It’s common for small businesses in Thailand to prepare two financial statements, one real and one “understated” for taxation.

Now the Thailand Ministry of Finance wants to enlarge the tax base and a measure to do so is to end the double financial statement practice.

Yesterday January 4, 2016, the ministry stated that small and medium-sized businesses (SME) will be given benefits if they sign up for a single financial statement practice. Signing up will be possible from January 15, 2016, to March 15, 2016 and it can be done online.

SMEs who signs up obliges to:

  • Only prepare one financial statement, a statement which shows the reality of their operation
  • Not avoid taxes
  • Pay their duties correctly

In return SMEs who signs up will get tax reliefs:

  • 2016: 0 % corporate income tax
  • 2017: 0 % corporate income tax on the first THB 300,000 of the net profit, 10 % corporate income tax on the exceeding net profit
  • Applicable for SMEs with up to THB 5 million in paid-up capital and THB 30 million in turnover

Additionally, SMEs who sign up will be exempted from backdating investigations:

  • Applicable for companies with up to THB 500 million in revenue 2015
  • On-going investigations and trials concerning tax liabilities, issuing fake tax receipts and avoided taxes before 2016 will however be completed, even for companies signing up from 2016
  • If signed-up companies fail to meet the demands they are no longer protected from new backdated investigations

The ministry will secure that banks will use financial statements from tax filings (not any other unofficial financial statements) as basis for loans and other transactions, starting from January 1, 2019.

By encouraging companies to adopt a single financial statement practice the ministry aim to achieve a sustainable tax base, showing the actual economic situation of Thailand.

The ministry also hopes that a transition to a single financial statement practice will result in statements that shows the true results and financial positions, giving the companies basis for economic decisions and planning. Wonderful words, closing to my focus on performance and income planning!

Source: Bangkok Post January 4, 2016: Two-year tax breaks for SMEs