Problems relating to Trade and Investment on Thailand
14. Taxation Systems |
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Issue |
Issue details |
Requests |
Reference |
| (1) Arbitrary Nature of The Corporate Tax Audit and Correction | - In a case where customs clearance procedure is consigned with the coil center, back taxes are imposed on a non-taxable enterprise so approved by Board of Investment (BOI). (This shows an arbitrary nature of interpretation of laws.) | - It is requested that GOT discontinues back tax levy. | |
| (2) Double Tax Levy on Payment of Technical Licence Fees in Japan and Thailand | - Technical assistance fee (TAF) is differently interpreted between Thai and Japan so that in the case where TAF is paid by an enterprise in Thai to an enterprise in Japan, withholding tax on TAF is levied both in Thai and Japan, a case of double taxation results. | - It is requested that GOJ and GOT harmonise the Interpretative Rules on the Japan-Thailand Tax Treaty. | |
| (3) Double Taxation Risk due to International Non-Conformance of TPTS | - Especially as regards Transfer Price Taxation System (TPTS), rules are diversified by and between the States, so are their respective interpretations, so that a member firm as a group of companies faces a risk of double taxation. | - It is requested that GOJ/GOT work together to: -- prepare legal framework, (serving as Guideline, etc. to) the world standard transfer price taxation system, and -- complete advance pricing agreement system (APAs). |
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| (4) Disunity in Interpretation of Revenue Code | - Due to the differences in interpreting tax laws or by immature interpretation of the taxation personnel, the tax law is not properly implemented in some cases. - Tax Act is ambiguous so that the tax investigator in charge in his/her own interpretation may demand correction in the amount of tax return in the past fiscal years. |
-It is requested that GOT takes step to establish more refined precise tax law for homogeneous implementation unaffected by individual tax investigators. | |
| (5) Amendment of Corporate Income Tax | - Corporate income tax reduction schedule: -- 30% until the Fiscal Year 2011 -- 23% during the Fiscal Year 2012 -- 20% from the Fiscal Year 2013 |
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| (Action) - Since January 2013, GOT has reduced corporate income tax to 20%. If the judgement bases of the light tax state (or the trigger tax rate at 20% or less) in Japan remains at this level, the unitary tax upon foreign subsidiary, (which is equivalent to the anti-tax haven taxation in Japan) could apply to the member firm and its Thai operation. - On 14 October 2015, Thai cabinet approved the ministry of finance proposal to make permanent the corporate income tax rate of 20%, (after reduction) by the interim measures. |
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| (6) Large Sum of Overdue Interest (Surcharge) | - The levy of 1.5% interest (surcharge) is payable for correction of tax payment arrears for the past years. | - It is requested that DOR sets up surcharge for overdue interest, commensurate with the contents of correction. | - Thailand Revenue Code, Tax Law, Section 27 Surcharge on Payment of Tax Arrears |
| (7) Nebulous Reason for Delay in Refund of Withholding Tax | - While MFS has paid withholding tax (corporate income tax) of 3%, without having received refund for the past three fiscal terms. | - It is requested that DOR provides a clear explanation for the delay in tax refund upon filing tax returns. | |
| (8) Disagreement between DOR and Customs over Vat Levy on Transactions via Free Zones | - MFS has been conducting transactions via free zone with 0% VAT, however, MFS not being an enterprise in free zone, Department of Revenue (DOR) contends MFS is responsible for payment of VAT 7%. MFS has been dealing business via free zone at 0% VAT levy, after having received confirmation from both the local office of DOR and the customs. However, on one of the occasions in dealing via free zone, the central DOR office pointed out that enterprises dealing via free zone were liable to pay VAT 7%. While customs maintains 0%, there is no official document to support its position. (DOR takes the position of granting 0% VAT pending customs issuance of Official Documents (ODT). However, its preparation is not yet ready at the customs.) As regards free zone within Bangkok airport, promulgation of ODT enabling 0% VAT transactions is due within 3-months, provided, however, that in other free zones the release date of such ODT remains undecided. Such differences in VAT levy depending upon areas can cause confusions not only inside MFS but between MFS and its customers, also. | - It is requested that GOT takes step to harmonise the differences between DOR and ODT as soon as possible over the VAT administration as the VAT rates vary by Free Zone, due to the differences in view between Central and Local Departments of Revenue, or by the delay in issuing ODT. | |
| (9) Luxury Tax Levy on Car Air-conditioner | - Due to the ambiguity in rules, such as varying payment methods by car manufacturers, tax payers run the risk of over payment. | - It is requested that GOT: -- repeals luxury tax levy, or -- clearly defines the applicable rules. |
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