Thailand’s Tax Relief Measures to Counter COVID-19 Impact

• Thailand has issued a variety of tax relief measures covering tax deductions, VAT refunds, and tax filing extensions to counter the economic impact of the COVID-19 outbreak.
• This comes after the country’s central bank forecast the economy shrinking by 5.3 percent this year.
• Investors should seek the assistance of registered tax advisors to better understand how they can benefit from these relief measures.

Thailand, on March 27, 2020, issued a series of tax relief measures covering tax deductions, VAT refunds, and tax filing extensions to counter the economic impact of the COVID-19 outbreak.

The country’s central bank, the Bank of Thailand, has forecasted the economy will shrink by 5.3 percent this year; COVID-19 has already taken a heavy toll on exports and tourism – two sectors that account for some two-thirds of Thailand’s GDP.

On March 20, 2020, the central bank cut its benchmark rate by 25 basis points to 0.75 percent. The rate cut follows similar decisions by other ASEAN nations, such as Indonesia and the Philippines, who cut their benchmarks by 25 and 50, respectively. The government hopes the emergency policy rate cut will address liquidity strains and accelerate debt restructuring for borrowers, in particular, for small and medium-sized enterprises (SMEs) and households.

Investors should seek the assistance of registered tax advisors to better understand how they can benefit from these relief measures.

Interest expense deduction

The government will make available 150 billion baht (US$4.5 billion) in soft loans for SMEs at an interest rate of two percent for the first two years. SMEs can claim a 150 percent deduction for interest expenses on these loans.

The maximum each SME can receive is 20 million baht (US$606,000). To be eligible, businesses will need to fulfil the following criteria:

• Have less than 200 employees;
• Maintain a single set of accounts; and
• Have an annual revenue of less than 500 million baht (US$15.1 million).

Withholding tax deductions

The government announced that withholding tax will be reduced from 3 to 1.5 percent starting from April 1 until September 30, 2020. From October 1, 2020, this tax rate will be reduced again to two percent until December 31 of the same year.

For businesses, this would cover commissions, royalties, and professional fees. Investors should note that this incentive is eligible for those that make payments via the e-Withholding Tax system.

VAT refunds

Businesses that participated in the ‘Good Exporter’ program can receive VAT refunds within 15 days, which would normally take 30 days. This is only available for businesses if the VAT returns are filed through the e-filing system.

For businesses filing paper returns, VAT refunds can be received within 45 days (compared to the usual 60 days).

A Good Exporter is a public or limited company that adheres to the government’s export regulations, is VAT registered, and must have a ratio of goods exported abroad of no less than 50 percent of total sales. Investors should see the website of the Revenue Department of Thailand for more information regarding the conditions and application process.

Deduction of salary costs

SMEs can deduct 300 percent of eligible salary costs paid to employees for the period April to July 2020, for corporate income tax (CIT) purposes. To be eligible for this incentive, SMEs must fulfil several conditions:

• The salaries that are eligible for the 300 percent deduction must be below 15,000 baht (US$454) per month, per employee;
• The total number of employees cannot exceed 200;
• The SMEs annual revenue does not exceed 500 million baht (US$15.1 million);
• Employees must be insured under the national social security program;
• The number of insured employees during the said period should not be lower than the number of insured employees as of December 31, 2019.

Personal and corporate income tax filing extensions

The government has extended the deadline for the filing of personal and CIT returns. The new deadline for filing personal income tax is August 31, 2020.

For businesses that have their accounting period ending 2019, the deadline is also extended to August 31, 2020. For businesses that have their accounting period ending 2020, the new deadline is September 30, 2020. 

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