Tax Newsletter OCTOBER 2023

 Tax Newsletter

Dharmniti Law Office Co., Ltd.

Issue No. 147, in October 2023

Tax Law Updates

     1. The criteria and conditions of income tax, value-added tax, specific business tax and stamp duty exemptions for monetary donations made to educational institutions through the e-Donation payment channel

     The Notification of the Director-General of the Revenue Department (Issue No. 50) sets out the criteria and conditions applicable to the income tax, value-added tax, specific business tax and stamp duty exemption for monetary donations made to educational institutions through the e-Donation payment channel. This tax exemption under this Notification shall be effective from 1 January 2023 through until 31 December 2024.

     For more details, please see https://bitly.ws/Wp38

     2. The criteria, procedures, and conditions relating to a corporate income tax exemption on subsidies received from the government to support electric vehicles

     The Notification of the Director-General of the Revenue Department (Issue No. 436) sets out the criteria, procedures, and conditions which shall apply to a corporate income tax exemption on income received in the form of government subsidies which are to promote the use of electric vehicles (EVs). This Notification stipulates the criteria, procedures, and conditions for companies or juristic partnerships receiving income from such subsidies and exercising the right to income tax exemption under Section 3 of the Royal Decree (Issue No. 773) B.E. 2566. This Notification is effective from 1 January 2023 to 31 December 2024.

     For more details, please see https://bitly.ws/Wp69

     3. Extension of the reduced value-added tax rate

     The Royal Decree Issued under the Thai Revenue Code Governing the Reduction of Rate of Value Added Tax (Issue No. 780) B.E. 2566 has extended the reduced value-added tax rate of 6.3 percent for the sale of goods, provision of services, and importation. This extension is applicable to tax liabilities occurring from 1 October 2017 through until 30 September 2024. This Decree is effective from 1 October 2023.

     For more details, please see https://bitly.ws/WvnL

     4. Payment of income tax in accordance with Section 41 Paragraph 2 of the Thai Revenue Code

     Revenue Department Order No. Por. 161/2566 regarding the payment of income tax in accordance with Section 41 Paragraph 2 of the Thai Revenue Code stipulates that a resident of Thailand who derived assessable income from employment or from business carried on abroad or from a property situated abroad in such tax year and brings such assessable income into Thailand in whichever tax year, shall pay personal income tax on such income in the tax year that the said assessable income is brought into Thailand in accordance with Section 48 of the Thai Revenue Code. This Order became effective for assessable income brought into Thailand from 1 January 2024 onward.

     For more details, please see https://bitly.ws/Wvq5

     5. The criteria, procedures, and conditions applicable to a corporate income tax exemption relating to expenses paid for the employment of ex-convicts

     The Notification of the Director-General of the Revenue Department (Issue No. 437) sets out the criteria, procedures, and conditions which shall apply to a corporate income tax exemption relating to expenses paid for the employment of ex-convicts. This Notification stipulates the criteria, procedures, and conditions of this corporate income tax exemption which shall apply to companies or juristic partnerships with respect to expenses they have paid for the employment of ex-convicts.

     For more details, please see https://bitly.ws/Wvro

     6. The criteria and conditions applicable to an income tax, value-added tax, specific business tax and stamp duty exemption with respect to donations made to support sports through the e-Donation payment channel

     The Notification of the Director-General of the Revenue Department (Issue No. 51) sets out the criteria and conditions of an income tax, value-added tax, specific business tax and stamp duty exemption relating to donations made to support sports through the e-Donation payment channel. This Notification stipulates the criteria and conditions of income tax, value-added tax, specific business tax and stamp duty exemptions relating to donations made to support sports through the e-Donation payment channel in accordance with the Royal Decree Issued under the Thai Revenue Code (Issue No. 772) B.E. 2566, and is effective from 1 January 2023.

     For more details, please see https://bitly.ws/Wvvd

     7. The tax return form for withholding personal income tax

     The Notification of the Director-General of the Revenue Department (Issue No. 438) relates to the tax return form to be used for withholding personal income tax. This Notification also stipulates the form to be used for withholding personal income tax returns. This Notification is effective from 21 September 2023.

     For more details, please see https://bitly.ws/Wvwd

Tax News Updates

     1. Extension of value-added tax reduction

     On 13 September 2023, the Cabinet passed a resolution approving the draft Royal Decree issued under the Revenue Code Regarding Reduction of Value Added Tax (Issue No. …) B.E. … (Extension of value-added tax reduction), as proposed by Ministry of Finance. The draft Decree provided for an extension of the value-added tax reduction for another year. Thus, value-added tax will remain at the rate of 6.3% (excluding local taxes) or at the rate of 7% (including local taxes) for the sale of goods, provision of services, and importation from 1 October 2023 through until 30 September 2024.

