Leo Watanabe
2024年7月30日
The Director-General of the Revenue Department on Income Tax has published three announcements (No. 446, No.447, No.448) in the Official Gazette outlining the new criteria, methods, and conditions for income tax reductions and exemptions for businesses, skilled workers, and investments in special development zones (SDZs). These updates aim to foster economic growth in Thailand's SDZs through new incentives. These announcements came into force retroactively from 1 January 2024.
Income Tax Reductions for Businesses:
Under Royal Decree No. 783 B.E. 2024, businesses operating in special development zones can benefit from reduced income tax rates. This announcement aims to support enterprises in these areas by providing clear guidelines on income definition, calculation, and tax filing procedures. Companies or juristic partnerships with mixed-income from both special development zones and other sources must calculate profits and losses for each business type separately. If expenses cannot be clearly attributed to a specific business type, they should be averaged based on the income proportions of each business type.
The filing of income tax returns for these entities will use the same taxpayer identification number, with separate documentation showing detailed profit and loss calculations for each business type.
Incentives for Skilled Workers and Investments:
The Revenue Department has set new guidelines to offer tax reductions and exemptions for skilled workers, experts, and investments in SDZs. These measures are designed to attract and retain skilled labor and experts and encourage substantial investments in SDZs. To qualify for the tax reduction schemes, Skilled workers must possess a minimum of a bachelor's degree or equivalent technical/vocational certification, pass the national skill standard test (level 2), and have at least 5 years of relevant work experience. Experts must have at least a bachelor’s degree and a minimum of 8 years of relevant work experience. Employers are required to notify the Revenue Office with employee details before the first income payment and retain supporting documents for inspection.
Companies or juristic partnerships investing in special development zones are eligible for double corporate income tax exemptions on actual expenses, provided they meet specific criteria, such as having no prior business establishment in the zone for at least one year before the investment and not transferring shares except under specific capital increase conditions.
Tax Exemptions for Target Industries:
The Revenue Department has also set new guidelines for companies wishing to receive income tax exemption related to engagement in target industries. To be eligible, companies must use approved core technology in their production and service processes, which needs certification from the National Science and Technology Development Agency. The application for approval must be submitted online through the Revenue Department's website using Form R.M.1, along with a PDF of the certification.
Companies or juristic partnerships that have already been approved and wish to expand their operations or add new products/services in target industries must submit an additional application using Form R.M.2.
Companies using this tax exemption cannot simultaneously benefit from other tax incentives under investment promotion laws.
Conclusion:
The current Thai government is launching several sets of comprehensive measures to relaunch the post-pandemic sluggish economy by attracting foreign investors into the country. Thailand's new tax incentives for businesses, skilled workers, and investments in Special Development Zones represent a significant opportunity for growth and expansion. Businesses operating in or considering expansion into special development zones should carefully review these new regulations to fully leverage the available benefits.
At BizWings, we specialize in helping businesses navigate such regulatory landscapes with ease. With our team of Japanese-certified accountants and Thai experts, we provide end-to-end support in accounting, auditing, compliance, management, and expansion. Our goal is to empower foreign businesses to thrive in the Thai market, ensuring they can focus on growth while we handle the complexities and intricacies of navigating the Thai business landscape. Contact us to learn how we can help you make the most of these new opportunities in Thailand's special development zones.
Source: Royal Thai Government Gazette