Promoting investment in southern border provinces
In the Cabinet meeting on 27 September 2016, the Cabinet agreed on and approved draft Royal Decrees to promote investment in the southern border provinces Yala, Pattani, and Narathiwai, (collectively called “the Area”).
Keywords: Mazars, Thailand, Tax, CIT, Revenue Department, Royal Decrees
3 November 2016
We set below the key points of the draft laws:
- A corporate income tax (CIT) payer that has places of business in the Area is entitled to an income tax deduction for the actual amount of the expense incurred in respect of the addition, alteration, extension, or improvement of an asset (but not for repairs for maintenance). Subject to other conditions, this deduction is in addition to depreciation that would generally be allowed on such outlay.
- Subject to certain conditions, a new start-up CIT payer in the Area can be exempt from CIT for five accounting periods. Such a CIT payer must be registered during the period from 1 October 2015 to 31 December 2020. The CIT payer must also have paid-up capital at the end of an accounting period not exceeding 5 million baht, and derive income from the sale of goods or the provision of services not exceeding 30 million baht.
- A qualified staff member (to be defined by an upcoming Notification of the Director-General of the Revenue Department) of the CIT payer (whether a new start-up or existing CIT payer) that has places of business in the Area can choose to pay personal income tax at the rate of 3% of employment income derived from the CIT payer. Such remuneration can also be excluded from other income for personal income tax calculation purposes. To be entitled to this tax benefit, the staff member must satisfy certain conditions including being resident in the Area for 180 days or more in the calendar year.
- A CIT payer that does not have places of business in the Area is also entitled to an income tax deduction of 200% of the actual cost of an investment in the shares of a company or contribution to a legal partnership which has offices in the Area, whether for increasing capital or for starting such a company or partnership. To be entitled to this tax benefit, the shares in a company or contribution to the partnership cannot be sold or transferred, unless done so on justifiable grounds, which will be set out in an upcoming Notification of the Director-General of the Revenue Department.
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