The Government recently issued an Emergency Decree aimed at incentivizing taxpayers to regularize their tax affairs on a forward looking basis. Any tax examination, inquiry, assessment, payment demands or criminal prosecution in respect of income generated prior to 1 January 2016 will be waived. The Emergency Decree for the so-called ‘tax audit exemption program’ is in force and available to taxpayers from 1 January 2016.
The Government recently issued an Emergency Decree aimed at incentivizing taxpayers to regularize their tax affairs on a forward looking basis.  Any tax examination, inquiry, assessment, payment demands or criminal prosecution in respect of income generated prior to 1 January 2016 will be waived.  The Emergency Decree for the so-called ‘tax audit exemption program’ is in force and available to taxpayers from 1 January 2016.
Which taxes will be exempt from audit and for what period?
Disqualification from the tax audit exemption program
In the following instances the tax audit exemption program will not be available:
Process and conditions to apply for the tax audit exemption program
If the eligible company, partnership or SME wishes to apply for the tax audit exemption program it must notify and register with the Revenue Department before 15 March 2016. In addition, the eligible company, juristic partnership or SME must, from 1 January 2016 onwards:
Failure to comply with the above conditions will result in the tax audit exemption program being revoked retrospectively from 1 January 2016.
Additional benefits for SMEs
In order to encourage SMEs to join the tax audit exemption program, the Government issued Royal Decree No 595 that provides the following corporate income tax exemption to qualifying SMEs:
After the utilization of the additional tax benefits discussed above, the SME will still be entitled to the reduced SME tax rates under Royal Decree No 530.
The objective of the tax audit exemption program is to bring more taxpayers intothe system and encourage tax compliance, which should, in the long term,improve overall revenue collection.
Tax payers are often reluctant to voluntarily correct non-compliance as they are concernedthat it may trigger a tax audit for previous years. This could be both timeconsuming and result in additional liabilities. Thus, the intention of thisprogram is to provide certainty to taxpayers that no tax audit will beconducted by the Revenue Department in respect of the past years.
Although the certainty is promised, there is a concern from some taxpayers that theRevenue Department will specifically scrutinize and audit the future taxperiods of eligible companies, juristic  partnerships or SMEs that haveelected into the tax audit exemption program.  It is therefore imperativethat the taxpayers that decide to take advantage of the program correctlyadminister their tax affairs going forward.
The program may be particularly advantageous to taxpayers with a history of taxnon-compliance, in the context of acquisition of an entity with historic taxexposures, or taxpayers planning to expand their business, especially in lightof future opportunities presented by the AEC. Additionally,taxpayers wishing to obtain a bank loan may be forced to improve their taxcompliance.  From 1 January 2016, the Ministry of Finance and the Bank ofThailand require that financial institutions request that a loan applicantprovides its accounting records and financial statements, which have beensubmitted to the Revenue Department for tax filing purposes, in support of theloan application.
KPMG Tax Team is available to assist clients in assessing whether the auditexemption program would meet their needs and improving tax compliance goingforward.  The window of opportunity exists until 15 March 2016.
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