Tax Newsletter NOVEMBER 2015

DLO’S Tax Newsletter

Issue 60 – November 2015

Tax Law Update

To Specify Some Type of Income not to be Included in Tax Calculation

The Minister of Finance has issued Ministerial Regulation No. 308 (B.E. 2558) which specifies that the following assessable types of income are not to be included in calculating taxable income: .

1. Benefits that officials receive from their pensions due to them requesting to return to apply their right according to the pension law.

2. Extra monies that the pensioner gains from the Comptroller General’s Department due to them requesting to return to apply for the right according to the pension law.

This Ministerial Regulation will apply for assessable income from 2015.

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

The Explanation of Criteria for filing Por. Ngor. Dor. 2 and Por. Ngor. Dor. 2 Khor.

The Director – General of the Revenue Department has issued two Notifications regarding Income Tax (No. 255) and (No. 260) to prescribe guidelines for filing forms Por. Ngor. Dor. 2 and Por. Ngor. Dor. 2 Khor. regarding withholding tax for personal income and extending  the time limit for taxpayers that filled in forms Por. Ngor. Dor. 2 and Por. Ngor. Dor. 2 Khor incorrectly until the tax month of June 2016 and the tax year of 2016, respectively.

In order to clarify matters the Revenue Department has issued the following additional explanation:

1. Filing Por. Ngor. Dor. 2

     1.1  For the tax month of July 2015 and thereafter, taxpayers can file using one of the following methods:

          (1)   Filing Por. Ngor. Dor. 2 can be done in paper format together with the list of withholding tax provided on recordable media in a computer system.

          (2)   Filing Por. Ngor. Dor. 2 can be done using Software Component (SWC) and sending the details of withholding tax (by the person responsible  to file Por. Ngor. Dor. 2), to the online mainframe of the Revenue Department through the internet and then printing it out from the system and filing it to the Revenue Department Branch Area without needing to attach recordable media.

          (3)   Filing of the form on the internet through the Revenue Department’s website.

     1.2  If a person who has responsibility to file form Por. Ngor. Dor. 2 but cannot do so according to (1) (2) or (3) as mentioned above within the  specified time, then they can use one of the following methods:

          (1)   If all filing is done in paper format, then such person is permitted to continue to file using  paper format.

          (2)   In case of previously filing in paper format using 1 sheet and filing it on recordable media in a computer system then the filer can continue to use such method. .

     However, this exception regarding filing applies only to filing from July 2015 until June 2016.

2. Filing Por. Ngor. Dor. 2 Khor.

     2.1  For the tax year of 2015 and thereafter, taxpayers can file this form using one of the following methods:

          (1)   Filing Por. Ngor. Dor. 2 Khor. can be done in paper format together with the list of withholding tax on recordable media in a computer system to the Revenue Department’s Branch Area.

          (2)   Filing Por. Ngor. Dor. 2 Khor. can be done  using Software Component (SWC) and sending the details of withholding tax ( by the person responsible to file Por. Ngor. Dor. 2 Khor) to the mainframe of the Revenue Department through the internet and then printing it out from the system and filing it to the Revenue Department’s Branch Area without the need to attach recordable media.

     2.2  For a person who has responsibility to file Por. Ngor. Dor. 2 Khor. but cannot do so according to (1) or (2) as mentioned above within the specified timeframe, they can use one of the following methods:

          (1)   If all filing is done in paper format then the person is permitted to continue file in paper format.

          (2)   In case of previously filing in paper format using 1 sheet and filing on recordable media in a computer system then the person can continue to use such method.

     This exception only applies to filings from  July 2015 until June 2016.

For more details, please visit: http://goo.gl/Cuok1C

Tax News

Reducing Corporate Income Tax Permanently

The Cabinet of Thailand has agreed to the draft of an Act Amending the Revenue Code which will permanently reduce corporate income tax from 30 percent of net profit to instead be 20 percent of net profit commencing from January 1, 2016.

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

Fiscal stimulus measures for the property sector

The Cabinet of Thailand has agreed to the following fiscal measures in order to stimulate the property sector:

1. The registration of transfer fee and the registration of mortgaged property which was previously 2 percent and 1 percent respectively has been reduced to 0.01 percent only for the property that is considered as being a building (detached house, twin house, town house, commercial building) but will not apply to land allocation law (i.e. land) according to the law of Thailand.

2. Exempting personal income tax on income paid for purchasing a building with land or a unit in a condominium, which does not exceed a price of 3 million Baht and is used as a residence, by 20 percent of the property’s price according to the following conditions:

2.1 To use the right of exemption on personal income tax, it must be spread over 5 continuous years commencing from the tax year that the process of registration of transfer occurs and the use of this right must be equal in each tax year (i.e. annual personal income tax deduction = 20% of property price / 5 (i.e. 5 years).

