Tax Incentive for Eco-Automobiles

16 July 2009

Yesterday the Board of Investment (BoI) approved a large reduction of 90 percent on import duties for raw materials and parts used in the production of eco-automobiles. The reductions will be maintained for a period of 2 years, starting from the date manufacturers begin importing.

The BoI expects this measure to reduce the retail value of eco-cars by 100,000 baht. However, a source at the Thai Automotive Industry Association stated that automobile manufactures to reap the most benefit from this measure are those who rely on imports instead of local content, whereas manufacturers relying on local content may not gain much from the measure nor be able to lower the retail price of automobiles.

The BoI also approved maximum tax incentives for various investments in the three southern provinces experiencing separatist violence, namely Pattani, Yala and Narathiwat as very few applications have been received for this region recently.

Refund for Specific Business Tax (SBT)

15 July 2009

Property buyers who have performed a property purchase in Thailand recently may be afforded the opportunity to request a refund from the Revenue Department based on the government’s tax incentive package to promote growth in the real estate market.

Based on the Royal Decree of the Revenue Code (vol. 427) B.E. 2551, the Thai government reduced the specific business tax for property purchases from 3.3 percent to 0.11 percent. This measure became effective on 29 March 2008 and expired on 28 March 2009. Buyers who transferred property after the expiration date were charged at 3.3% according to Thai land law.

However, the Royal Decree of the Revenue Code (vol. 488) B.E.2552 extended the reduction of the specific business tax from 29 March 2009 to 28 March 2010 and prescribed that the specific business tax will remain at the reduced rate of 0.11 percent during this period. The extension has a retroactive effect so that buyers who transferred property after 28 March 2009 and were charged at 3.3% may seek a refund from the Revenue Department.

International Financial Reporting Standards to Be Implemented by SET

14 July 2009

The Stock Exchange of Thailand (SET) sources have stated that the agency will progressively implement International Financial Reporting Standards (IFRS), starting in 2011.

Companies with the highest proportion of trading on the Stock Exchange of Thailand, namely the SET50 companies, will be required to implement IFRS by 2011. SET100 companies are to follow by 2012, and for all listed companies on the SET and the Market for Alternative Investment by 2015.

The implementation of IFRS is perceived by analysts as a means to boost the local Thai market by drawing global investors and capital through conservative accounting practices.

A source at the accounting supervision department of the SET explained that IFRS provides a true picture of the financial status of a company by including factors such as future liabilities, an example being employee retirement schemes and their cost to the company. Moreover, under IFRS, revenue is accounted for at the completion of sales.

IFRS may also require two sets of accounts to be prepared, one in Thai currency and the other in the principal currency used.