     For more details, please see https://bitly.ws/WvzQ

     2. The reduction of excise tax rates for diesel fuel and other similar fuels

     On 13 September 2023, the Cabinet passed a resolution approving the draft Ministerial Regulations Prescribing Excise Tariffs (Issue No. …) B.E. …, as proposed by Ministry of Finance. The draft Regulation stipulates a reduction in excise tax rates for diesel fuel and other similar fuels under excise tax type no. 01.05, diesel fuel with sulfur and diesel fuel with methyl ester biodiesel mixed with fatty acids item, as prescribed in the Excise Tariff Schedule. This regulation shall be effective from 20 September 2023 through until 31 December 2024.

     For more details, please see https://bitly.ws/WvzQ

Highlighted Supreme Court Judgment

Supreme Court Judgment No. 2095/2543

Between            Body of persons Kor-Mor represented by Mr. Kor as the manager of the body            Plaintiff

and             Revenue Department                                                                                   Defendant

Subject:            Filing a lawsuit on behalf of a body of persons

Disputed issue:  Is a non-juristic body of persons (in accordance with Section 39 of the Thai Revenue Code) to be considered as a legal person/entity entitled to institute a lawsuit with the Court?

Abbreviated judgment: The Court noted that the Plaintiff had filed a motion to amend the complaint, claiming that Mr. Kor acted as the Plaintiff’s manager. The Court found that Mr. Kor had filed the lawsuit in his personal capacity and that he also acted as the attorney for Ms. Mor when initiating this lawsuit.

     The Supreme Court found that the purpose of amending the Plaintiff’s complaint was to add more names under the Plaintiff, which the Court noted must be clearly specified in accordance with Section 67 of the Civil Procedure Code. The Court held that adding additional plaintiffs to the original complaint would be considered as an increase in the number of the plaintiffs rather than an amendment to the complaint under the aforementioned legal principles. Therefore, the Supreme Court held that any order permitting the Plaintiff to amend the complaint as per its request would not be legally permissible and have no legal effect.

     Furthermore, according to the Plaintiff’s complaint, the Plaintiff was identified as a body of persons defined as a group or association of individuals taxed as a single entity under the Thai Revenue Code, without any legal entity status under Thai law. Therefore, the Court held that the Plaintiff was not to be considered as a natural person or as a juristic person, hence it lacked the legal capacity to participate as a party in this case. Thus, the Court ruled that the Plaintiff had no authority to institute a lawsuit.

Legal opinion: I, the author agree with the abovementioned Supreme Court Judgment due to the following reasons set out below.

     The primary issue is whether the proposed amendments to the Plaintiff’s complaint were in compliance with the law. The Plaintiff is permitted to amend the complaint if it complies with the provisions of Section 179 of the Civil Procedure Code, which allows for amendments to the charges or allegations, including altering the originally stated amount of capital or property value in a dispute, waiving certain allegations, or adding additional details to supplement the original complaint. Consequently, the Plaintiff’s proposed amendment, which only added the Plaintiff’s name, does not align with the aforementioned legal provision. Thus, this is one reason why I agree with the Supreme Court’s judgment.

     The second issue concerns the Plaintiff’s authority to institute a lawsuit. Section 1(11) of the Civil Procedure Code prescribes that “parties” means a person who may file a suit or be sued in Court. Additionally, the definition of “person” under the Civil and Commercial Law includes both natural persons and juristic persons. However, the body of persons known as ‘Kor-Mor’ is merely a tax entity established under the Thai Revenue Code for the purpose of paying income tax as if it were a single natural person. Therefore, given that the Plaintiff does not qualify as either a natural person or a juristic person and lacks the capacity to sue as a party in this case, the Plaintiff has no authority to institute a lawsuit.

     However, a body of persons is a tax unit that refers to a group of two or more persons who agree to unite for a common undertaking, but not as an ordinary partnership. If such a group wishes to dispute an assessment and appeal against the decision of an official by filing a complaint, they can do so by having all their members jointly participate. Each member would act as a Plaintiff in sequence in the lawsuit, or otherwise the members of the body of persons can authorize a manager of the body to file the lawsuit on their behalf in their personal capacity or as an authorized attorney. However, it is crucial not to file the lawsuit on behalf of the body itself, as it does not have the necessary legal status to do so.

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 with respect to Thai tax law.

Author: Ms. Munja Boonchuay

Translator: Ms. Nutthanicha Sricharoenvanichakul

Dharmniti Law Office Co., Ltd. (DLO)

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