On 18 March 2014, the Thailand Revenue Department's sanctioning of the loss on sale of shares expenses was repealed by Instruction No Paw 146/2557.
For quite a long time in Thailand companies utilized a tax plan of converting debt owed by a related company into shares in that company then selling those shares to another related company to produce a loss on sale of shares which loss on sale of shares was claimed as a corporate tax expense.
But the Thailand Revenue Department's tax lawyers just about always denied the deduction for the loss. Almost every Revenue Department Tax Ruling would allow the loss incurred on the original shares in the related company on the basis that the original shares were acquired for earning investment income but would deny the loss on the additional shares acquired from the conversion of the debt on the basis that the additional shares were acquired only for creating an expense.
Despite all of the Revenue Department's own Tax Rulings, on 08 August 2008, the Revenue Department issued Instruction No Paw 135/2551 sanctioning the loss on sale of shares tax plan.
The Position from 18 March 2014
On 18 Mar 2014 (five and a half years after the Instruction No Paw 135/2551), the Revenue Department issued its Instruction No Paw 146/2557 prescribing simply:
Departmental Instruction No Paw 135/2551 issued on 8 August 2008 shall be repealed; and
This Instruction No Paw 146/2557 shall apply from the date of its issue.
And therefore, from 18 March 2014, Thailand's tax position should revert back to that of the Revenue Department's tax lawyers, which is summed up as being:
A loss incurred on the original shares in the related company is permitted on the basis that the shares are acquired for earning investment income;
But a loss incurred on the additional shares acquired from a conversion of a debt is not permitted because the additional shares are not acquired for the purpose of earning investment income, but instead, are acquired only for the purpose of creating an expense.
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