On 10 Sep 2015 Thailand's Director-General of Revenue issued Instruction No Paw 152, providing an additional reasonable excuse for half-year corporate income tax return filings.

This Insight has been updated for the prescription in Instruction No Paw 152.

The basis on which half-year corporate tax shall be paid is prescribed in Section 67 bis of the Revenue Code, as follows:

• For listed companies, banks and financial institutions, half-year tax shall be based on the amount of the actual net profit for the half-year.
• For other corporate entities, half-year tax shall be based on an estimated amount of net profit for the entire year.

And for corporate entities required to base the half-year tax on an estimated net profit for the entire year, the next Section 67 ter of the Revenue Code prescribes that when the estimate is lower than the actual net profit by more than 25%, the corporate entity shall be subject to a penalty of 20% of the shortfall half year tax that is not paid.

But Section 67 ter includes four more words, "without a reasonable excuse", which means only without a reasonable excuse shall a corporate entity 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 totally honest and legitimate, it's just about impossible to get a Thailand tax audit officer to believe it, and the way to have a reasonable excuse is to follow the Director-Generals Instruction No Paw 50, which orders tax audit officers to permit the following as reasonable excuses:

1. When a corporate entity prepares an estimated net profit and files a half-year tax return with a half-year tax payment that's not less than one half of the tax liability amount in the previous full year's tax return; and
2. When a corporate entity prepares an estimated net profit and files a half-year tax return with an estimated net profit that's not less than the net profit in the previous full year's tax return and a half-year tax payment is less than half the liability amount in the previous full years tax return because of an entity being entitled to a tax exemption or a tax rate reduction.*​

* As amended by the Director-General's Instruction No Paw 152 issued on 10 Sep 2015

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