff’s officer –failed to show the fact that the 1^st defendant had undertaken juristic acts that were designed to disadvantage the plaintiff. The Court found  that the plaintiff was aware of  the disadvantage arising from the juristic acts. Therefore, given the date of the rejection letter and the memorandum exceeds a year, the Court found case was not precluded by prescription (within the lawful timeframe for bringing the lawsuit).

Legal Opinion

The Court had to consider whether  the plaintiff’s fraud could  abrogate the  decrease of the registered capital of the  company as well as the selling of the immoveable property. According to Section 237 of the Civil and Commercial Code, it prescribes the following conditions:

1. The persons who can claim a cancellation must be a creditor;

2. The juristic act must be done by the debtor with the knowledge that such act  would prejudice their creditor. However,  in the case of a gratuitous act, the knowledge on the part of the debtor alone is sufficient.

The Court considered the issue of when the obligation of the creditor and debtor began. It determined that the obligation of the debtor of the 1^st defendant began from the day that the 1^st defendant had the duty to file a tax return together with tax payment by the prescribed date of the Revenue Code. DLO agrees with this judgment because of  the surcharge as specified in Section 27 of the Revenue Code as it prescribes that; if a tax payer fails to pay tax or incorrectly pays tax, then they shall be liable to pay a surcharge of 1.5% per month or part thereof, with such surcharge calculated from the day after the last day for filing the tax return until the actual date of tax payment. This section clearly shows that a tax payer is  required to correctly file a tax return together with their tax payment from the due date. If a tax payer fails to comply with such rules they shall be in debt to the Revenue Department from the due date. Therefore the right of claim by the government in relation to tax arrears arises from the due date rather than from the day that the Revenue Department officer had noted the tax payers assessment (compare with Dika (Supreme) Court Judgment No. 1821/2548).

The 1^st defendant had decreased the registered capital in the company and had sold immoveable property after the date that the 1^st defendant became the plaintiff’s debtor, Furthermore these acts disadvantaged the plaintiff and the defendant was aware of the disadvantage these acts posed to the plaintiff. Thus, the Court found that the plaintiff was legally entitled to claim the cancellation of both of these juristic actions.

Mr. Taradol Chantarasap
Lawyer

Should you require any legal advice on tax in the workplace then please contact us at Dharmniti Law Office Co., Ltd. 2/2 Bhakdi Building 2^nd Floor, Witthayu Road, Lumphini, Pathumwan, Bangkok, Tel : (66) 2680 9751, (66) 2680 9753 Email: budhimak@dlo.co.th or sureelukt@dlo.co.th