Thailand Half Year Corporate Tax Filings
Update | September 2015
On 10 September 2015, the Director-General repealed his Instruction No Paw 50/2537 and replaced it with his Instruction No Paw 152/2558, which prescribes, from and including the 2012 financial year (i.e. the first year of change in the corporate tax rates) the following are considered to be reasonable excuses for half year corporate income tax return filings:
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 Insight | 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 Insight Article only. It should not be used to determine any matter without consulting with an experienced Thailand tax advisor.