In our tax article for February 2017, we noted that the government issued a law which exempts the transfer of an individual’s property to a company or legal partnership, and the sale of goods by that individual to such a company or partnership, from various taxes.
Keywords: Mazars, Thailand, Tax, Revenue Department, Legal Partnership
04 May 2017
In March 2017, the Thai Revenue Department issued Notification of the Director-General of the Revenue Department No. 4 which sets out the rules for those tax exemptions. We set below the key points of this law:
1. Only an individual will be entitled to the exemptions. In other words, the exemptions are not available to an ordinary partnership or a body of persons.
2. The property must be transferred at market value to a company or legal partnership that is registered for incorporation from 10 August 2016 through 31 December 2017. The transferred property must be used as the registered capital of the company or legal partnership.
3. The transferor must hold shares in the transferee. The value of shares held must not be less than the value of the transferred property.
4. The shares mentioned in point 3 above must not be transferred at a value below book value.
5. In regard to the transfer of immovable property, the transferor and the transferee must jointly prepare a document which certifies that the property is transferred for use as the registered capital of the transferee. That document must be submitted to the area Land Office and Revenue Office. It must also contain the minimum details required by law.
We also noted in our tax article for February 2017 that a newly incorporated company or legal partnership can take additional corporate income tax deductions for expenses incurred for registering a company or legal partnership, and for expenses incurred for accounting and auditing. The Notification of the Director-General of the Revenue Department No. 4 also sets out the rules for such a tax benefit:
1. Expenses incurred for registering the company must be ratified by the board meeting held for incorporating the company. There must also be evidence of such expenses.
2. Expenses incurred for registering the legal partnership must be certified by the managing partner. There must also be evidence of such expenses.
3. Expenses incurred for accounting and auditing must be for such services as performed under accounting law.