2.2 The property purchase and registration of transfer must occur between 13 October 2015 and 31 December 2016.

2.3 The new owner of the property must continuously own the property for at least 5 years from the date of transfer..

2.4 The new owner must never have had their name appear on the title to any other real property (i.e. title deed).

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

The Exemption on Business Tax for Revenue from total Money of Management of IHQ

The Cabinet of Thailand has agreed to exempt business tax in relation to revenue derived from management funds of an IHQ from giving loans to affiliated enterprises that relates to money management. This exemption has been effective since 2 May 2015.

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

Tax Benefits for donations to  Culture and Learning Development

The Cabinet of Thailand has agreed to give tax benefits to donors to culture and learning development who donate to the secure and inventive media development fund, the benefits are as follows:

1. Individual Taxpayers – can make a deduction as an allowance, in such case the deduction shall be double the actual amount donated, subject to the condition that  when it includes expenses on supporting education according to the Royal Decree (No. 420) B.E. 2547  it cannot exceed 10 percent of the taxpayers assessable income after deducting other expenses and allowances.

2. Corporations and Juristic Persons – can deduct double the amount money or asset donated subject to the condition that when it includes expenses on supporting education according to the Royal Decree (No. 420) B.E. 2547, the sum cannot exceed 10 percent of net profit before deducting expenses on public charity or commonwealth and expenses on education or sport according to section 65 Ter (3) of the Revenue Code.

For more details, please visit: http://goo.gl/2X4Y87

Taxation policy for new Start-up Company

The Cabinet of Thailand has agreed to a draft of a decree to exempt corporate income tax for new start up company for 5 accounting periods according to the following conditions:

1.  New company to be registered from 1^st October 2015 to 31^st December 2016; must have the capital registration not exceeding 5 million Baht

2. New company must operate a business in a new growth industry which registered and approved by the Office of SMEs Promotion (OSMEP), including:

2.1 Technology and industrial innovation;

2.2 Agricultural and industrial processing;

2.3 Research and industrial development;

3. Income must be derived from goods and services under 2. which must not be less than 80 percent of the income derived from the business in each accounting period.

4. New Company cannot use all or some parts of the right to exempt corporate income tax from the BOI if the applicable conditions are not fully complied with in the five accounting periods,

For more details, please visit: http://goo.gl/2X4Y87

Interesting Dika (Supreme Court) Judgments

Dika (Supreme) Court Judgment No. 16023/2557, in re:

Rules of issuing a credit note

Company S                              Plaintiff

The Revenue Department      Defendant

The plaintiff claimed that it had made a deal to sell component parts of automobiles to a buyer and set a price by using the cost plus method. However, the plaintiff and the Buyer had no documentary  evidence to show that the plaintiff and the buyer had reached such a deal. The plaintiff failed to prove that the factors about material price, machine cost, labour cost, and production timing for those components were the reason that caused the plaintiff to miscalculate the components price thereby resulting in a price higher than the actual price in accordance with Section 82/10 (1) of the Revenue Code. Therefore, the excuse of a issuing a credit note to decrease the components price from such miscalculation is not acceptable. Therefore, the plaintiff had no legal right to issue such credit note.

Legal Opinion

In this case, the plaintiff tried to claim that they have the right to issue a credit note because of the miscalculation of the price in accordance with  Section 82/10 (1) of the Revenue Code. However, the plaintiff had no evidence to support their excuses concerning how they had miscalculated. Thus, the credit note that was issued by the plaintiff did not comply with Section 82/10 (1) of the Revenue Code and as such was found to be unacceptable.

However, a VAT registrant that has sold goods or provided a service can issue a credit note for the following reasons (specified below) if it is in compliance with section 82/10 of the Revenue Code and the Notification regarding Value Added Tax (No. 82).

1. A decrease in the price of goods because of the goods not being as agreed, goods being damaged, missing stock, miscalculation of price of goods resulting in a higher pricethan the actual price;

2. A decrease in the service fees because the services were not as agreed, shortage of services, miscalculation of service fees resulting in a price higher than the actual agreed price;

3. Received goods returned because of damage, goods different from samples or description;

4. Termination of service contract according to causes and conditions as prescribed by the Director – General of the Revenue Department;

5. A VAT registrant has to pay compensation (or similar kinds of monies) to the buyer or the service receivers in accordance with the law (i.e. by judgment or court order);

6. A VAT registrant returns an advance payment, security money, earnest money, reservation money or similar types of money to the buyer or service receiver that are legally required by a trade agreement;

7. Return of goods or exchange of goods arising from a trade agreement between VAT registrants;

8. Return of goods or exchange of goods arising from a trade agreement between a VAT registrant and a buyer within a reasonable period of time;

9. Defective service or faulty terms of service;

10. No service arising from an agreement.

In accordance with the above, there are 10 reasons justifying the issuance of a credit note. If aVAT registrants issues a credit note for another reason, it shall not be considered as a credit note that has been issued in compliance with  the Revenue Code which in turn will cause the VAT registrant to have no right to deduct the decreased output tax from goods or services to input tax.

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