On 27 Apr 2011 Royal Decree (No 516) was gazetted, extending indefinitely the tax concessions for Partial Business Transfer transactions after 01 January 2011. This Tax Insight has been updated for this new law.
The Transaction
A Partial Business Transfer transaction in Thailand is carried out by one affiliate company transferring part of its business operation to another affiliate company for enhancement of the efficiency and competitiveness of the companies.
The Revenue Code Prescriptions
For Partial Business Transfer transactions, the Thailand Revenue Code and Royal Decree (No 516) prescribe as follows:
For a transferor company transferring its assets, liabilities, rights and obligations to a transferee company
Corporate income tax on any gains earned from the transfer
For a transferor company transferring its movable assets to a transferee company
Exemption from value added tax
For a transferor company transferring its immovable assets to a transferee company
Exemption from specific business tax
For the executing of instruments that are required in connection with the PBT
Exemption from stamp duty tax
The Revenue Department's Conditions
The conditions prescribed by the Director-General of Revenue for Partial Business Transfer transactions are as follows:
The partial business transfer shall be between private or public companies established under Thai law;
The partial business transfer shall be to an affiliate and the transferor and transferee companies shall remain affiliated for not less than six months after the transfer;
The transferee company shall have registered capital of not less than the value of the partial business transferred to it;
The assets that are transferred shall be the assets of the partial business that is transferred and shall not be assets transferred under a normal or usual sale and purchase of assets transaction;
The transferee company shall use the assets for carrying on a same or a similar kind of business as that carried on by the transferor;
The transferee company shall not be entitled to claim any tax losses from the partial business that arose prior to the transfer; and
The transferee company shall use the assets transferred in a business that is subject to VAT.
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