Coronataxation in Thailand – how to tax the pandemic

Corona impact tax measures in Thailand – learning from the flood

ConoraAlliance: On this page, Thailand’s regulatory framework of pandemic-related taxation and tax relief schemes are constantly updated. The expected and already implemented regulations are set in context to Thailand’s taxation rules during and after the flood of 2011/2012. #CoronaAlliance

How Thailand taxed the flood 2011/2012

Regulatory framework: The Thai flood in 2011 till 2012 affected 3,151,224 people from 1,154,576 families and the damage is estimated at least THB 185 billion. The Revenue Department issued a Notice #206 on October 3, 2011, and some days later, on October 12, 2011, Notice #207. Royal Decree #527 had been issued under the Revenue Code on June 2, 2011. Another announcement by the Revenue Department dated November  3, 2011. Noted should be also the Ministerial Regulation #282. and the BOI Notification dated October 7, 2011.

Tax-free compensations: Tax exemption had been granted for compensation payments by the government, donations or aid by private donors, and compensation payments by insurance companies. As a general rule, the tax exemption is not granted if the compensations exceeded the depreciated value of the lost property.

Deadlines for tax filings and payments had been extended. 

BOI-promotions had been broadened in several ways. BOI-companies had been allowed to temporarily relocate elsewhere to continue their production for six months. Replacements and project transfers have been accepted as new investments, at least within the same province. Outsourcing of manufacturing processes to other companies had been widely allowed. Exemptions for import tax for machines and materials as well as tax holidays had been extended. Additional corporate income tax exemption had been offered to BOI-promoted companies that are flooded and industrial estates that invested in flood prevention systems.

The recommendable scope of rapid tax relief for Thai taxpayers – timely, targeted and temporary as necessary

Taxpayers demonstrating that they are directly and not immaterially affected by the pandemic should be allowed to apply for a deferral of taxes (due or which will become due) until December 31, 2020. No interest should be applied. This should relate to corporate income tax, personal income tax, and VAT. Upon request, tax advance payments should be reduced. Enforcement measures (e.g. seizure of accounts) should be halted until December 31, 2020.

To qualify for such tax relief, sufficient evidence should be prepared and maintained, that the inability to pay is a specific consequence of the Coronavirus pandemic for the affected taxpayer. The inability to pay has to be a proven specific consequence of the pandemic. The inability of the taxpayer to pay alone shall not qualify for tax relief. General extension for the filing of tax returns should be generously granted and non-bureaucratic.

How Thailand taxes the pandemic – seven tax reliefs

The scope of tax measures is only gradually crystallizing out of various decrees, guidelines, and conditions. The seven most significant measures are described below, constantly updated as new decrees are published:

#1. Deadlines for the filing of personal income tax have been extended from end of March to the end of June. 

#2. Tax deductions apply for excise tax on jet fuel from 4.726 baht to 0.20 baht a liter until September 30, 2020.

#3. Withholding taxes are slightly reduced. Adjusting to the new rates might in many cases bring more administrative burden than financial benefits. 

#4. Business expenses: If governmental covid19-funding is utilized, the interest payments can be deducted at a rate of 150%. Salary expenses can be deducted as business expenses at a rate of 300%. Complex conditions and restrictions apply.

#5. E-filings: to be announced

#6. Donations related to COVID19 can be deducted as business expenses. 

#7. BOI promotion: to be announced

This page will be continuously updated to reflect the current state of discussion, drafting, and legislation.

#CoronaAlliance – tax advice and assistance in the management of the Coronavirus crisis

PUGNATORIUS Ltd. is the Bangkok-based specialist provider of transactional legal and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property developments and acquisitions. The law firm sees the pandemic as a challenge to protect and enforce the legal and economic interests of international clients in a dynamic situation with high-quality and pragmatic advice and action. 

CoronaAlliance: As a founding member of the CoronaAlliance, the law firm advises on the legal implications of the Coronavirus outbreak as well as on tax planning opportunities. It also provides consulting on short-term and long-term measures to avoid or mitigate the damage to companies, individuals, and institutions. It provides guidance in the transition process to the post-pandemic world to protect clients’ assets, wealth, and business. #CoronaAlliance #PostPandemicWorld

The professional services linked to the effects of the outbreak of COVID-19 are explained at “Legal support and assistance regarding the effects of the #coronavirusoutbreak”.

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