Recognition of Corporate Income Tax

The Thai Ministry of Finance issued a notification on 6 June 2016 extending the deadline for filing a tax return for companies which receive investment promotional privileges from the Board of Investment of Thailand, but which do not set off tax losses incurred for BOI projects against taxable profits of other BOI projects that arise in the same accounting period to derive an overall net taxable profit and loss for the BOI projects.

Keywords: Mazars, Thailand, Accounting, BOI, FAP, Board of Taxation, CIT, Income Tax, TFRS

2 September 2016

This is because such a practice does not comply with Board of Taxation Ruling Number 38/2552.

This announcement affects the recognition of corporate income tax that entities recorded in their financial statements in the previous year. As a result, the question arises as to whether or not the correction of an error made in a previous period is required where the corporate income tax treatment did not recognize and comply with Board of Taxation Ruling Number 38/2552.

The Federation of Accounting Professions (“FAP”) has released the following guidance on this matter:

Such instances occur as a result of the degree to which different governmental agencies determine corporate income tax. Thus, there is a discrepancy in the recognition of corporate income tax.

Entities take many factors into account when determining the amount of tax, including interpretations of tax law and other information that have been enacted or substantively enacted by the end of the reporting period. This approach is in line with paragraphs 46 and 47 of Thai Financial Reporting Standard No. 12, “Income Tax”. Therefore, there is no need to correct accounting transaction errors related to corporate income tax in previous periods.

For more information, please visit the Federation of Accounting Profession website