One of the drawbacks of the second Regional Operating Headquarter (‘ROH’) regime announced in 2010 was that if the company was unable to meet the specified conditions in any particular year, the Revenue Department would retrospectively cancel the tax privileges from year 1. Some of these criteria included maintaining a minimum level of operating expenses and/or capital expenditure per year as well as maintaining a minimum level of skilled workers in the company.
Keywords: Tax, Thailand, ROH, Revenue Department
Royal Decree No. 535 now introduces new concessional rules that will not substantially punish the taxpayer through legislation that previously would have cancelled all tax benefits retrospectively from year 1 (resulting in taxes foregone needed to be paid back along with possible penalties and surcharges).
The new rules apply to the ROH business that fails to comply with any of the following requirements:
- Having operating expenses paid to recipients in Thailand in an amount not less than Baht 15 million for each accounting period (but not including the depletion of assets, operating costs paid abroad, raw material costs, goodwill, copyright or annex rights, accessory expenses, packaging costs) or Capital expenditure in accordance with Section 65 ter (5) of the Revenue Code which is paid to recipients in Thailand in an amount not less than Baht 30 million in each accounting period (but not including any equity investment cost in those companies operating under the Securities and Exchange laws);
- The exemption of corporate income tax on service income received from associated offshore enterprises or branches of an ROH.
- The exemption of corporate income tax on dividend income received from associated enterprises of ROH.