Tax Measures on COVID-19

Keywords: Mazars, Thailand, Tax, COVID-19, Cabinet,Withholding Tax, VAT Refund, Donations, Health Insurance Premiums, Super Savings Fund Extra

Updated: 10 June 2021

1. Reduction in withholding tax rates

In March 2020, Ministerial Regulation Number 361 was issued to reduce withholding tax rates on certain types of payments. On 12 January 2021, the Cabinet approved a draft Ministerial Regulation to amend Ministerial Regulation Number 361 in relation to the period for the reduction of the withholding tax rate from 3% to 2% for the payment of assessable income through the e-withholding tax system. The draft Ministerial Regulation extends the original period (from 1 October 2020 through 31 December 2021) to from 1 October 2020 to 31 December 2022. In addition, it also reduces the withholding tax rate of 5% to 2% for the payment of assessable income through the e-withholding tax system from 1 October 2020 to 31 December 2022.

Therefore, the withholding tax rate reduction under the draft Ministerial Regulation will be as follows:

2. Deduction of expenses for donations for COVID-19

On 22 June 2020, Royal Decree No. 701 to exempt income tax and VAT for donations to the Office of the Permanent Secretary, Prime Minister’s Office, was published in the Government Gazette.

Under Royal Decree No. 701, individuals, companies, and partnerships that make a donation electronically to the Office of the Permanent Secretary, Prime Minister’s Office, to help fight the COVID-19 virus between 5 March 2020 and 5 March 2021 can deduct the expenses for such a donation (not exceeding 10% of net income for an individual and not exceeding 2% of net income for companies or legal partnerships). The donation is also exempt from VAT.

The rules, procedures, and conditions specified by the Director-General of the Revenue Department must be complied with.

3. Deduction of 1.5 times interest expenses

On 12 July 2020, Royal Decree No. 707 providing an additional deduction of interest on low-interest loans (soft loans) was published in the Government Gazette.

Under Royal Decree No. 707, a company or legal partnership can claim a tax deduction of 1.5 times (1 time as a normal deduction and 0.5 times as an additional deduction) the interest expense paid on low-interest loans (soft loans) from 1 April 2020 to 31 December 2020. 

In order to qualify for the additional deduction under Royal Decree No. 707, the company or legal partnership must meet the following rules, procedures and conditions:

• Having income of not more than 500 million baht in the last 12-month accounting period, where the last day of the accounting period ended on or before 30 September 2019 arising from or in consequence of the business conducted, and filing a corporate income tax return for that accounting period by the due date specified in the Revenue Code.
• Having not more than 200 employees in the accounting period mentioned above.
• Giving its consent for the financial institution which is the lender to provide at least the following information about the loan that the borrower received under the measures for low-interest loans to assist entrepreneurs who are directly and indirectly affected by the COVID-19 outbreak:
  • The borrower's taxpayer identification number; and
  • Details of the loan agreement, including contract number, contract date, loan amount, term of the loan agreement, and interest rate.
• Paying interest on loans under the low-interest credit measures to help entrepreneurs directly and indirectly affected by the COVID-19 outbreak according to the Cabinet's resolution in March 2020.

4. Deduction of 3 times wage expenses

On 12 July 2020, Royal Decree No. 708 providing an additional deduction of wage expenses was published in the Government Gazette.

Under Royal Decree No. 708, a company or legal partnership can claim a tax deduction of 3 times (1 time as a normal deduction and 2 times as an additional deduction) the wage expenses paid from 1 April 2020 to 31 July 2020 to employees insured with the Social Security Fund. Eligible wages for the additional deduction shall be the amount actually paid to employees who earn not more than 15,000 baht per month.

“Wage” is defined as money agreed upon between employer and employees as compensation for their work under the employment contract for normal working time, regardless of whether it is hourly, daily, weekly, monthly, or otherwise. This also includes the money that an employer shall pay to its employees on holidays and days off to which they are entitled under the Labour Protection Act, but does not include overtime, bonuses, assets, or other benefits that an employer pays to its employees due to employment.

In order to qualify for the additional deduction under Royal Decree No. 708, the company or legal partnership must meet the following conditions:

• Having income of not more than 500 million baht in the last 12-month accounting period, where the last day of the accounting period ended on or before 30 September 2019 arising from or in consequence of the business conducted.
• Having not more than 200 employees in the accounting period mentioned above.
• Having a number of employees insured with the Social Security Fund on the last day of April 2020, May 2020, June 2020 and July 2020, whichever is the case, that is not less than the number of employees insured with the Social Security Fund on the last day of March 2020, unless there are reasonable grounds for this, as specified by the Director-General of the Revenue Department.
• Not claiming the additional deduction of wage expenses, whether in whole or in part, under another Royal Decree or the Revenue Code.

