On 23 December 2013, Royal Decree (No 571) was gazetted, prescribing:​

"For businesses undertaking regular transactions similar to commercial banking, but not being a business of banking, finance, securities, credit foncier or a life insurance business under Sections 91/2 (1), (2) or (3) of the Revenue Code, interest received from lending of money to related entities shall be exempt from Specific Business Tax."

For the Revenue Department's tax audit officers, this Royal Decree (No 571) now converts the intention of the below Director-General’s Instruction No Paw 26/2534 and rulings of the Supreme Court into a thou-shalt-not-impose Specific Business Tax law for related party interest income.

SBT on Related Party Interest Income

When the tax audit officers re-assessed interest income under the corporate tax law's "market price" rule, they also imposed Specific Business Tax on the amount of the re-assessed interest income.

But taxpayers should note that this was not right. The corporate tax law provision for re-assessed income tax does not automatically apply for Specific Business Tax and for tax audit officers to also impose SBT, they should have firstly followed the rules for application of SBT, as follows:

Departmental Instruction No Paw 26/2534

For a company loaning funds to an affiliated company, irrespective of those funds coming out of the company's own funds or coming out of funds that are borrowed by the company, the interest income earned is not considered as being subject to SBT.

For a company investing funds in bank deposits, irrespective of the funds coming out of the company's own funds or coming out of funds that are borrowed by the company, the interest income earned is not considered as being subject to SBT.

Supreme Court Ruling No 687/2550

For a company providing loans to shareholders for the amount of unpaid share capital, such loans are not “regular transactions similar to commercial banking” and the tax audit officers have no power to assess SBT on the interest income.

Supreme Court Ruling No 13847/2553

For a company providing advances to suppliers for securing company supplies, such advances are not “regular transactions similar to commercial banking” and the tax audit officers have no power to assess SBT on the interest income.

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