International tax planning and the implications of the new corporate income tax rate in ThailandImplications of thenew CIT rate• Status quo: The new CIT rate regime for 2012, 2013, 2014• Dependencies between the CIT rate and tax planning policies: What is international tax planing?• Practical considerations for the tax structuring• Implications on sales, services, and financing• Offshore companies - are they still a useful tool?
Promised in July ...• “Ms. Yingluck said an aggressive, nationwide increase in the minimum wage, by 40% to 300 baht, about $10, per day in Bangkok, is set to take effect at the beginning of 2012. ...• ... But employers will benefit from a cut in corporate tax rates that she plans - to 23% from 30%. That rate will fall further, to 20% in 2013.”• Wall Street Journal, July 7, 2011 ... and delivered in December• On December 21, 2011, the Thai Government announced in Royal Decree No. 530 B.E. 2554 the following CIT reduc- tions: ✓ 23 % of net profits of the juristic person for the first accounting period which begins on or after 1 January 2012; ✓ 20 % of the net profits of the juristic person for the following two accounting periods which begins on or after 1 January 2013 and 2014.• The Revenue Code has not been modified.• PIT has not been changed.
CIT rate comparison USA France Germany Australia Japan Thailand 2011China / Vietnam Thailand 2012 Thailand 2013 Singapore Hong Kong 0 10 20 30 40Source: OECD Tax Database 2011 Corporate Income Tax RateCIT rate of SME commencing 2012• Royal Decree No. 530 reduces in Section 6 the CIT rate for small and medium sized enterprises (SME), that means ✓paid up capital not exceeding THB 5 million and ✓gross annual revenue from sale of goods or services not exceeding THB 30 million• The CIT rates for SME: ✓Net taxable profit THB 1 to 150,000 is tax exempt in the accounting year 2012 and thereafter. ✓Net taxable profit THB 150,001 to 1 Million, CIT rate is 15% in the accounting year 2012 and thereafter. ✓Net taxable profit THB 1 million is taxed at a CIT rate of 23% in the accounting year 2012. ✓ Net taxable profit THB 1 million is taxed at a CIT rate of 20% in the accounting year 2013 and thereafter.• Maximal tax savings 2013: (850,000 x 5%) + (150,000 x 20%) = THB 72,500, approximately equivalent to a MacBook Pro
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