Mazars Thailand Tax Breaks - Mazars - Thailand

The long drawn out court case over the alleged tax evasion on the sale of shares from Thaksin’s wife (Khunying Potjaman Shinawatra) to her step-brother (Bannapot Damapong) has resulted in a number of interesting issues that should be of concern to corporate tax payers.

Please note that, you are required to hold the Annual General Shareholders’ Meeting for your company within 4 months of year end. Please be reminded that now the notice for summoning the shareholders’ meeting must be sent by registered mail and published in a local newspaper.

Every company has to file an annual tax return within 150 days from the date of the accounting year end. Therefore, for companies with accounting period end on 31 December 2008, the company has to prepare and file the annual tax return by 30 May 2009. However many companies end up paying significant penalties and surcharges for errors made on their annual tax return.

For debt restructuring of Non-Performing Loans (‘NPL’) during the period 1 January 2009 to 31 December 2009, NPL debtors will be exempt from income tax for the debt released by the financial institution or other creditors, provided certain complying conditions imposed by the Bank of Thailand are met.

Further to recommendations put forward by its Legal Consultative Committee, the Department of Business Development (Ministry of Commerce) last month announced the following procedural changes to the rules regarding Directors’ Board Meetings, such changes having immediate effect:
1) Company directors are no longer permitted to appoint proxies to attend, and vote in, board meetings on their behalf;
2) The adoption of circular resolutions without holding a directors’ meeting is no longer permitted.

Effective from 7 August 2008, depreciation on computer software may be claimed as a tax deduction over 3 accounting periods. Smaller to medium sized companies (with fixed assets of not more than Baht 200m and that employ no more than 200 employees) will even be entitled to a faster write-off including an upfront deduction of 40% and the balance written off over 3 accounting periods commencing from the date of acquisition.

There are a number of changes to company law requirements as from 1 July which in the main will help companies and cut down bureaucracy, although there is one baffling change in the opposite direction.

The Tax Stimulation Package, recently announced in respect of 2008, has lifted the personal income tax zero tax band from Bt 100,000 to Bt 150,000. Otherwise the taxation bands remain the same starting with the 10% band for the next Bt 350,000 of income with the top rate of 37% kicking in after a further Bt 3.5 m of income in total. Combined with the standard allowance of Bt 60,000 per annum and a few other allowance entitlements, most people will now have to earn more than Bt 20,000 per month before they pay tax. Maximum benefit to individuals from the changes is only Bt 18,500!

Effective from 7 August 2008, depreciation on computer software may be claimed as a tax deduction over 3 accounting periods. Smaller to medium sized companies (with fixed assets of not more than Baht 200m and that employ no more than 200 employees) will even be entitled to a faster write-off including an upfront deduction of 40% and the balance written off over 3 accounting periods commencing from the date of acquisition.

The Tax Stimulation Package, recently announced in respect of 2008, has lifted the personal income tax zero tax band from Bt 100,000 to Bt 150,000. Otherwise the taxation bands remain the same starting with the 10% band for the next Bt 350,000 of income with the top rate of 37% kicking in after a further Bt 3.5 m of income in total. Combined with the standard allowance of Bt 60,000 per annum and a few other allowance entitlements, most people will now have to earn more than Bt 20,000 per month before they pay tax. Maximum benefit to individuals from the changes is only Bt 18,500!!

Major amendments to the Civil and Commercial Code were published in the Government Gazette on 3 March 2008, and will be effective 1 July 2008. These measures include a reduction from 7 persons to 3 in respect of the minimum number of shareholders required for incorporation of a private limited company as well as a reduction in the time required for the incorporation process to just 1 day if certain conditions are met. The reduction in the number of minimum shareholders required will apply to both newly incorporated entities and existing companies.

Modern technology has progressed at such a rapid pace that electronic commerce has now emerged as a major tax issue and one that the Tax Authorities have not fully come to grips with. Because of internet technology, a non-resident person can be in one place and conduct business in cyberspace thus effectively deriving income in another country without the need to establish a physical presence there. The question arises as to how such a person would be taxed.

SCI Double Impact Ltd. and SCI Audit Plus Ltd. have together become the first accounting firm in Thailand to fully integrate into an international partnership: Mazars.

In March 2008, the Cabinet approved a tax stimulus package proposed by the Ministry of Finance. The package effectively includes a reduction in personal taxes, lower corporate tax for certain entities and a reduction in property taxes.