Tax News No. 242 February 2017

Tax News No. 242 February 2017

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New Labour Protection Act on retirement

  • On 4th January 2017, the cabinet passed a resolution to approve the draft of Labour Protection Act (No. …) B.E. … as proposed by the Labour Department and would submit to the Council of State and propose to the National Legislative Assembly afterwards. The essential contents of the draft are as follows
    1. Adding a provision on the authority of the Wage Committee that the Committee can define the rate of minimum wages for employees in each group.
    2. Repealing a provision of Section 108 which states that the employer shall submit a copy of work regulation to Director-General of Department of Labour Protection and Welfare or a person assigned by the Director-General.
    3. Adding a provision of Section 118/1 so that retirement shall be a cause of termination. In case that the employer does not specify the age of employees for retirement, the employees shall get retired when they are completely 60 years old. The employer shall also provide severance pay as prescribed by law.
    4. Adding a provision of Section 144 which provides sanction in case that the employer fails to provide severance pay for the employees when they are retired.
  • Since the existing Labour Protection Act does not specify that retirement is a cause of termination, the employer may or may not provide severance pay subject to employment agreement. However, if a new amendment of Labour Protection Act is effective, the retirement shall be a cause of termination and the employer has to pay to the employees, who are terminated because of retirement, severance pay. If the employer refuses to do so, the employer shall be punished by a new provision of Section 144. In addition, if the employer decides to hire retired employees to work, the employer shall provide welfare under the previous employment agreement that the employees are entitled to obtain.

New Labour Protection Act on hiring children

  • Labour Protection Act (No. 5) B.E. 2560 (2017) amends offence and punishment for child labor as follows
    1. Section 144 Paragraph 1 is amended to be Section 144 (1) (2) (3). Section 144 (1) (2) use the same contents as previous Section 144 Paragraph 1. Section 144 (3) adds an offence on child labor in the age as prescribed by Ministerial Regulation and in certain work.
    2. Section 148 is amended to have the violation of Section 31 only, which an employer is punished by not over 1 year imprisonment or not over 200,000 Baht fine or both.
    3. Section 148/1 is added for the violation of Section 44 i.e. child labor in the age lower than 15 years. The employer is punished by 400,000 – 800,000 Baht fine for each employee or not over 2 year imprisonment or both.
    4. Section 148/2 is added for the violation of Section 49 or 50 i.e. child labor in the age lower than 18 years in certain work. Generally, the employer shall be punished the same rate as Section 148/1. However, if the offence of the employer causes mental and physical harm to the employee, the employer shall be more severely punished by 800,000 – 1,000,000 Baht fine for each employee or not over 4 year imprisonment or both.

Limit period for tourist visa

  • Ministerial Regulation on Procedures, Methods and Conditions for Checking, Exemption and Change a Type of Visa (No. 5) B.E. 2559 (2015) provides new procedure in Section 13 Paragraph 3. The Section 13 states that a person who temporarily enters into Thailand with Tourist Visa through immigration checkpoint or land border crossing point can enter into Thailand not over 2 times per calendar year, except for a Malaysian person who may enter more than 2 times per calendar year.

Authority of BOI committee based on size of project

  • BOI Instruction No. 1/2560 Subject: Amendment of Authority and Responsibilities of Subcommittee in Project Consideration provides that the Subcommittee can approve the following
    1. The project of which its size is 200 Million Baht to not over 2,000 Million Baht (not include land and working capital).
    2. The project that manufactures products for the purpose of export and of which its size is over than 2,000 Million Baht (not include land and working capital).
    3. Amendment, examination promoted business and further tax privileges for not over 10% of the approved values for a project of which its size over than 2,000 Million Baht (not include land and working capital).
    4. Expansion of operation for all size of promoted projects.

