Amendment of debt thresholds for writing off bad debts

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Debt thresholds for writing off bad debts

The Cabinet recently approved the draft Ministerial Regulation to amend the debt thresholds required for compliance with the conditions of writing off bad debt under Ministerial Regulation No. 186 (M.R. 186).

Keywords: Mazars, Thailand, Tax, Ministerial Regulation, Bad debt write-off, Bank of Thailand

15 March 2021

The amendments under the draft Ministerial Regulation compared with M.R. 186 are presented below.

Related clause under M.R. 186

Debt threshold

Required action

Current

New (draft)

Clause 4

Exceeding 500,000 baht

Exceeding 2,000,000 baht

  • Follow up on demand for debt repayment as appropriate with clear evidence on demand being issued but no payment received.
  • Bring a civil action to court against the debtor or enter into a petition for sharing the proceeds in an action already brought against them by another creditor. In either case a court injunction or order has been issued, and it was reported under the first execution of the enforcement officer that the case has been executed but the debtor has no property to pay the debt; or
  • Bring a bankruptcy action to court against the debtor or enter into a petition for debt settlement in a bankruptcy action already brought against them by another creditor. In either case a compromise has been reached with the debtor and approved by the court, or the debtor has been adjudged bankrupt and the first lot of their properties has been shared out.

Clause 5

Not exceeding 500,000 baht

Not exceeding 2,000,000 baht

  • As per clause 4.
  • Bring a civil action to court against the debtor and the court has by order accepted the complaint, or enter into a petition for sharing the proceeds in an action already brought against them by another creditor and the court has by order accepted the petition; or
  • Bring a bankruptcy action to court against the debtor and the court has by order accepted the complaint, or enter into a petition for debt settlement in a bankruptcy action already brought against them by another creditor or in the case that the liquidator requests the court to judge the debtor as a bankrupt and the court has by order accepted the petition.

Clause 6

Not exceeding 100,000 baht

Not exceeding 200,000 baht

  • Demands for payment have been made to the extent suitable to the case but the debt has not been paid and the expenses of a court action against the debtor would not be commensurate with the amount expected to be recovered.

In addition, the draft Ministerial Regulation sets the criteria for financial institutions to write off bad debts from debtors with respect to loans that are fully reserved at 100 percent in accordance with the rules specified by the Bank of Thailand and have any of the following characteristics:

  • the loan principal or interest has been outstanding for an aggregate period of not less than 360 days or 12 months; or
  • the debtor meets the criteria for asset write-off as specified by the Bank of Thailand.

The draft Ministerial Regulation shall apply to the write-off of bad debts for accounting periods beginning on or after 1 January 2020 onwards.

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