Editorial staff

DLO’S Tax Newsletter

 

Issue 72 December 2016

 

Inside this Issue

Tax Laws Update

Personal Income Tax Exemption for Expenses relating to Services or Accommodation spent on travel in Thailand on December 2016

Tax News

1. MOF is considering implementing a windfall tax

2. The Cabinet has agreed to the draft law for tax exemptions on the National e-Payment Master Plan

3. The Cabinet has agreed to the draft law concerning tax incentives for employment of elders

4. The draft of Land and Buildings Tax Act is put off

Interesting Dika (Supreme Court Judgment)

Dika                 (Supreme Court Judgment No. 5150/2559), in re:

                        S. Company                                                                             Plaintiff

                        Revenue Department                                                             Defendant

Issue:               Corporate Income Tax Assessment under Section 71(1) of The Revenue Code

 

 

Tax Law Update

Personal Income Tax Exemption for Expenses relating to Services or Accommodation spent on travel in Thailand on December 2016

Ministerial Regulation No. 322 (B.E. 2559) and the Notification of the Director General of Revenue Department regarding income tax (No. 280) provide for personal income tax exemption on actual expenses relating to services or accommodation spent on travel in Thailand for an amount not exceeding 15,000 Baht. Such expenses must be incurred between December 1, 2016 to December 31, 2016. The Ministerial Regulation and the Notification prescribe criteria as follows:

         1) For an individual, the exemption shall not exceed 15,000 Baht;

         2) For spouses:                  

               - If either the husband or wife has assessable income, the exemption shall not exceed 15,000 Baht;

               - If however both the husband and wife have assessable income, then each party shall be entitled to the exemption for an amount not exceeding 15,000 Baht.

         3) The Individual having an income must pay the service fee and accommodation cost in relation to traveling by himself/herself; and

         4) The Business operator must provide any evidence proving the receipt of money with the individual’s name, amount paid and date/month/year of payment.

This criteria has been effective since December 1, 2016.

For more details, please see: https://goo.gl/d8bbWj and  https://goo.gl/SgYE65

 

Tax News

1. MOF is considering implementing a windfall tax

The Permanent Secretary of the Ministry of Finance has revealed that the Ministry of Finance is considering the imposition of a new tax on land owners who gain benefits from government investment on infrastructure, such as roads, motorways, yards, airports, trains and etc. Such tax is proposed to be collected when the owners sell the lands or gains other benefits from the land. The conclusion of the consideration of this new proposed tax may be completed in the government’s2017 fiscal year.

However, please note that this tax imposition shallcomply with the criteria, methods and conditions which will be provided by the government in the future.

For more details, please see: https://goo.gl/KSIapK

2. The Cabinet has agreed to the draft law for tax exemptions on the National e-Payment Master Plan

On November 1, 2016, the Cabinet agreed to the draft of the Royal Decree (No. …) B.E. … about the income tax exemptions for the investment on electronic payment machine, as follows:

1)      Corporate income tax exemption for expenses on investing in electronic payment machine.

2)      Corporate income tax exemption and personal income tax exemption for expenses on the fee arising from the payment made by the Debit Card through electronic payment machines.

However, please note that this tax measure must comply with the criteria, methods and conditions which will be provided by the government in the future.

For more details, please see: https://goo.gl/BWBcKE

3. The Cabinet has agreed to the draft law concerning tax incentives for employment of elders

On November 8, 2016, the Cabinet accepted and agreed to the draft of the Royal Decree (No.…)B.E.… for promoting the employment of elders. This measure is provided for employers, who are juristic persons and pay salaries or wages to elderly employees (aged over 60 years), whereby they will receive tax benefits on such expense as a double expense in the calculation of corporate income tax (CIT). However, such salaries or wages must not exceed 15,000 Baht per person/per month. Furthermore, such expenses must be incurred in or from the accounting period starting January 1, 2016 and the employer can only apply this measure up to 10 percent of the total of its employees.

However, such employees must not beshareholders, committee members, nor current or previous directors of the juristic person.

For more details, please see: https://goo.gl/ujjssp

4. The draft of Land and Buildings Tax Act is put off

The Minister of Finance has revealed that the new tax imposition on land and buildings (the draft of Land and Buildings Tax Act B.E. …) are not able to be enacted within 2017, however, he noted that it may be pushed forward such that it is able to be enforced on January 2018.

For more details, please see: https://goo.gl/h24b9o

 

Interesting Deka (Supreme Court) Judgment

Dika                 (Supreme Court Judgment) No. 5150/2559, in re:

                        S. Company                                                                             Plaintiff

                        Revenue Department                                                             Defendant

Issue:               Corporate Income Tax Assessment under Section 71(1) of The Revenue Code

 

The Plaintiff failed to file form PND.50 in the period prescribed by law but the Plaintiff did file form PND.50 after receiving a summons. The Defendant then claimed that the Plaintiff incompletely submitted its books of account or any evidence for verification but this conflicted with the testimony of the Defendant that the Defendant used the result of the verification on income, expense and additional tax payment to adjust net profit which the Plaintiff has already filed using form PND.50 and could thus calculate corporate income tax from net profit. Therefore, the assessment official required the Plaintiff to pay tax at the rate of 5 percent on gross income before deductions of any expense from the accounting period using Section 71(1) of the Revenue Code. The Court held that the exercise of the assessment official’s discretion was improper, and that such assessment by the assessment official and the Committee of Appeal were unlawful.

Legal opinion

            The above court judgment is related to the corporate income tax assessment of the assessment official at the rate of 5 percent from the gross income and gross sales before deduction under Section 71(1) of the Revenue Code which the assessment official has the power to assess when a company or juristic partnership fails to:

  1. file particulars necessary for tax calculation or
  2. does not keep a book of account or
  3. does not follow the requirements prescribed under Sections 17 and 68 Bis or
  4. does not bring books of account, documents or other evidence to an assessment official for interrogation under Section 23

which causes an assessment official to be unable to calculate net profit under Section 24 of the Revenue Code.

            Even though, the Plaintiff did not a file tax return (form PND.50) in the period prescribed by law but when the plaintiff received the summons and filed form PND. 50 together with the submission of documents and other evidences and the assessment official claimed that it was inadequate for interrogation; on the other hand, an assessment official was able to calculate corporate income tax of the Plaintiff from net profit of such form PND.50.

            The author  agrees with this judgment because of the fact as appeared in the testimony which showed  that the Defendant investigated income, expenses, additional tax payment and profit adjustment on the form PND.50, thus the Revenue Department officer therefore could not conduct  the tax assessment from gross sales by claiming that the Plaintiff had not sent the required documents or sent the documents but such documents were inadequate which thereby caused the assessment official to assess corporate income tax using Section 71(1). Therefore, the Court ordered the assessment official to assess corporate income tax of the Plaintiff for the disputed accounting period from net profit of the business under Section 24 and Section 65 of the Revenue Code. This judgment is lawful accordingly.        

Ratchasak Kunkanya

 

Should you require any legal advice on Thai tax law then please contact us at Dharmniti Law Office Co., Ltd. 2/2 Bhakdi Building 2nd Floor, Witthayu Road, Lumphini, Pathumwan, Bangkok, Tel : (66) 2680 9751, (66) 2680 9760 Email: budhimak [at] dlo.co.th or sureelukt [at] dlo.co.th

 

 

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