Measure to encourage individuals

In the Cabinet meeting on 9 August 2016, the Cabinet agreed on and approved proposals made by the Ministry of Finance to encourage individuals who conduct business to register a company or legal partnership.

Keywords: Mazars, Thailand, Tax, Ministry of Finance, Revenue Code, VAT, CIT

30 August 2016

We set below the key points as a result of such a measure:

  • There will be an exemption from personal income tax, value-added tax, specific business tax, and stamp duty on the transfer of the individual’s movable and immovable property to the company or legal partnership, if the transfer is made during the period from 10 August 2016 to 31 December 2017.
  • Expenses incurred for registering the company or legal partnership, and expenses incurred for accounting and auditing, can be deductible for corporate income tax purposes at the rate of 200% of the amount incurred over 5 accounting periods. This shall apply to a company or legal partnership registered during the period from 10 August 2016 to 31 December 2017, where the paid-up capital at the end of an accounting period is THB 5 million or less. In addition, income from the sale of goods and provision of services must be THB 30 million or less.
  • For income under Sections 40 (7) [income derived from a contract for work, whereby the contractor provides essential materials besides tools] and 40 (8) [income derived from business that requires intensive investment] of the Revenue Code, for which expenses are currently deductible on a lump-sum basis and the amount deductible may be more than 60% of such income, deductible expenses will, in future, be reduced to 60% of income. This will apply from the 2017 tax year onwards.
  • The registration fee for the transfer of immovable property (including a condominium unit) from an individual to a company or legal partnership, to pay up the capital of the newly established legal entity, will be reduced from 2% to 0.01%. 
  • It will be possible to transfer a business licence from an individual to a newly established company or legal partnership. 

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