Questions: The company provides housing to its affected employees to enable them to continue working and pays for the housing directly to the provider. The agreement is effected in the name of the employees and stated on the receipt, not the company’s name. Does the payment by the company qualify as tax deductible expense?
Answer: Yes, if the company has a clear policy for the support and evidence is substantiated as proof.
Questions: The company grants an interest-free loan to employees for housing repair. Will the company be exposed to the risk of interest assessment under Section 65 bis (4) of the Revenue Code?
Answer: The Revenue Department’s Ruling No. 0706/4260 dated 24 April 2007 states that in respect of an emergency loan to employees who are in financial difficulties without interest as welfare announced in the Company’s policy, it is considered that there are justifiable grounds pursuant to Section 65 bis (4).
Questions: Are corporate donations in kind to public charity organisations, for example the Red Cross, or intermediary agents, such as Channel 3 or government units to help flood victims tax deductible?
Answer: It is tax deductible at the amount equal to the cost of the donated items, provided that such amount together with the sum donated for public charity or public benefit pursuant to Section 65 ter (3) of the Revenue Code shall not exceed two percent of the net taxable profits.
Questions: A Thai company provides financial aid to an affected supplier company in Thailand without consideration. Is the financial aid treated as an expense for the Thai company and taxable income for the supplier company?
Answer: It should not treated as taxable income for the supplier company if the value does not exceed the damages pursuant to Clause 3 (2) of Royal Decree No. 527. It is also not a tax deductible expense under section 65 ter (3) for the company who provides the financial aid.
Questions: How is corporate income tax computed if the accounting and tax supporting documents are lost?
Answer: The Revenue Department issued guideline in the Ruling No. KorKhor. 0810/4971 dated 11 April 1989, which provided 5 methods of calculation as follows:
(1)Calculate net profit or loss by subtracting the value of the net assets at the beginning of the year from the value of the net assets at the end of the year. If the value of the net assets at the end of the year is higher, it means that there is a profit in an amount equal to the difference. If not, it means that there is a loss equal to the difference.
(2)Use the net profit according to the corporate income tax returns or the highest amount of tax paid as a result of a tax investigation during the past three years and use an average of the amounts as the base in calculating net profit.
(3)Calculate the net profit or loss by computing the percentage of the total net profit or loss to the gross receipts before deduction of expenses of the previous three accounting periods and then use the average percentage to calculate the net profit or loss from the gross receipts before deduction of expenses according to the business tax* returns.
(4)A business that is not subject to business tax* shall compute the percentage of total net profit or loss to the gross receipts before deduction of expenses as in 1.3 above and then multiply it by the gross receipts of any one of the previous years’ according to form P.N.D. 50 or by the highest gross receipts of the previous 3-5 accounting periods as a result of a tax investigation in order to compute the net profit or loss.
(5)Use the estimated amount of net profit or loss according to the half-year tax return (form P.N.D. 51) to calculate the net profit or loss for the period January – November 1988 plus or minus the actual net profit or loss for December 1988.
*Business tax already revoked
Questions: What should the company do if its accounting and tax supporting documents are lost or damaged by flood?
Answer: Report the lost or damaged documents to the police in the area as evidence. If there are practical problems, the relevant Area Revenue Office or the Bureau of Large Business Tax Administration should be contacted for their decision as per the Revenue Department’s newsletter dated 3 November 2011.
Report to an accounts inspector who is attached to the local accounts office that has the jurisdiction in the province where the company’s head office is located; or, file to a chief accounts inspector of the central accounts office at the Bureau of Business Compliance of the Department of Commercial Registration within fifteen days from the date of the problem arises, or the date such loss or damage becomes known.
Questions: What are the tax liabilities in the event of damage to goods and property?
Answer: They can be taken as a deductible expense upon sale or destruction according to the guidelines in Departmental Instructions No. Paw. 58/2538 and Paw. 79/2541.
Questions: When is loss from flood deductible for income tax purpose?
Answer: There are 2 cases to be considered:
(1) If the company is covered by insurance, the loss cannot be written off as expense right away, until the insurance recovery is settled. The part of the insurance compensation that exceeds the net book value of properties is tax exempt pursuant to Clause 4 of Royal Decree No. 527.
(2) If the company has no insurance, loss can be written off as deductible expense in the accounting period in which the loss occurs.
Questions: The company is BOI promoted. It is unable to continue its business operation due to the flood. Can the company engage another company to temporarily carry out production?
Answer: According to information from the Investment Service Centre, the Office of the Board of Investment dated 7 November 2011; the company may engage another manufacturer to temporarily carry out certain steps of the production process.
Questions: The parent company wishes to make a financial support to assist its affiliated company in Thailand that is affected by the flood. Is the donation tax exempt for the Thai company?
Answer: The donation from the parent company is tax exempt for the Thai company provided that the value of it does not exceed the value of the damage pursuant to Clause 3(2) of Royal Decree No. 527.