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Following the release of the COVID-19 relief measures in March 2020, the Ministry of Finance has released the Royal Decree Nos. 707 and 708, which have come into effect from 13 July 2020, to provide further guidelines of certain tax relief measures for SMEs.

The details of the tax relief measures are summarized below. 

Additional deduction for SMEs on interest expenses incurred from soft loans

(Royal Decree No.707)

Eligible Small and Medium Enterprises (SMEs) can claim an additional 50% deduction of interest expenses (150% deduction in total) incurred on soft loans obtained under the Government’s measure to aid business operators who have been affected from COVID-19 outbreak. The interest expenses must incur in the period from 1 April 2020 to 31 December 2020.

To be eligible for the increased tax deduction, the SME must meet the following conditions in the 

12-month accounting period ending on or before 30 September 2020:

  • The annual revenue must not exceed THB 500 million, and
  • The number of employees must not exceed 200 persons

Additional deduction for SMEs on salary expenses paid to insured employees

(Royal Decree No.708)

The SMEs employers can claim an additional 200% deduction (300% deduction in total) of salary expenses paid to insured employees under Section 33 of the Social Security Act for the salary cycles of April 2020 to July 2020. Such expenses must be paid in the period from 1 April 2020 to 31 July 2020 for the insured employees who receive salary of not exceeding THB 15,000 per month.

Qualified salary is defined as the amount agreed by the employer and the employee to be remunerated for the work performed under the employment agreement, either per day, per week, per month or otherwise agreed, including the amount paid by the employer to the employee for work performed on holidays or leaves that the employee is entitled to under the Labor Protection Act. However, it does not include overtime payments, bonuses and other benefits relating to employment.

To be eligible for the additional tax deduction, the following conditions must be met:

  • The annual revenue must not exceed THB 500 million and the number of employees does not exceed 200 persons in the 12-month accounting period ending on or before 30 September 2020, and
  • The number of insured employees on the last day of April 2020, May 2020, June 2020 and July 2020 must not be lower than the number of insured employees on the last day of March 2020, unless the SME has any justifiable reasons as prescribed by the Director-General of the Revenue Department, and
  • The SME must not utilize other tax benefits relating to salary expenses, and
  • Other conditions, procedures and requirements to be announced by the Director-General of the Revenue Department must be complied.

If SMEs fail to comply with the specified procedures and requirements, the applied tax benefit will be revoked. The amount of tax benefits received must be included as taxable income for corporate income tax purposes in the accounting period that such tax benefit is used.

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