(19/2006)
Please be informed that on 15 September 2006 Departmental Notifications on Income Tax No. 156 and 157, which set out guidelines and conditions for corporate income tax exemption, were enacted pursuant to Royal Decree No. 460. With the objective of boosting Thailand’s economic competitiveness by encouraging the private sector to enhance production efficiency and the quality of services, the Regulations provide corporate income tax exemption in the following cases.
1) If a listed company carries out a project that involves making additions, altering, expanding or improving its assets, but not repairing them for maintenance, it will be entitled to corporate income tax exemption for twenty-five percent of the expenditure actually invested in such project. The expenditure must be incurred within five accounting periods from the accounting period commencing on or after 1 January 2006 and the exemption is subject to the condition that the project is relevant to the main business of the entity and has a value of 5 million baht or over. In addition, to avoid the issue of double tax privileges, the Regulations stipulate that the assets must not be used in a business which has been granted other tax privileges, such as BOI promotion, or other businesses generating tax-exempt income, and that the assets themselves must not have been granted other tax privileges, e.g. the privileges in relation to the government’s measures to promote research and development and the measures to promote the merchant navy.
2) If a juristic company or partnership sells its machinery and uses the derived income to purchase brand new machinery to replace it within one year, it will be eligible for corporate income tax exemption. This is subject to the condition that the company or partnership provides evidence of the acquisition of property, such as receipts and invoices. The remaining costs of the machinery sold cannot be deducted as expense for the computation of income tax. In addition, the machinery must be used for the expansion of production capacity and the enhancement of the quality of services and the sale must be made during the period from 1 January 2006 to 31 December 2010. The conditions laid out to avoid double tax privileges are similar to those in the first case as mentioned above.
