Tax Reduction Measures

Tax Reduction Measures Measure

Objective

Start Date

1. Measure to support and develop real estate industry  Exemption from income tax and stamp duty for immovable property seller who has used the property as the primary residence which the owner's name has been appeared in the residence registration at least one year, until the time of transaction; or the seller enter a contract purchases his new residence in one year after the transferring ownership.  Fees charged on transferring ownership and mortgage of immovable property are reduced from 2% to 0.01%.  Individual’s down payment or immovable property hire-purchase installment is tax deductible up to 200,000 baht.

To support and encourage the citizen to access appropriate residence by promoting the liquidity to used house market.

Ministry code No. Ministry code No. 241, effective from 1 January 2003. Royal Decree No. 444, was enforced from 30 November 2005. Ministry of Interior Announcement issued under Land Act dated 11 November 2005. Ministry of Interior Announcement issued under condominium Act dated 11 November 2005.

Ministry code No. 230 effective from 7 September 2001 (applicable with official transferring ownership registered within 1 year from the effective date.

Tax Reduction Measures Measure

Objective

Start Date

1. Measure to support and develop real estate industry For cash purchase, the tax deductible can be claimed in two consecutive years, 100,000 baht each. For purchase by installment, tax deductible will be applicable in the year that transferring ownership take place.

 Legal entity can deduct 20% of the purchase costs with remaining deductible in the next 20 years under a normal circumstance as the depreciation cost or the initial allowance.

Royal Decree No. 388, effective from 6 September 2001 (applicable to permanence building used for business transaction which has been transferred ownership and registered within 1 year from the effective date).

Tax Reduction Measures Measure

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2. Tax measure for facilitate and expedite debt restructuring  Privilege is granted under guideline set out by the Bank of Thailand, applicable to debt restructured before 1 January, 2005.

 Deduction to the creditor’s income tax are debt write-off.

 Exemption from income tax, VAT, specific business tax and stamp duty for debtor and creditor to transfer ownership, sale, relevant service and issuance of financial instrument.

Royal Decree No. 433 and Ministry code No. 251, effective from 7 January 2005.

Royal Decree No. 418 and Ministry code No. 243, effective from 1 January – 31 December 2004.

Royal Decree No. 410 and Ministry code No. 242, effective from 1 January – 31 December 2003.

Tax Reduction Measures Measure

Objective

Start Date

2. Tax measure for facilitate and expedite debt restructuring  Exemption from income tax, VAT, specific business tax and stamp duty for debtor to transfer ownership of immovable property to others and issuance of financial instrument for debt repayment purpose.

 Registration Right and Legal Fees on immovable property transaction are reduced to 0.01 % for debtor.

Tax Reduction Measures Measure

Objective

Start Date

3. Tax measure to lower burden on individual's income tax  Exemption from personal income tax allowance to first 100,000 baht (from 80,000 baht in the past).

To lower tax burden on income earner and enhance economic expansion.

Royal Decree No. 430, effective for 2004 net income onwards.

Ministry code No. 240, effective for insurance premiums were paid from 1 January 2002 onwards.

 Increase deductibles from insurance premium allowance up to 50,000 baht (from 10,000 baht in the past.)

4. Measure to revive and develop Thai capital market  To lower legal entity’s income tax for companies listed in SET from 30% to 25% and to 20% in MAI for 5 years. Applicable to companies listed in SET from 6 September 2001 to 31 December 2005.

To encourage firms to float their securities in the SET and to stimulate port folio investment especially in SET.

Royal Decree No. 387, effective from 6 September 2001. Royal Decree No. 421, effective from 12 October 2005.

Tax Reduction Measures Measure

Objective

Start Date

4. Measure to revive and develop Thai capital market  To resolute in debt instrument in writing. - Calculate tax on a net basis. - Exemption from individual‘s income tax for interest from B/E or any debt instrument in writing issued by partnership or other legal entities.

To lower tax duplications as well as to promote investment in domestic debt investment.

 To resolute in securitization problems - Debtor who pay the interest on his residence lone to Special Purpose Vehicle (SPV) is entitled to the same deductible on residence interest costs as before.

To facilitate the securitization as an assistance to transfer commercial bank lone to the capital market and to balance the financial system while the instruments option have been expanded for the investors.

Royal Decree No. 388 and Ministry code No. 231, effective from 6 September 2001.

Royal Decree No. 389, effective from 6 September 2001. Ministry code No. 232, effective from 1 January 2001.

Tax Reduction Measures Measure

Objective

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4. Measure to revive and develop Thai capital market - SPV is exempted from legal entity’s income tax.  Tax privilege for individual who invest in Long Term Equity Fund (LTF). - Exemption from individual’s income tax for one who invest in LTF.

To facilitate long term investment through LTF.

Ministry code No. 246, effective from 4 September 2004 to 30 June 2007.

5. Tax measure to develop Asian Bond  Exemption from income tax for interest; differences between sale and booking prices and benefit from transferring on all investment of nonresident or legal entity partnership that is registered abroad with no business in Thailand.

To develop Asian Bond under APEC cooperation.

Royal Decree No. 429, effective from 25 January 2005.

Tax Reduction Measures Measure

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6. Tax measure to promote domestic savings  Tax privilege for investor who invest in Retirement Mutual Fund (RMF). - Exemption from individual’s income tax for one who invest in RMF. - Amend rule and condition in income tax exemption for RMF. - Lower tax burdens for investment via RMF.

