Tax Newsletter SEPTEMBER 2015

DLO’S Tax Newsletter

Issue 58 – September 2015

Tax Law Update

–

Tax News

Increase of Deduction Expenses on Researching from Double to Triple

The Deputy Spokesman of the Prime Minister’s Office has issued a statement that the Cabinet of Thailand has agreed to the draft measure for the exemption on juristic company or partnership income tax for expenses relating to  research and development of technology and innovation for government agencies or individuals, such tax deductions shall be triple that of actual expenditure. However, such exemption  must not  exceed the revenue or circulation to be included in the calculation of net profit prior to the deduction of any expenses in the accounting period according to the criteria which will be further determined.

Research and development projects must be examined and certified by agencies prescribed by the Ministry of Finance.

For more details, please visit: http://goo.gl/2Ic3tV

Extension Period of Benefits on Deduction of Expense for Donating to Support Sport Activities

The Deputy Spokesman of Prime Minister’s Office has also issued a statement that the Cabinet of Thailand has agreed to the draft measure relating to tax deductibility for donations supporting sporting activities, such that these donations shall be subject to a tax deduction calculated at double the amount  of the actual expenditure. The purpose of this draft is to extend the original period which will expire on 31 December 2015.

This shall be effective from 1 January 2016 until 31 December 2018.

For more details, please visit: http://goo.gl/8IzWOa

The Draft of Land and Property Tax Act

The Minister of Finance has announced that he has signed and proposed the draft of the Land and Property tax Act to the government. The draft of this new law must be agreed by the Deputy Prime Minister responsible for the Economy prior to being proposed to the Cabinet.

For more details, please visit: https://goo.gl/1OnxQe

Interesting Dika (Supreme Court) Judgments

Court Judgment No. 2936/2558, in re:

Company A                            Plaintiff

Revenue Department           Defendant

Sales of Goods by Export under  Section 70 Ter of the Revenue Code

The Witness of the Plaintiff testified that the Plaintiff’s business was to produce goods in order to export such goods abroad. Sending goods back to Thailand was not beneficial to the Plaintiff because it did not result in revenue to the Plaintiff’s business. Furthermore, sample goods were out of date and the Plaintiff would sell such goods abroad at the market price which could be lower or higher than the cost depending on the specific circumstances. Therefore, this indicated that the Plaintiff had an intention to sell the sample goods abroad and that it had no intention to return the goods back to Thailand from where they emanated.

In addition, the Plaintiff could not bring evidence which are able to specify the kind, category and quantity of such exported goods abroad as well as reports of the goods regarding  sample goods sent abroad and insurance of such sample goods abroad could not be specified whether the quantity of such goods were the same as or had a relationship with the product disputes or not. Furthermore, the Plaintiff could not provide evidence on whether the goods were modern and popular in other countries, and could be used as sample goods while the assessment officials were examining.

In relation to interpreting the law, paragraph 2 (1) of Section 70 Ter of the Revenue Code provides an exemption for tax liability, this must be interpreted strictly. Therefore, sending the goods abroad to agents was not only for the purpose of using such goods  as the sample goods, but given that  the Plaintiff’s intention was to sell such goods to their clients, the Court found that such transaction must be considered as a sale of goods in Thailand according to Paragraph 1 of Section 70 Ter of Revenue Code.

Legal Opinion

With respect to the Supreme court’s decision, the principle of sending goods abroad to agents according to Paragraph 1 of Section 70 Ter of Revenue Code is considered as a sale of goods in Thailand, unless an exemption under (1) – (4) of such Section will apply. Only exemption (1) relates to the subject matter of the court’s decision of whether the goods sent abroad are the sample goods or not. The Supreme Court analyze the Plaintiff’s business and was not convinced that such goods were the sample goods because the Plaintiff had no intention to return the goods back to Thailand. Therefore, if the juristic company or partnership had an intention to send such goods abroad to be used as sample goods, then they must have a confirmation document to clearly prove whether such goods are sample goods and they have no intention to sell such goods. As a result, this case is unable to be considered as involving the sale of goods in Thailand according to the implication of the Supreme Court’s decision.

Furthermore, sending sample goods in accordance with Paragraph 2 (1) of Section 70 Ter is a different matter when compared to  sending goods abroad and returning them back to exporter in Thailand as provided under Paragraph 2 (4) of Section 70 Ter. However, subsection (1) does not consider the range of time of sending and returning such goods, thus, if the facts of the case show that the goods were sent as sample goods and are still existing and such sample goods are not returned back to Thailand within 1 year, it is not considered as the sale of goods in Thailand under Paragraph 2 (1) of Section 70 Ter of the Revenue Code.

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