Bahrain and Thailand has signed an amending protocol of Double Taxation Agreement (DTA) for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income in Manama on 25 April 2017.
The Revenue Department of Thailand is planning to enforce a new law to tax cross-border e-commerce transactions by April 2017.
Currently, a foreign operator which carries on e-commerce business but does not enter Thailand or does not have any employee, agent or representative and/or server located in Thailand, were not regarded as carrying on business in Thailand and therefore are not subject to income tax in Thailand.
But now the Thai Revenue Department (TRD) is intended to improve and increase revenue collection from the e-commerce business.
The government of Thailand approved the amendment of Royal Decree No. 604 on 24 January 2017, which was gazetted on 21 April 2016. The amendment permits a 50% additional corporate tax deduction on the expenditure acquired on additions, alterations, extensions and/or improvements of property, plant and equipment which meet the requirements of deduction under section 65 Bis (2) of the Revenue Code. This new rule will be applicable from 1 January 2017 to 31 December 2017.
On 28 March 2016 the IMF issued a report following discussions in Thailand under Article IV of the IMF’s articles of agreement.
The economy of Thailand recovered in 2015 following a slowdown and output reached 2.8%. The recovery is expected to slightly strengthen with economic growth of 3% in 2016 and 3.2% in 2017. The IMF report recommends measures to safeguard financial stability.
Despite some external risks Thailand’s strong economic fundamentals provide room to maneuver to improve the economic prospects. The IMF considers that fiscal buffers should be built over time to prepare for the economic challenges of the ageing population. The IMF report therefore recommends that Thailand should gradually raise the VAT rate to 10% as soon as the economic recovery is on a sound footing.
The government of Thailand intends to revise incentives available in Special Economic Zones, to take advantage of Thailand’s location and encourage higher value-added activities. The IMF considers that the cost effectiveness of the incentives could be increased by careful coordination and periodic evaluation of their effect.
Reform of pension schemes would help Thailand to deal with the problems of an ageing population. Productivity could be enhanced by measures in education. Trade integration could also enhance external competitiveness and could facilitate structural reforms.
The government of Thailand recently released an emergency decree providing a “tax audit exemption program” which has become effective and available to taxpayers beginning in 2016.
According to the program, any kind of tax examination, inquiry, assessment, payment demands or criminal prosecution in respect of income generated before 1 January 2016 will be waived. Eligible taxpayers to get facility from the program are those companies and partnerships whose revenue does not exceed THB 500 million (approximately U.S. $14 million) for any accounting period ending on or before 31 December 2015. Thus the program is available for many small- and medium-size enterprises (SMEs). Therefore, income tax, value added tax (VAT), specific business tax (SBT), withholding tax and/or stamp duty due by an eligible company or partnership will get exemption from audit if those taxes are related to income generated or expenses incurred in any accounting period ending on or before 31 December 2015.
The Deputy Prime Minister of Thailand announced on 4 January 2016 some further tax incentives for targeted industries.
According to the announcement 10% to 15% income tax exemption will be provided for professionals working in targeted industries.
For the purpose of increasing current projects in Thailand, double tax deductions will be provided on capital investments like the procurement of machinery, equipment, computer software, etc. made by foreign investors before 31 December 2016.
Also, for the research expenditure incurred during the period 2015 to 2019 triple tax deductions will be provided.
The Royal Cabinet of Thailand ruled on 13 October 2015 that the corporate income tax rate will be permanently kept at 20% effective from 1 January 2016.
Previously the rate was reduced to 23% from 30% for the tax year 2012 and temporarily to 20% for the years 2013-2014. But now the cabinet has determined to keep the rate at 20% permanently.