A Quick Guide to Thailand’s Latest Tax Relief Package for Businesses to Lower Operating Expenses

a-quick-guide-to-thailands-latest-tax-relief-package-for-businesses-to-lower-operating-expenses

On 26th January 2021, the Thai government published its latest corporate tax reduction plan as it keeps taking steps to mitigate the pandemic’s economic effect. The latest package reduces land and construction taxes, real estate transaction fees and extends the tax submission period for withholding tax, personal income tax, and value added tax. Thailand has also issued a series of incentives in 2020 to help businesses, financial services companies, families, and employees.

a-quick-guide-to-thailands-latest-tax-relief-package-for-businesses-to-lower-operating-expenses

In April 2020, the government offered a massive stimulus package worth USD 58 billion. The package is called Phase 3, and it provides commercial banks with USD 15 billion to confer to small to Thailand SMEs in soft loans. Moreover, USD 30 billion in financial assistance was provided to farmers, and USD 18 billion was allocated to temporary employees, self-employed individuals, and contract employees. This aid includes providing THB 5,000 per month for six (6) months.

The BOI, as the primary institution in charge of supporting foreign investment in the country, also attempts to bring in more foreign investments via holidays and tax reductions for certain BOI projects. By the end of 2020, BOI offered deductions on CIT for extensive projects and companies looking to incorporate digital technology in their businesses.

This article highlights the key points you need to know about Thailand’s latest tax relief package for businesses.

Land and Construction Tax Reduction

Thailand will reduce the land construction tax by 90% in 2021, which includes the following types of land:

  •       Residential
  •       Agricultural
  •       Commercial
  •       Vacant land

Taxes will be paid at the following applicable ceiling tax rates yearly at the month of April:

  •       Commercial land or property for commercial purposes only: 1.20%
  •       Vacant or unused land: 1.20%
  •       Residential property: 0.3%
  •       Agricultural land used for agricultural purposes, including aquaculture and animal domestication: 0.15%

If the properties are left vacant for over three successive years, tax rates will increase by 0.3% triennially until reaching the highest tax rate of 3%. The country’s latest Building and Land Law was released in 2019. It will become effective in early 2020. Before this act passed, the land and property tax rates were evaluated based on income and property worth.

The law offers a two years transition period beginning 1st January 2020 to assist property owners in adjusting to the latest regulation. Tax rates have been further lessened throughout the transition duration, as shown below:

  •       Residential Property:
    •       THB 0 to 50 million: 0.02%
    •       THB 50 to 70 million: 0.03%
    •       THB 75 to 100 million: 0.05%
    •       More than THB 100 million: 0.1%
  •       Agricultural Property:
    •       THB 0 to 75 million: 0.01%
    •       THB 75 to 100 million: 0.03%
    •       THB 100 to 500 million: 0.05%
    •       THB 500 million to 1 billion: 0.07%
    •       More than THB 1 billion: 0.1%
  •       Vacant or Unused Property:
    •       THB 0 to 50 million: 0.3%
    •       THB 50 to 200 million: 0.4%
    •       THB 200 to 1 billion: 0.5%
    •       THB 1 billion to 5 billion: 0.6%
    •       More than THB 5 billion: 0.7%

 

Therefore, residential properties that are appraised at THB 5 million in 2021 would apply the following tax calculation: 

  • THB 5 million x (0.02%) tax rate = THB 1,000
  • THB 1,000 x (90%) tax reduction = THB 900
  • Final tax: THB 1,000 – THB 900 = THB 100

Costs reduction for the property transaction 

To help the country’s real estate sales, the government lowered the real estate transfers’ registration fee from 2% to as low as 0.01% and the mortgage registration fee from 1% to as low as 0.01%. This tax deduction is applicable to the following category of real estate:

  •       Condominiums registered below THB 3 million
  •       Land with detached homes, twin houses, construction, or commercial properties that authorized land developers sold

This reduction will take effect from 12th January to 31st December 2021.

E-tax Submission Extension

Thailand extends the personal income tax returns period from 31st March 2021 to 30th June 2021. Furthermore, the time limit for paying withholding tax and value-added tax has been extended until the end of every month, starting from February 2021 until June 2021.

Getting Help From Accounting and Withholding Tax Thailand Services

Professional accounting and withholding tax Thailand services offer a higher level of accounting and tax expertise at an affordable price to ensure the company stays compliant with current laws and regulations. They perform accurate and timely accounting works and can offer appropriate financial advice for business growth.

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