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May 21, 2019
Thailand issues guidance regarding International Business Center regime
On 3 May 2019, the Thai Revenue Department issued Notification of the Director-General of the Revenue Department under the Royal Decree 674 (the Notification), providing details of the conditions, application procedures and relevant application forms under the International Business Center (IBC) regime. It is effective retroactively from 29 December 2018.1 The Notification provides additional details to the main IBC conditions set forth under the Royal Decree 674.
Key additional details on the IBC
Foreign employees eligible for the flat 15% personal income tax
To qualify for the flat 15% personal income tax, the individual must:
Additional reporting requirements for qualifying royalty income
A report should provide details of the developed software patent or copyright and evidence showing that the result is from technological research and development activities performed in Thailand by the IBC or other parties engaged by the IBC.
Tax treatment for the IBC
An IBC may have both IBC and non-IBC activities. The IBC activities may also consist of services and/or royalties. When the IBC consists of different IBC activities as well as non-IBC
I. IBC vs. non-IBC
II. IBC activities: Services fee vs. royalties – each category of income, expense and loss follows the same calculation method stated above.
Conversion to the IBC
1. See EY Global Tax Alert, Thailand enacts International Business Centers regime to replace existing incentive regimes, dated 7 January 2019 and Thailand repeals grandfathered tax incentives for certain incentive regimes, dated 1 April 2019.
2. Paper submissions are acceptable during the time the Revenue Department’s online application portal is not yet ready.
For additional information with respect to this Alert, please contact the following:
EY Corporate Services Limited, Bangkok
Ernst & Young LLP (United States), Thai Tax Desk, New York
Ernst & Young LLP (United States), Asia Pacific Business Group, New York