Editorial staff

DLO’S Tax Newsletter

Issue 97 January 2019

Inside this Issue

Tax Law Update
1. Personal income tax (PIT) deduction of up to 15,000 baht for the purchase of certain products or services.
2. Cancellation of tax benefits for Bangkok International Banking Facility Enterprises.

Tax News
1.Extending the period for tax measures relating to tax deduction of up to 2 times the amount of donations that are made to support education.

Interesting Deka
Dika               (Supreme Court Judgment) No.2136/2561, in re:
Between       Bor Co.,Ltd.                       Plaintiff
                      Revenue Department      Defendant

Issue:            Right to sue, in the case where an appeal against an import VAT assessment has not been filed.

Tax Law Update

1.Personal income tax (PIT) deduction up to 15,000 baht for the purchase of certain products or services.
          Ministerial Regulation (No.341), B.E.2561 has given the right to individuals who purchased particular goods or services as specified in such regulation during the period running from December 15, 2018 to January 16, 2019 to deduct the value of such goods or service actually paid but not exceeding 15,000 baht to be a deductible allowance when calculating PIT liability. Such permitted goods or services are as follows;

          1. Car tires, motorcycle tires or bicycle tires
          2. Books and E-Books, not including newspapers and magazines which are bought from a seller who is a company or juristic partnership.
          3. One Tambon One Product (OTOP) goods which are goods that have been registered with the Community Development Department, Ministry of Interior.
          For more details, please see: https://bit.ly/2T8TKWu

2. Cancellation of tax benefits for Bangkok International Banking Facility Enterprises.
          The Royal Decree (No. 675), B.E. 2561 stipulates the cancelation of tax benefits for the Bangkok International Banking Facility Enterprises that were given by Royal Decree (No. 454), B.E. 2549. However, Royal Decree (No. 454) will continue to apply with respect to income, revenue or instrument execution which occurs within December 31, 2020, provided that such income, revenue or instrument execution is derived from deposits or loans from abroad to lend in abroad or has been renewed or falls under a debt restructuring agreement which was made before the date that this Royal Decree came into force.
          For more details, please see: https://bit.ly/2GF4hHQ

Tax News

1. Extending the effective period for tax measures relating to tax deductions of up to 2 times the amount of the donations that are made to support education.
On December 18, 2018, the Cabinet approved in principle the Draft Royal Decree issued under the Revenue Code Regarding Reduction (No…) B.E. … regarding the extension of the effective period for tax measures that support education. The key features of this Royal Decree are as follows:
          1.1 An individual can deduct up to 2 times the amount of their donation made to a public school, private university or private school as a deductible allowance, however, such deduction must not exceed 10 percent of the individuals’ income after deducting other expenses and permitted deductible allowances.
          1.2 A juristic person can deduct up to 2 times the amount of the expenses of the donation regardless of whether such donation is in the form of cash or property. However, when combined with permitted expenses paid for the construction and maintenance of a private owned playground, park, sport field or a public park or sport field without charge and open for public use such exemption must not exceed 10 percent of the juristic person’s net profit before deducting expenses for public charity or for public benefit and education or sports according to Section 65 Ter (3) of the Revenue Code.
          Moreover, the abovementioned Draft Royal Decree also provides an exemption on Value Added Tax (VAT), Special Business Tax (SBT) and Stamp Duty to individuals and juristic persons with respect to the transfer, sale or issuing instrument that is related to a donation made to a permitted educational institute as detailed above. The cost of the assets or goods which are tax exempt shall not be permitted to be deducted as an expense in the calculation of PIT or CIT liability.
In order to be eligible for the above mentioned tax benefits, a donator must make their donation through the electronic donation system (e-Donation) of the Revenue Department within the period January 1 to December 31, 2019.
          For more details, please see: https://bit.ly/2RibP7w

Interesting Deka
Dika                (Supreme Court Judgment) No.2136/2561, in re:
Between        Bor Co.,Ltd.                      Plaintiff
                       Revenue Department      Defendant
Issue:             Right to sue, in the case where an appeal against an import VAT assessment has not been filed.

Facts: The Plaintiff imported peppermint and mental products by using Rule of Origin, a tariff privilege for ASEAN - China Free Trade Area which exempted the duty or reduced the duty to 0%, the Custom Department officer then released the goods to the Plaintiff. Later, the Customs officer found that the Plaintiff had imported the product using the certificate of origin of the product that was issued by the People's Republic of China. However, the Plaintiff entered into a contract and opened a Letter of Credit (L/C) payment to a company that was registered in the Republic of Singapore. Therefore, it was deemed to be trading through a third country and not a direct trade with the country of manufacture which is eligible to exercise the exemption or reduction of duty rates under the ASEAN-China Free Trade Area. Thereafter, the Defendant’s officer issued an assessment report that levied import duty, excise tax, VAT and other taxes at the normal rate. As a result, the Plaintiff was ordered to pay the deficit of import duties and other taxes thus in response the Plaintiff filed an appeal against the import duties but did not appeal the VAT assessment to the Appeal Committee.

Issue to consider: Does the Plaintiff have the right to sue challenging the VAT assessment given that it did not submit an appeal against the import VAT assessment with the Appeal Committee?

Judgment of the Supreme Court: The Tax Division of the Supreme Court, considered that the Plaintiff was the importer of goods with a duty to pay VAT to the customs official along with the payment of import duties. The Court noted that to determine the VAT base calculation for the imported goods it is necessary to add the value of the goods or the price that the customs official assessed the goods at together with applicable import duty. The conflict regarding VAT assessment in this case was caused by a dispute regarding the amount of import duty to be applied, which is a direct part of the VAT base calculation, thus, the Court noted that the VAT liability would be dependent upon the Defendant’s import duty assessment which the Plaintiff had already filed an appeal on to the Defendant concerning such matter. Therefore, given this the Court held that the Plaintiff had the right to sue the Defendant without the need to file a VAT assessment appeal to the Appeal Committee according to the Revenue Code. The Supreme Court determined that the grounds argued by the Defendant under the appeal were untenable.

Legal Opinion: The author agrees with the judgment of the Supreme Court, Tax Division given that the first paragraph of Section 79/2 of the Revenue Code stipulates that the “tax base of import of goods shall be according to the following rules.

(1) Tax base of import of goods is the C.I.F. price plus import duty, excise tax under Section 77/1(19), special fees under the Investment Promotion law and any other fees as prescribed by Royal Decree.
          Also, the third paragraph stipulates that the “C.I.F. price is the price of the goods plus insurance and transport costs to the customs station of importation except-”. Based on the legal provision above, it is clear that import duty forms a part of the VAT base. When importing goods, the importer must pay VAT to the customs officer. The amount of VAT that must be paid will depend on the amount of import duty that will be levied, therefore, if there is no import duty to be applied, it will reduce the VAT base for the import of goods, thereby resulting in a lower VAT liability.
          Thus, when the officer of the Customs Department determined that the Plaintiff must pay additional import duties on the goods it would cause a change in VAT liability. The writer would like to stress that even though the Plaintiff appealed the assessment without mentioning VAT the result of the appeal assessment would still directly affect the VAT liability significantly. Therefore, the writer agrees with the Court’s ruling which held that was unnecessary for the Plaintiff to file an appeal concerning the VAT assessment to the Appeal Committee to be able to have the right to sue on this issue given that the matter was closely related to the issue in question (VAT tax base). However, the writer would like to point out that if the issue was not related and an appeal had not been filed, then the issue would not be allowed to be directly filed with the Court.

Author: Warinthorn Saruno
Should you require any legal advice on Thai tax law then please contact us at
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