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Thailand: Income and expense recognition for financial businesses

Thailand: Income and expense recognition

The Thai Revenue Department issued Departmental Regulation No. Taw.Paw. 329/2563 (30 October 2020) to amend the rules for revenue and expense recognition for businesses in the banking, finance, securities, and credit sectors.

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The amendment provides that the businesses must recognize interest income and expense under an accrual basis by using the effective interest rate (EIR) method pursuant to generally accepted accounting methods. This means that the application of a cash basis in recognition of interest income which has been in default for more than three consecutive months is repealed.

The following table sets out the changes:

Previous regulation

Amended regulation

An accrual basis must be applied in the computation of the revenue and expense of a juristic company or partnership conducting business in the banking, finance, securities, and credit sectors under the related laws except for revenue in the form of interest which has been in default for more than three consecutive months. Juristic companies or partnerships may treat interest received thereafter as the revenue of the accounting period in which it is received.

An accrual basis must be applied in the computation of the revenue and expense of a juristic company or partnership conducting business in the banking, finance, securities, and credit sectors under the related laws when the computation of interest income and expense must be computed by the EIR method according to generally accepted accounting methods.


KPMG observation

The rules for revenue and expense recognition for life insurance, credit card or other businesses of a similar nature remain unchanged.

Read a November 2020 report prepared by the KPMG member firm in Thailand

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