Previously, interest that a company charged on loans provided to an associated company or its employees were exempt from Special Business Tax (SBT) under the Departmental Instruction No. Paw. 26/2534.
Keywords: Mazars, Thailand, Tax, Revenue Department, SBT, Royal Decree No. 571, Royal Gazette
30 January 2014
However, this Instruction is not a law but only an internal directive provided by the Revenue Department for its own officers.
In order to legalise this exemption, Royal Decree No. 571 was published in the Royal Gazette on 23 December 2013 and went into effect retroactively from 1 January 2012. The Royal Decree provides an exemption from SBT for interest charged on loans that a company, which is not carrying on the business of commercial banking, finance, securities, credit foncier, or life insurance, provides to the following borrowers:
- Its affiliated company, which is defined as one entity that holds at least 25% of total shares with voting rights in the other for at least 6 months before entering into the loan. This six-month shareholding requirement is relaxed for companies that have undergone an amalgamation or an entire business transfer.
- Employees which are a member of an employees’ accumulated fund or any other fund set up by the employer.
This Royal Decree also exempts SBT on interest that a company received from money deposited with a financial institution, or from promissory notes issued by financial institutions.