Tilleke & Gibbins, a Corporate Member of the Thai-Norwegian Chamber of Commerce has kindly shared the following legal opinion on a number of issues linked to the COVID-19 situation. In this article, Tilleke & Gibbins is providing a summary how Thai government implement tax and non-tax relief measures to aid the general public, workers, and entrepreneurs.
The economic impact of the COVID-19 pandemic has led Thailand’s Ministry of Finance, with the approval of the cabinet, to implement tax and non-tax relief measures, two phases of which have been released to date, are detailed below.
Phase I Tax Relief Measures – March 10, 2020
Reduction of withholding tax rates. This measure, which is already in effect, reduces withholding tax from 3% to 1.5% for the following types of payments made between April 1, 2020, and September 30, 2020:
- Income from service fees, commission fees, and other income under section 40 (2) of the Revenue Code, paid to companies or juristic partnerships in Thailand.
- Income from payments for goodwill, copyrights, and other rights under section 40 (3) of the Revenue Code, paid to companies or juristic partnerships in Thailand.
- Income from professional legal fees, audit fees, and other income under section 40 (6) and (7) of the Revenue Code, paid to persons liable to Thai personal income tax or corporate income tax.
- Income from payments in the nature of hire-of-work service, awards, rebate, or sales promotion, and any services other than entertainment performance, advertisement, non-life insurance premiums, and transportation fees, excluding payments for hotel services, restaurant service charges, and life-insurance premiums, all falling under section 40 (8) of the Revenue Code, paid to persons liable to Thai personal income tax or corporate income tax.
For payments of the above types made between October 1, 2020, and December 31, 2021, the withholding tax rates will be reduced from 3% to 2% for e-payments and e-withholding tax only.
Payments to foundations or associations that carry out business, as well as those announced by the government according to Section 47 (7) (b), are not be eligible for any of these reductions.
Increased tax deductibility for SMEs’ loan interest. SMEs that enrolled in the Soft Loan program for COVID-19 and committed to the “single account” program can claim 150% of actual loan interest paid from April 1 to December 31, 2020, as tax-deductible expenses.
Increased tax deductibility for SMEs’ salary costs. SMEs can claim 300% of actual salary costs paid to qualifying employees from April to July, 2020, as tax-deductible expenses.
Acceleration of the VAT refund process. All domestic business operators classified as “good exporters” will receive any VAT refund owed within 15 days of filing VAT online, or 45 days of filing VAT manually.
If you have any queries about the legal implications of COVID-19, or any other matters, please contact Varapa Aurat at [email protected] or call +66 2056 5508.