Extension of tax measures to encourage an electronic tax system (e-Tax Invoices & e-Receipts and e-Withholding tax)

By Tossaporn Kiattidamrongkul, Associate Director

On 24 January 2023, the Minister of Finance announced that the Cabinet had approved the extension of tax measures to promote the 2 measures on the wide use of e-Tax Invoices & e-Receipts, and e-Withholding systems for transactions between private entities and transactions with the government sector to encourage Thailand’s digital economic and digital transformation for both private and public sectors. This is something that RSM taxation service Thailand has been keeping a close eye on.

The Ministry of Finance, represented by the Revenue Department realises the importance of increasing efficiency for tax collections and taxpayer’s services, including, the increasing of Thailand’s competitiveness. Therefore, the draft Royal Decree has been proposed to be issued under the Revenue Code on the tax exemption extending the period of tax measures to promote the investment in the electronic tax (“e-tax”) system and the draft Ministerial Regulation issued under the Revenue Code on income tax, extending the period of tax measures to promote the use of the electronic withholding tax (e-Withholding Tax) system as follows:

1. Tax measures to promote investment in electronic tax systems to companies and juristic partnerships to allow double deduction for investment expenses on actual payment through the e-Tax Invoice & e-Receipt systems and the e-Withholding Tax system from 1 January 2023 to 31 December 2025.
2. Tax measures to promote the use of the electronic withholding tax (e-Withholding Tax) system by reducing the rate of withholding tax from the rates of 5%, 3% and 2% to 1% for paying assessable income through the e-Withholding Tax system from 1 January 2023 to 31 December 2025

The Revenue Department also added that such measures will assist the private sector in reducing their costs and the burden of preparing and storing documents, including performance of tax duties. In addition, it will also assist entrepreneurs to increase cash flow by the reduction of withholding tax of approximately THB 9,800 million per year.

In this regard, the reduction of the withholding tax rate to 1% under the e-Withholding Tax system has been in force in accordance with Ministerial Regulation No. 389 (B.E. 2566), dated 10 March 2023. RSM Thailand Tax Consultants will update the details of the Royal Decree once it is enforced.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Topic: Extension of tax measures to support the relocation of foreign investors' production bases (Thailand Plus Package)

On 7 March 2023, the Cabinet approved the extension of tax measures to support the relocation of foreign investors’ production bases (Thailand Plus Package) which was originally to end on between 31 December 2022 to 31 December 2025. This is to encourage the investment and development of private businesses in Thailand.

The Ministry of Finance represented by the Revenue Department recognises the importance of relocating the production base of foreign investors into the country, including the development of the country’s industry and the development of highly skilled personnel. This is to ensure that the aforementioned policies continue to meet the goals set by the Government.

Therefore, the Revenue Department proposed that the Cabinet to approve a draft law to extend the period of tax measures to support the relocation of foreign investors’ production base (Thailand Plus Package) by way of enacting a Royal Decree under the Revenue Code regarding tax exemption for 3 issues, which requires companies or juristic partnerships being entitled to deduct expenses paid between 1 January 2023 and 31 December 2025 as detailed below:

1. Expenses for investments in automated systems are deducted 2 times.
2. Expenses for hiring highly skilled personnel are deducted 1.5 times.
3. Expenses for promoting the development of highly skilled personnel are deducted 2.5 times.

The Revenue Department also added that the extension of the tax measures is continuing to help incentivize foreign investors to relocate their production bases into Thailand in terms of increasing industrial productivity through automation, hiring highly skilled personnel to develop the country’s industry including developing the potential of personnel to have higher skills to increase the number of qualified personnel and to enhance the country’s competitiveness.

In this regard, RSM Thailand Tax Advisors will update the law once it is enacted.

Should you require information with regard to this article or alternatively tax service Thailand advice, please contact us on [email protected]