To increase long term saving channels for employee, government officer and income earner and to promote long term savings.

Ministry code No. 228, effective from 1 January 2001. Ministry code No. 246, effective from 4 September 2004.

7. Tax measure to develop and support SMEs  Lower legal entity’s income tax for Company or partnership which paid up capital on the last day of the accounting period by not exceeding more than 5 millions baht as follow. - 15% of first one million net profit for legal entity which had accounting period from 1 January 2004.

To develop SMEs, lower tax burdens and encourage investment in SMEs for stimulate the overall economy.

Royal Decree No. 394, effective for the legal entity which had accounting period from 1January 2002. For Royal Decree No. 431, effective for the legal entity which had accounting period from 1 January 2004.

Tax Reduction Measures Measure

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7. Tax measure to develop and support SMEs - 20% of first one million net profit for legal entity which had accounting period from 1 January 2002 to 31 December 2002. - 25% of one million excess of net profit but not more than three millions baht.

 To facilitate the Venture Capital (VC) that is registered in SEC before 30 January 2008. - Exemption from legal entity’s income tax for dividend and capital gain that VC receive.

To promote the investment in SMEs and to stimulate the investment in capital market via VC that effect to the overall economic expansion.

Royal Decree No. 396, effective from 31 January 2002. Royal Decree No. 439, effective from 19 October 2005. Royal Decree No. 442, effective from 24 November 2005.

Tax Reduction Measures Measure

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7. Tax measure to develop and support SMEs - Exemption from individual’s income tax for dividend and capital gain that the investor who invest in VC receive.

 Exemption from individual’s income tax 190,000 baht for one who is 65 years old or older.  To deduct for cost of parental caring (30,000 baht each for one who cannot earn enough and under taking care by income earner).  To increase tax privilege for private’s donation that facilitate public learning by no charges and any donation given to fund for rehabilitation, fund for social welfare and child protection or Sport Authority of Thailand.

To lower tax burdens for senior citizen. To support parental caring.

To promote learning and entertaining assistance by private sector for a lack of chance one.

Ministry code No. 257, effective from 1 January 2005.

Act for Fiscal Code No. 36, effective from 14 January 2005.

Royal Decree No. 428, effective from 25 January 2005.

Tax Reduction Measures Measure

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Start Date

7. Tax measure to develop and support SMEs  To allow company and legal entity partnership that increase living allowance to their employees can deduct 1.5 times of their expense from 1 August 2005 to 31 December 2007.

Encourage private sector to increase living allowance payment for the employees. So that they can access to the appropriate income at present.

Royal Decree No. 438, effective from 19 October 2005.

 Tax privileges are grated to the individual and legal entity who change their equipment to the energy-efficiency one which has never been used before by allowing 1.25 times tax deductible of the first 50 millions investment value.

To promote energy -efficiency.

Royal Decree No. 436, effective from 6 October 2005 to 31 December 2006.

Tax Reduction Measures Measure

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8. Tax measure to promote social, education, and sport activity  Exemption from individual’s income tax To lower tax burdens for 190,000 baht for one who is 65 years senior citizen. old or older. • To deduct for cost of parental caring (30,000 baht each for one who cannot earn enough and under taking care by income earner).

To support parental caring.

Ministry code No. 257, effective from 1 January 2005. Act for Fiscal Code No. 36, effective from 14 January 2005.

9. Tax measure to promote and support training as well as develop and enhance labor skill  Legal entity that has cost of training, ether internal or external which is under Labor Skills Development Act B.E. 2545 for working preparing can use for tax deductible 2 times of that cost (from 1.5 time in the past).

To promote labor skill training.

Royal Decree No.437, effective from 19 October 2005.

Tax Reduction Measures Measure

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Start Date

10. Measure to extend duration of VAT reduction  Extend period for VAT reduction as follows: Reduce VAT from 10% to 7% for the following periods: - from 1 Oct 2002 to 30 Sept 2003 - from 1 Oct 2003 to 30 Sept 2004 - from 1 Oct 2004 to 30 Sept 2005 - from 1 Oct 2005 to 30 Sept 2007

To encourage the expansion of private spending which facilitates the economic recovery.

Royal Decree No. 383, effective from 1 October 2001. Royal Decree No. 407, effective from 1 October 2002. Royal Decree No. 416, effective from 1 October 2003. Royal Decree No. 440, effective from 1 October 2005

11. Improve customs taxation on automobile  To adjust excise tax on small automobile with engine less than 2000 cc. from 35% to 30 %.

To increase Thai automobile sector competency to be Detroit of Asia.

Ministry of Finance announcement No. 72 on lower rate and exempt excise tax, effective from 28 July 2005.

Tax Reduction Measures Measure

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12. Improve custom taxation  Improve taxation system to promote NGV using in transportation by exemption from import duty or decrease import duty for an equipment that used for NGV gas station and engine.

To improve custom taxation as a measure for an economic resolution through Thai’s natural resources using and import energy reduction.

Ministry of Finance announcement No. B.E. 4/2544, effective from 27 September 2001.

13. Improve excise tax  Increase excise tax on liquor, beer and wine, distillated liquor such as whisky, brandy and other special liquor and raise stamp duty up on cigarette.

To increase government revenue and keep the sustainability of trade balance.

Ministry code No. 118 issued under Liquor Act B.E. 2493, raising the Liquor tax rate. Ministry code No. 26 (B.E. 2544) issued under Tobacco Act B.E. 2509 adjusts the duty stamp a cigarette from 28 March 2001.