The COVID-19 virus infection leads to a slowdown in the world’s economy. Governments across the globe are advising proactive response plans to protect their businesses and individuals from the economic turmoil. Tax systems, such as tax deduction and investment incentives, play a significant role in alleviating both economic and financial disturbances caused by the ongoing pandemic.
The country’s government has taken multiple measures to stimulate and re-stabilize its economy from the effects of COVID-19. This article will share with you the significant tax relief measures introduced by Thailand’s authorities.
Deduction in interest expense for SMEs
Eligible small-to-medium enterprises would be able to claim an interest expense deduction of up to 150% on loans gained under the funding initiative of the government. The initiative offers THB 150 billion in soft loans to these enterprises at an interest rate of 2% for the first two years. The Government Savings Bank will be responsible for supporting the funding of this initiative.
The SMEs can apply a maximum loan of up to THB 20 million. The following are the criteria SMEs need to meet to be eligible for the deduction (based on the company’s latest previous tax year ending on or before 30th September 2019):
- Have annual profits of less than THB 500 million
- Have less than 200 workers; and
- Keep a single set of accounts
Deductions in withholding tax
To raise the liquidity for business and individual operators, Thailand’s Ministry of Finance introduced a withholding tax deduction from 3% to 1.5% for payments made from 1st April to 30th September in 2020. The withholding tax will later be lowered to 2% starting from 1st October 2020 until 31st December 2020, provided that the operators use the e-Withholding Tax system to make the payment.
For individual operators, the deduction would cover fees for the hire of work, fees of liberal professional, any benefits obtained from sales promotion, such as a discount.
For business operators, the deductions would cover fees for professionals and hire of works, royalties, commissions, and other benefits from sale promotion.
Businesses participating in the Good Exporter program can get VAT refunds within fifteen days after the filing date, which would typically take about thirty days. Companies can only receive the refunds if they submit the VAT returns through the e-filing system.
Businesses that files for paper returns can obtain the VAT refunds within forty-five days, instead of the normal sixty days process.
A Good Exported is a limited or public corporation that satisfies the following criteria:
- Abide by the government’s export law
- Possess a ratio of products exported abroad of no less than 50% of total sales
Salary costs deduction for SMEs
SMEs can reduce 300% of eligible wage expenses paid to their workers from April to July of 2020, for corporate income tax purposes. To receive this incentive, SMEs need to fulfill the following requirements:
- The eligible salaries for 300% reduction must be below THB 15,000 every month for each employee
- The total number of workers must not be more than 200
- The company’s annual profits must not be more than THB 500 million
- Workers are insured under the national social security program
- The insured employees’ number during the said period must not be less than the insured employees’ number as of 31st December 2019
Extension for personal income tax filing
The personal income tax returns’ filing deadline is extended from the previously extended deadline of 30th June 2020 to a new deadline of 31st August of the same year.
Extension for filing of corporate income tax
The extension of a non-listed company’s submission deadline for corporate income tax is as follows:
- Businesses with an accounting period ending 2019: Deadline is extended to 31st August 2020
- Firms with an accounting period ending 2020: Deadline is extended to 30th September 2020
Tax relief for donations supporting COVID-19 measures
Donations provided to support COVID-19 measures through the e-Donation system of the Revenue Department from 5th March 2020 to 5th March 2021 will be treated as follows:
- Individuals can receive cash donations as deductible allowances for the purpose of personal income tax, limited to 10% of adjustable chargeable income.
- Legal entities can receive assets or cash donations as deductible expenses for the purpose of corporate income tax, limited to 2% of net taxable revenues.
- Assets donations will be exempt from VAT for VAT-registered operators.
Seeking guidance from competent accounting services provider in Thailand
Businesses and entrepreneurs in Thailand should seek professional advice from a reputable accounting services provider in Thailand to understand better and take advantage of these tax updates. To pick the best Thailand accounting company, consider the company’s needs, the accounting services offered, the company’s reputation, and services price.