Reduction of corporate income tax rate for listed companies

(18/2008)

In order to stimulate investment in the private sector and to provide for fair competition thereby resulting in economic expansion, the following two Royal Decrees, which became effective on 7 August 2008, have been issued.

Royal Decree No. 474 was issued to extend the period in which companies may apply and become newly-listed on the Stock Exchange of Thailand (SET) or the Market for Alternative Investment (MAI) and obtain the corporate income tax reduction granted under Royal Decree No. 467. Under Royal Decree No 467, the reduced tax rates of 25% for companies listed on the SET and 20% for companies listed on the MAI will be applicable only for companies which applied for listing on the SET or the MAI between 1 January 2007 and 31 December 2007 and which must be listed by 31 December 2008. Royal Decree No. 474 extends the period for the application submission from 31 December 2007 to 31 December 2008 and for being listed to 31 December 2009.

Royal Decree No. 475 was issued to reduce the corporate income tax rate to 25% for three accounting periods commencing from the accounting period starting on or after 1 January 2008 for the first Baht 300 million of net profit for companies listed on the SET and to 20% for the first Baht 20 million of net profit for those listed on the MAI. The reduced tax rates will be applicable only for companies listed on the SET and the MAI which are not granted for the tax rate reduction under Royal Decree No. 467 (as amended by Royal Decree No. 474) as mentioned above.

It is worth noting that those companies which have been listed on the SET or the MAI between 6 September 2001 and 31 December 2005 will continue to be taxed at reduced tax rates under Royal Decree No 387. Upon the expiry of these tax rate reductions, they will be taxed at the reduced rates under Royal Decree No. 475, but not beyond the accounting period ending on or after 31 December 2010.

It is further noted that listed companies that benefit from the reduced income tax rates under Royal Decree No. 475 are not permitted to take the benefit of the tax exemption on income equal to 25% of capital expenditure available under Royal Decree No. 460.