Tax Newsletter
Dharmniti Law Office Co., Ltd.
Volume 168, July 2025
Tax Law Updates
1.Reduction in tax rate according to Tax Measures to Promote Investment in Special Economic Zones (SEZs)
Royal Decree issued under the Revenue Code on Tax Rate Reduction (No.797), B.E.2568 (2025) regarding Tax Measures to Promote Investment in Special Economic Zones, has been in force from June, 6th 2025.
For more details please see: https://bit.ly/3GnPQaM
2.The criteria, procedures, and conditions regarding the exemption of income tax for the investment in Thai ESG Funds
A notification of the Director-General of Revenue Department regarding Income Tax (Issue No.458) prescribing the criteria, procedures, and conditions regarding the exemption of income tax for investments in Thai ESG Funds, has been in force from November, 21st 2023.
For more details please see: https://bit.ly/3IvYjsX
Tax News Updates
1.Tax exemption [tax measures to promote Thailand as a global digital asset hub]
On June, 17th 2025, the Cabinet passed a resolution on the draft of the Ministerial Regulation regarding the exemption on personal income tax for capital gains arising from the sale of digital assets (cryptocurrency or digital tokens) through a digital asset business operator that is licensed under the laws of digital asset businesses. The tax exemption shall be effective from January, 1st 2025 to December, 31st 2029.
2.Tax exemption [tax measure to promote digital transformation for SMEs ]
On June, 24th 2025, the Cabinet passed a resolution approving the draft of a Royal Decree issued under the Thai Revenue Code providing for a corporate tax exemption for companies or juristic partnerships, whereby a double deduction (not exceeding 300,000 Baht) would be allowable for expenses incurred for the purchase or hire of work or use of computer software service, hardware and smart device, or digital service. However, such deduction would exclude computer devices. This tax deduction is applicable to eligible expenses paid from 24th June 2025 to 31st December 2027.
Highlighted Supreme Court Judgment
Supreme Court Judgment No. 736/2550
Between Company S Plaintiff
Revenue Department Defendant
Subject: Income derived from an interest rate swap agreement
Disputed issue: Is the difference in the amount of money paid to and by each party under an interest rate swap agreement, where the Plaintiff is required to pay the bank, considered to be assessable income under Section 40(4)(a) of the Revenue Code, and therefore subject to withholding tax on the amount paid and required to be remitted?
Abbreviated judgment: The Plaintiff entered into an interest rate swap agreement with the counterparty, whereby, on the agreement maturity date, each party shall make payments to the other based on the interest rate, fixed and floating, specified for each party. The payment amount, once calculated, shall be offset, and only the net difference will be settled. This arrangement is not considered a loan agreement. Furthermore, both parties can be the payer or the receiver of money, depending on the calculation outcome as agreed upon in the interest rate swap agreement. Where the plaintiff is required to pay the net difference to the counterparty, such amount is deemed income of the counterparty, resulting solely from the interest rate swap agreement, and not as interest income. Accordingly, the Plaintiff is not subject to withholding tax and is not required to remit tax to the Revenue Department under Section 70 of the Thai Revenue Code.
Writer’s opinion : I, the writer, agree with the Supreme Court’s judgment stated above because the interest rate swap agreement was entered into solely for the exchange of interest payment obligations between the parties, and not for a direct interest payment. A party may derive benefits from the exchange of interest rates if the calculation, based on the agreed terms, results in a profit.
The income derived from such agreement is not to be regarded as interest income or income of a nature similar to interest, as it is not calculated based on the principal amount using a rate and period of time as stipulated by any contract or law. The agreement specifies the notional principal (reference principal) and the interest rates agreed upon by the parties as the basis for calculating which party shall make payment to the other and in what amount.
Moreover, at the time of entering into the interest rate swap agreement, neither party acknowledged which party would be responsible for making the payments thereunder, including the amount of money to be paid by such party. The above case is unlike cases involving interest income, where a debtor is aware of their payment obligation beforehand and the specific amount due to the creditor.
Therefore, income derived from an interest rate swap agreement is not to be regarded as interest income or income of a nature similar to interest. The Supreme Court’s judgment is thus justified.
Please note that the comments mentioned above only represent the writer’s legal opinion regarding the case. Tax law requires factual analysis, and the results of a legal interpretation of the same legal provision can vary based on different points of view. The writer presents this Supreme Court judgment in order for the reader to gain a deeper understanding of tax laws so that they can pay tax correctly.
Prow Phuechmongkol
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