Amendment Act on Investment Promotion Act

  • Investment Promotion Act was amended in 2017 and consisted of the following main points
    1. Repealing provisions of Section 7 Paragraph 3, Section 20 (4) and (18).
    2. Adding a provision of Section 11/1 that BOI committee can evaluate investment promotion at least every 2 years in order for following and assessment of performance and providing privileges to promoted persons.
    3. Adding a provision of Section 13/1 that BOI can assign a third party to check, control, evaluate the promotion and privileges
    4. Amending a provision of Section 16 Paragraph 3 that business obtaining investment promotion shall not be included business that manufactures for the purpose of export and distribution overseas.
    5. Adding a provision of Section 30/1 that the promoted person can be exempted from import duty for materials imported for research and development
    6. Adding a provision of Section 31/1 that in case of business using high level of technology and innovation, the promoted person can be exempted from corporate income tax for net profits not over 13 years.
    7. Adding a provision of Section 31/2 that if the promoted person is not entitled to exempt from corporate income tax, he can deduct investment money not exceeding 70% of net profits within 10 years as of the date that he got incomes of the business.
    8. Amending a provision of Section 32 that BOI committee has authorization to consider whether business under Section 31 and Section 31/1 can be exempted from corporate income tax or reduced corporate income tax in a rate not over 5% within 10 years.
    9. Adding a provision of Section 32/1 that the computation of net profits and net loss shall be applied by Revenue Code.
    10. Amending a provision of Section 34 that business under Section 31 and Section 31/1 can obtain dividend exemption.
    11. Amending a provision of Section 36 that a promoted person obtained import and export duty exemption under Section 36 (1) (2) and (3) shall comply with conditions as prescribe by BOI committee and shall not be subject to law on customs and tariff. In addition, Section 36 (4) was repealed.

Competition enhancement of Target Industry Act

  • In February 2017, there is Act on Enhancement of Domestic Competitiveness of Targeted Industry B.E. enacted and it comprises of the following main points
    1. Targeted industry means the industry that matches with country’s effectiveness, causes high benefits on economy, society and security and enhances sustainable competitiveness. Targeted industry needs to be a new industry and has no production or service in the country, or an industry using high technology and knowledge to develop and promote innovation.
    2. An enterprise of targeted industry shall be a juristic person incorporating in Thailand.
    3. Privileges of targeted industry are
        1. Privileges are under law on investment promotion, such as privileges in machines, raw materials and necessary materials, but not include a matter of exemption and reduction of corporate income tax under such law.
        2. Exemption of corporate income tax from net profits not over 15 years as of the day that business gets income.
        3. Monetary support from a fund as considered by a policy committee to support expenses of investment, research and development
        4. Targeted industry can carry back net loss not over 5 years as of the expired date of corporate income tax exemption.
        5. Computation of net profits and net loss shall be applied by Revenue Code.
        6. Dividend of targeted industry exempted from corporate income tax can exclude the computation for paying income tax during obtaining corporate income tax exemption.

Index of legal movement in relation to business

Interested tax news

Supreme Court No. 1762/2559

Revenue Code Amendment Act (No.44) B.E. 2560 (2017)

Royal Decree Issued under the Revenue Code Governing Revenue Exemption (No. 630) B.E. 2560 (2017)

Ministerial Regulation No. 324 (B.E. 2560) issued under Revenue Code on Revenue Exemption

Director-General Notification Governing Income Tax (No. 282)

Procedures, methods and conditions on income tax exemption for actual income paying for goods or services

Departmental Instruction No. Paw.154/2559

Corporate Income Tax consideration of “justifiable grounds” under Section 65 Bis (4) in case of computation of income and expense under Section 65 Paragraph 3 of Revenue Code

Departmental Instruction No. Paw.155/2560

Rules of preparing tax invoice under Section 86/4 and Section 86/5 of the Revenue Code especially for a full form

Ruling No. GorKor 0702/ 8336 Date 6 October B.E. 2559 (2016)

Withholding tax and value added tax in case of paying royalty fee to foreign countries

Ruling GorKor 0702/Por./10011 Date 25 November B.E. 2559 (2016)

Value added tax in case of exporting goods

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