The rules, procedures, and conditions specified by the Director-General of the Revenue Department must be complied with.

If a company or legal partnership has claimed an additional deduction under this Royal Decree and subsequently fails to comply with the rules, procedures, and conditions, the right to claim the additional deduction under this Royal Decree shall be terminated. Consequently, the company or legal partnership must include the amount of the additional deduction already claimed as its income in its net profits for corporate income tax purposes in the accounting period in which the additional deduction was claimed. 

The company that meets the above conditions shall provide information of employment, wage expenses and number of employees in the report in the Revenue Department’s website within 150 days of the last day of the accounting period in order to claim the additional deduction under this tax measure. For an accounting period with the last day ended on or before 30 April 2020, information must be provided within 30 September 2020.

5. Investment in Super Savings Fund Extra

According to the Ministerial Regulation No.363 (2563 B.E.) that was published in the Royal Gazette on 26 May 2020, individuals investing in a Super Savings Fund Extra (SSFX) between 1 April to 30 June 2020, can deduct the actual investment amount, capped at 200,000 baht, as an allowance from personal income tax for only tax year 2020. The SSFX must invest not less than 65% of its net asset value in securities listed on the Stock Exchange of Thailand.

Individuals can sell SSFX units after holding them for at least 10 years from the date of purchase.  In addition, the rules, procedures, and conditions specified by the Director-General of the Revenue Department must be complied with.

This allowance will be in addition to the SSF allowance threshold (30% of the total income, capped at THB 200,000) and will not be included in the retirement saving fund threshold of THB 500,000.

6. Increase in tax allowance on health insurance premiums

According to the Ministerial Regulation No.365 (2563 B.E.) that was published in the Royal Gazette on 17 June 2020, the maximum personal income tax allowance on health insurance premiums paid from 1 January 2020 onwards for either a life or non-life insurance policy in Thailand has been increased from 15,000 baht to 25,000 baht.

However, deductions for health insurance premiums and life insurance policies, as well as for saving accounts with attached life insurance policies, must not exceed THB 100,000, and must be taken in accordance with the rules and procedures to be set out by the Director-General of the Revenue Department.

7. Early VAT refunds for “Good Exporters”

A “Good Exporter” as defined in Departmental Regulation Tor.490/2562 which has capital of over 10 million baht will receive a VAT refund earlier than normal, as follows:

• Within 15 days if filing electronically
• Within 45 days if filing on paper

This measure was announced by the Cabinet in March 2020 but is still not passed into law.

8. Reduction of land and building tax by 90% for 2021

On 31 January 2021, a Royal Decree on reducing taxes on certain types of land and buildings was published in the Government Gazette and became effective the following day. The purpose of the reduction is to alleviate the tax burden on people and entrepreneurs affected by the COVID-19 outbreak. 

Under the Royal Decree, tax on the following land and buildings shall be reduced by 90% of the amount calculated under the Land and Building Tax Act, B.E. 2562:

• Land or buildings for agricultural use
• Land or buildings for residential use
• Land or buildings for uses other than under points 1 and 2
• Vacant or unused land or buildings

Therefore, owners of the above land or buildings are required to pay only 10% of the land and building tax due for 2021.

9. Tax filing deadline extensions

On 28 January 2021 and 14 May 2021, the government extended the deadlines for filing returns and for paying personal income tax, withholding tax, and value-added tax. In addition, on 30 April 2021, the deadlines for filing returns and for paying corporate income tax were extended.

1. Personal Income Tax Returns

2. Withholding Tax and Value Added Tax Returns

3. Corporate Income Tax Return

This extension applies to companies or legal partnerships, excluding companies that have securities listed on the Stock Exchange of Thailand before or on the last day of the filing deadline, except those which must postpone annual general meeting of shareholders (“AGM”) to approve financial statements which were scheduled to be held from 26 April 2021 to 30 April 2021 for not more than 1 month after the original date fixed for holding the AGM due to government or provincial office announcements limiting the number of people who can attend events and activities to reduce the risk of spreading COVID-19. Such listed companies must notify the Director-General of the Revenue Department of the originally scheduled date of the AGM and the newly scheduled date of the AGM through the Revenue Department’s website by 31 May 2021.