Taxing Bodies of Persons and Ordinary Partnerships

On 21 October 2014, the Cabinet approved in principle the draft act to amend the Revenue Code as proposed by the Ministry of Finance.

Keywords: Mazars, Thailand, Tax, Revenue Code, the Ministry of Finance

06 November 2014

It will introduce an amendment on the taxation of bodies of persons and ordinary partnerships, as follows:

1. ‘Bodies of persons’ will no longer be required to pay personal income tax. Instead, the individuals in the bodies of persons will have to include their respective share of the bodies of persons’ income, along with whatever income they may have from other sources, in determining the total taxable income on their individual tax returns.

With this amendment, the income of a body of persons will flow through a conduit to the tax returns of the individual persons in that body of persons. Therefore, all income earned by the body of persons will be taxed to the individual persons without regard to whether the persons withdrew any of that income from the body of persons.

2. Non-juristic ordinary partnerships will still be required to pay personal income tax, but they will be deprived of standard deductions. Therefore, they will have no choice but to deduct only actual and reasonable expenses from their assessable income.

The draft act will now have to be proposed to the National Legislative Assembly for consideration and approval.