Additional deduction for the employment of ex-convicts

On 8 November 2021, the Government published Royal Decree No. 726 in the Government Gazette to extend the period for tax benefits provided for the employment of ex-convicts, which ended on 31 December 2020, for another year to continue promoting and supporting companies or legal partnerships that employ ex-convicts for a period of time.

Keywords: Mazars, Thailand, Tax, Employment, Royal Decree, Ex-convicts, Revenue Department, Corporate income tax

17 December 2021

We set below the key points of this law.

1. The ex-convicts under this law are defined as prisoners under the law on corrections who are of Thai nationality and who were released from prison after serving their sentences, had their jail terms suspended after being in jail, or had their jail terms reduced.

2. Companies or legal partnerships can claim a tax deduction of 1.5 times (1 time as a normal deduction and 0.5 times as an additional deduction) the amount actually paid to employ the above ex-convicts. However, the amount claimed for the additional deduction shall not exceed THB 15,000 per person per month.

3. To qualify for the additional deduction, the ex-convicts to be employed under this law must have been released from prison not more than 3 years before. 

4. Companies or legal partnerships that claim the additional deduction must also comply with the following rules and conditions:

  • must submit a withholding payroll tax return (“Form PND. 1”) via the Revenue Department’s e-filing system by the deadline prescribed under the Revenue Code from the first month that such ex-convicts are employed until the last month of the accounting period in which the additional deduction is claimed; and
  • must not claim an income tax exemption, whether in whole or in part, in relation to expenses for the employment of ex-convicts under other Royal Decrees issued under the Revenue Code.

5. The additional deduction under this Royal Decree shall be available for the accounting period which starts on or after 1 January 2021, and no later than 31 December 2021.

6. Rules, procedures, and conditions prescribed by the Director-General of the Revenue Department must be complied with.

7. If a company or legal partnership has claimed an additional deduction under this Royal Decree and subsequently fails to comply with the prescribed rules, procedures, and conditions, the right to claim the additional deduction under this Royal Decree shall be terminated. Consequently, the company or legal partnership must include the amount of the additional deduction already claimed as its income in its net profits for corporate income tax purposes in the accounting period in which the additional deduction was claimed.