Measure to encourage individuals

In our tax article for August 2016, we noted that the government had put together a proposal to encourage individuals who conduct business to register a company or legal partnership.

Keywords: Mazars, Thailand, Tax, VAT, PIT

08 March 2017

Such a proposal has finally become law. We set below the key points of this law:

1. There will be an exemption from personal income tax, value-added tax, specific business tax, and stamp duty on the transfer of an individual’s property to the company or legal partnership registered under Thai law, the execution of an instrument related to such a transfer, and the sale of goods by an individual to such a company or legal partnership.

To be entitled to such tax exemptions, the individual transferor must receive common shares in the company or legal partnership as a compensation for the transfer. Also, the transfer must be made during the period from 10 August 2016 to 31 December 2017, and in compliance with a notification of the Director-General of Revenue (to be announced later).

2. Expenses incurred for registering the company or legal partnership, and expenses incurred for accounting and auditing, can be additionally deducted for corporate income tax purposes at the rate of 100% of the amount incurred over 5 consecutive accounting periods, starting from the period in which the company or legal partnership is registered. 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 within an accounting period must be THB 30 million or less, subject to certain rules and conditions under a notification of the Director-General of Revenue (to be announced later).

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