Tax changes published in the Royal Gazette on 18 May 2009

Royal Decree No 481

Extension of registration period with the Office of Securities and Exchange Commission (SEC) for venture capitalists investing in small and medium enterprises (SMEs)

Under Royal Decree No. 439, venture capitalists investing in SMEs were required to register with the SEC by 31 January 2008. Due to the current business environment and the need to stimulate greater levels of investment, the period of registration has been extended to 31 December 2011.
Tax exemption on capital gain from transfer of shares in SMEs by companies or juristic partnerships operating venture capital business

With effect from 19 May 2009, exemption from corporate income tax on the capital gain from the transfer of shares in SMEs is granted to companies or juristic partnerships operating the venture capita

Tax exemption for seminar and accommodation expenses (Royal Decree No. 482)

Exemption from corporate income tax is granted to companies or juristic partnerships for one accounting period, which begins on or after 1 January 2009, on income in an amount equal to the expenses paid for seminar rooms and accommodation when arranging seminars for employees in Thailand.

To qualify for the exemption, the following criteria need to be fulfilled:

Detailed supporting evidence of the seminar must be maintained in order to be provided to the Revenue Department when required.
The seminars must take place in Thailand. The seminar rooms and the accommodation need not be on the same premises but they must be for the same event. The cost of the seminar rooms may include food and drink provided in the normal commercial manner.
The seminars are required to be completed within the accounting period which begins on or after 1 January 2009.
The seminars must not be related to the training programmes for employees which are eligible for the privilege of double tax deduction under Royal Decree No 437.

Tax exemption on debt restructuring (Royal Decree No 483)
Royal Decree No. 483 extends the period for the granting of tax privileges for debt restructuring under the Bank of Thailand framework in respect of transactions incurred from 1 January 2009 to 31 December 2009.

Tax exemption for partial transfer of a business (Royal Decree No. 484)
Exemption from value added tax, specific business tax and stamp duty is granted to a limited company and a public limited company for the partial transfer of a business executed between 1 January 2009 and 31 December 2009 in accordance with the criteria, methods and procedures announced by the Director General of the Revenue Department

The Director-General of Revenue has released a Notification dated 3 July 2009 to prescribe principles and methods of exemption, which can be summarised as follows:

The transfer must be between affiliates which are public or that limited companies, organised under Thai law. The term “affiliates” means the transferor company holds more than 50% of the total shares of the transferee company or the transferee company holds more than 50% of the total shares of the transferor company. Furthermore, it also includes a case where the transferor company holds not less than 99% of the shares with voting rights of another company which in turn holds not less than 99% of the shares with voting rights in the transferee company; however, the shareholding ratio in the transferee company after the transfer of business could be reduced provided that the shareholding with voting rights continues to exceed 50%.

The affiliated company status must be maintained for not less than 6 months from 31 December 2009.

The registered paid-up capital of the transferee company must not be less than net asset value transferred.
The transfer must be completed within 31 December 2009. A notice of the transfer together with a restructuring plan and a list of assets to be transferred must be submitted to the Director-General prior to the transfer through the Revenue Area Office or the Large Tax Bureau Office in the district where the head office of the transferring company is located.
The assets transferred must be related to the transferor’s type of business and not be a normal sale. The transferee must use such assets in the same manner or for a related business. The transfer of assets must be made at the market price as at the transfer date according to Section 65 bis (4) of the Revenue Code.
If the transferor is a VAT registrant, the transferee must also be a VAT registrant and use the assets transferred in its business that is fully subject to VAT.
The transferor and transferee must not be debtors of the Revenue Department for outstanding tax as of the transfer date, except in respect of a guarantee placed for outstanding tax according to the Revenue Department’s regulations.

Tax exemption for energy - saving equipment (Royal Decree No. 487)
Under Royal Decree No 487 individual and corporate taxpayers will be entitled to an exemption from income tax on income equal to 25% of the total cost or expenses incurred in the acquisition of materials, equipment or machines which are energy-saving, excluding vehicles as well as the materials, equipment and machines used with the vehicles. The assets must be acquired and be ready for use between 19 May 2009 and 31 December 2010.

The materials, equipment or machines must be new and meet specified conditions. In addition, the energy-saving certification must be obtained from the Department of Alternative Energy Development and Efficiency by 31 December 2010.

The tax exemption under this Royal Decree will be subject to the criteria, methods and procedures announced by the Director General of the Revenue Department. However, no such announcements have yet been issued.

Extension of reduction in rate of specific business tax (SBT) (Royal Decree No. 488)
The reduced rate of specific business tax on the sale of immovable properties in a commercial manner or for profit of 0.1% (0.11% inclusive of the 10% municipality tax) has been extended for a further period of one year from 29 March 2009 to 28 March 2010 for the registration of rights and juristic acts relating to the sale of immovable properties.