On 22 June 2020, Thailand Tax Royal Decree (No 693) was gazetted, reviving the Thailand Special Economic Zone tax structure, which entitles corporate entities with a business operation in an SEZ to concessional corporate income tax.

This Tax Insight updates you about the revived SEZ tax structure under RD 693.

Revival of the Tax Structure

Royal Decree (No 693) revives the SEZ tax structure for corporate entities, that file their application for the SEZ corporate tax concession with the Thailand Revenue Department from the date of 23 June 2020 (the date Royal Decree (No 693) enters into force) to the date of 30 December 2020.

Special Economic Zones

Special Economic Zones are areas in the following ten Thailand border provinces that the Government is promoting for the purposes of improving and enhancing trade with border countries:

1. Tak (bordering Myanmar);
2. Sa Kaew (bordering Cambodia);
3. Trat (bordering Cambodia);
4. Mukdahan (bordering Laos);
5. Songkhla (bordering Malaysia);
6. Kanchanaburi (bordering Myanmar);
7. Chiang Rai (bordering Myanmar and Laos);
8. Nong Khai (bordering Laos);
9. Nakhon Panom (bordering Laos); and
10. Narathiwat (bordering Malaysia)

The SEZ Structure

An SEZ structure is a corporate entity that:

1. Has a business operation in an SEZ irrespective of the location of the head office of the corporate entity; and
   
2. The business operation in the SEZ is either that of manufacturing goods in the SEZ or providing services in the SEZ.
   

Tax Concession under Royal Decree (No 693)

Under Royal Decree (No 693) a corporate entity, that applies for SEZ tax structure status from the date of 23 Jun 2020 to 30 Dec 2020 and complies with all the rules and conditions is entitled to the following tax concession:

Corporate Income Tax

10% corporate income tax on net profit derived from the manufacturing of goods in an SEZ or a provision of services in an SEZ for 10 consecutive fiscal years

Rules and Conditions

The rules and conditions prescribed in Royal Decree (No 693) require a corporate entity to:

1. If not an already registered corporate entity on 23 June 2020, establish the SEZ business in a permanent building in an SEZ or if an already registered corporate entity on that date, establish the SEZ business in an extension or an addition to a permanent building in an SEZ;
   
2. Submit an application and a business plan to the Thailand Revenue Dept between the dates of 23 June 2020 and 30 Dec 2020;
   
3. Not claim any entitlement for corporate income tax benefits under the law governing BOI investment promotion, in whole or in part;
   
4. Not claim any entitlement for corporate income tax benefits under a Royal Decree law governing taxation of SMEs;
   
5. Not claim any entitlement for corporate income tax benefits under a prior Royal Decree law for an SEZ tax concession;
   
6. Prepare separate accounts for the business operation entitled to the SEZ corporate income tax concession and business operations not entitled to the concession; and
   
7. Comply with the Revenue Department's additional rules, procedures and conditions.
   

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