SMEs will now have the opportunity for a clean start by joining the new tax amnesty program in Thailand. On 25 March 2019, the Act for the Exemption on Penalties, Surcharges, and Criminal Offenses and Support of Operations Under the Revenue Code, B.E. 2562 AD 2019 (the "Tax Amnesty 2019"), was published in the Government Gazette. A similar rule was applied in 2015 under the Royal Act on the Exemption and Support for Tax Operations Under the Revenue Code, B.E. 2558 AD 2015, in which corporate taxpayers who registered for the single account program were exempted from tax audits, tax assessments, and any criminal charges under the Revenue Code regarding the income in an accounting period ending on or before 1 January 2016.
Who is eligible for the Tax Amnesty 2019?
The Tax Amnesty 2019 aims to encourage small and medium-sized Enterprises (SMEs) to join the official tax system and prepare their accounting records to reflect actual business operations and commercial transactions. Only corporate taxpayers that are subject to corporate income tax (CIT) on net profits with taxable income of up to THB 500 million are eligible to join the Tax Amnesty 2019 program.
Kindly note that the following key points should be taken into consideration in determining the THB 500 million threshold.
a) The taxable income is only calculated from the latest 12-month accounting period, ending on or before 30 September 2018. This means that the preceding accounting years are not relevant. b) Taxable income means revenue recognized in accordance with section 65 of the Revenue Code, excluding revenue exempted from CIT.
What are the benefits of the Tax Amnesty 2019?
If you are eligible for the Tax Amnesty 2019, you will be exempt from penalties, surcharges, and any criminal charges regarding CIT, value-added tax (VAT), specific business tax (SBT), and stamp duty on any incorrect or unfiled tax returns before 26 March 2019.
1) being a limited company or limited partnership; 2) having taxable income of up to THB 500 million in the latest 12-month accounting period ending on or before 30 September 2018; 3) having already filed the CIT return (Form P.N.D. 50) for the latest accounting period (ending on or before 30 September 2018) by 25 March 2019 4) having never received any tax assessment notice or tax summons from the Revenue Department; and 5) having never used or issued any false tax invoice in a manner which is considered a criminal offense under the Criminal Code which has been subject to an official investigation.
Is any registration required for the eligible corporate taxpayers?
Yes. The applicant is required to register with the Revenue Department from 1 April to 30 June 2019 via the Revenue Department's website at www.rd.go.th, and submit the registration evidence (e.g. printed receipt from the website) together with the tax returns to the Revenue Department.
What action is required after registration?
After the registration, the applicant has to:
1) submit the paper-based tax returns and pay any unpaid taxes or tax shortfall to the Revenue Department for the following period by 30 June 2019:
- CIT for the accounting periods from 1 January 2016 to 31 December 2017;
- VAT or SBT for tax months from January 2016 to February 2019;
- stamp duty for instruments executed from 1 January 2016 to 25 March 2019; and
- withholding tax and remittance of VAT for transactions from 1 January 2016 to 25 March 2019.
2) submit all the tax returns under the Revenue Code via the e-filing system for the 12-month period from 1 July 2019 to 30 June 2020, unless there is a reasonable cause to do otherwise, including:
- the CIT returns (Forms P.N.D. 50, P.N.D. 51, P.N.D. 52, and P.N.D. 55);
- the VAT returns (Form P.P. 30 and P.P. 36);
- the SBT return (Form P.T. 40);
- the stamp duty return (Form O.S. 9); and
- the withholding tax returns (Forms P.N.D. 53 and P.N.D. 54).
Yes. Failure to comply with the above conditions will lead to a clawback on exempt penalties and surcharges. However, it is likely that you will still be eligible for the waiving of criminal charges in the case of not filing tax returns.
What are the key takeaways?
For those who are considering applying for this program, there are certain key considerations, as follows:
- only penalties, surcharges, and criminal charges are exempt, and there is no exemption for the subject taxes;
- the exemption is provided only for specific amnesty periods as mentioned above;
- the Revenue Department still has the right to conduct tax audit during the amnesty period;
- after registration, it is a condition that you must file all tax returns via the e-filing system for at least 12 months, and paper-based filling is not allowed; and
- taxpayers who were charged with a common criminal offense, such as using or issuing false tax invoices by 25 March 2019, cannot apply for this program.
Although the tax benefits under the Tax Amnesty 2019 may not be as beneficial to taxpayers as those under the previous tax amnesty regime, it is still a good opportunity for SMEs to voluntarily declare any shortfall or delinquent taxes to the Revenue Department during the amnesty period. This would mitigate tax exposure on surcharges, penalties, and criminal charges, and increase the trustworthiness of their businesses.
The Tax Amnesty 2019 is offered for a limited time, and we do not expect the Revenue Department to propose any amnesty programs again in the next few years. Please note that the eligible taxpayers can join the Tax Amnesty 2019 until 30 June 2019.