Thailand’s government is considering a tax deduction scheme for the kingdom’s traditional New Year festival in mid April known as Songkran. Whether they do their own accounting or they hire a Thai law firm to do this, taxpayers will be able to use tax invoices from the stimulus measure period against their taxable income.
The Finance Ministry plans to allow taxpayers the deduction period over the Songkran holiday for spending on dining and travelling inside the country.
“The move is aimed at encouraging Thais to travel domestically rather than going abroad for the holiday. In particular the government wants middle-income earners with high purchasing power to spend within their own country”, said BSA Law spokesman Apisakdi Kongkangwanchoke.
BSA Law is a leading international law firm in Thailand which offers tax consulting and accounting among its range of legal and financial services. It can provide advice and assistance, for example, to taxpayers in filing their yearly Personal Income Tax return. Foreigners working in the kingdom under a Thailand work permit are required by Thai law to do this the same as their Thai colleagues are.
Like many a law firm in Thailand, it also offers expertise in the areas of Thai labour law, corporate law, contracts, property, intellectual property, insurance, investment and starting a business in Thailand. BSA Law’s Thai visa service desk specializes in the process of obtaining a Thai visa.
The Songkran tax deduction scheme follows a similar scheme to spur spending that was rolled out in December of 2015 which allowed a tax deduction of up to Bt15,000 on purchases made during the New Year holiday. The ‘New Year gift’ from the Finance Ministry allowed shoppers to get a tax refund for goods and services, which needed to be purchased from registered businesses with a full receipt showing the Value Added Tax (VAT) and a tax invoice.
The details of the Songkran tax deduction plan were being finalized, for presentation to the cabinet ahead of the Songkran festival which is from 13 to 15 April 2016.
Finance Minister Apisak Tantivorawong said the measure was also designed to encourage businesses to legally register in the VAT system.
Recently the ministry was offering tax breaks for two years to small and medium sized businesses which adopted the single financial statement practice. The keeping of two financial statements, a real one for internal use and an understated one for tax filing, is a common practice among smaller businesses in Thailand. The ministry’s offer was aimed at expanding the tax base and putting an end to the practice of having two financial statements, by providing incentives to business operators.
A business that generates sales and revenue of Bt500 million or less each year is considered an SME.
A Finance Ministry statement released at the time also said companies which agreed to adopt the single financial statement practice would be exempted from backdating probes.
After signing up, companies were obligated to prepare financial statements that accurately reflected their real situation. They must also refrain from doing anything to evade taxes, and must file and pay their dues properly.
Tax breaks were offered as a bonus for signing up to the program. Businesses with not more than Bt5 million in paid-up capital and Bt30 million in sales revenue in the 2015 accounting year would enjoy tax breaks for two accounting years.
For the 2016 accounting year, the businesses will be exempted from corporate income tax on net profits, and in the following accounting year the first Bt300,000 of their net profits will be tax-exempted and the portion above this will be taxed at 10 per cent.