Thailand Half Year Corporate Tax Filings
Update | September 2015
As mentioned in our below Tax Advantage Insight Article, the easiest (and safest) way for entities to have a reasonable excuse for a half-year corporate tax return filing is to follow the Director-General's Instruction No Paw 50/2537.
On 10 September 2015, the Director-General repealed his Instruction No Paw 50/2537 and replaced it with his Instruction No Paw 152/2558, which prescribes, from and including the 2012 financial year (i.e. the year of the first change in the corporate income tax rates) the following are considered to be reasonable excuses:
1 above is how the Revenue's tax audit officers had always applied the reasonable excuse under Paw 50/2537, and 2 above is how the Revenue's tax lawyers had always interpreted the Instruction.
But irrespective of that, if your company followed the interpretation in 2 (especially for the 2 financial years of 2012 and 2013 when the tax rate reductions occurred) and the Revenue's tax audit officers didn't accept it and imposed the 20% penalty under Section 67 ter on your company, the Director-General's issue of his new Instruction No Paw 152/2558 means that your company now has a right to request the Revenue's tax audit officers to refund the 20% penalty to your company.
Tax Advantage Insight Article | August 2006
Half-year corporate income tax returns are required to be filed within 2 months after the end of an entity's half-year, and for most corporate entities in Thailand, 31 August is the last day for filing the tax return and paying the half-year tax amount.
Section 67 bis of the Revenue Code prescribes the basis on which half-year tax is required to be computed and paid, as follows:
And Section 67 ter of the Revenue Code prescribes that when a corporate entity estimates a net profit amount for a year that is lower than the actual net profit for the year by more than 25% the corporate entity is subject to a penalty of 20% of the shortfall half-year tax not paid.
But the prescription in Section 67 ter of the Revenue Code includes four more important words … “without a reasonable excuse”. That is, only "without a reasonable excuse" shall corporate entities be subject to the 20% penalty under Section 67 ter.
It is one of the tax-facts-of-life in Thailand that irrespective of a reasonable excuse being an honest and legitimate one, it is almost impossible to convince a Revenue Dept audit officer to believe you, and the easiest (and safest) way for a corporate entity to have a reasonable excuse is to follow the Director-General's Instruction No Paw 50/2537, which prescribes as follows:
In the case of a corporate entity estimating an amount of net profit and filing a half year tax return for the payment of half-year tax that is not less than one half of the tax payable for the previous financial year, this case is considered to be a reasonable excuse.
Accordingly, by simply paying a half-year tax amount for the current financial year calculated on a net profit estimate that is not less than one-half of the previous full year's net profit, your company will have a reasonable excuse and the Revenue Department audit officers cannot impose the 20% penalty under Section 67 ter of the Revenue Code.
This is a general information Tax Advantage Insight Article only. It should not be used to determine any matter without consulting with an experienced Thailand tax advisor.