In light of the Covid-19 virus crisis that is causing the current economic downturn which is affecting businesses across the kingdom, The Royal Thai Government recently approved Phase One of a broad range of financial and fiscal relief measures designed to help Thai companies, especially small and medium-sized enterprises (SMEs), alleviate the current business downturn.
The travel and tourism industries are a primary focus of attention for these relief measures since this sector is and will be the most affected by the economic downturn. Thailand’s Finance Minister Uttama Savanayana said that tourism, which accounts for 12% of Thailand's GDP, has been one of the worst affected business sectors due to a 44% decline in visitors in February of 2020, and Chinese visitors alone were down a staggering 85%.
The downturn has had a severe ripple effect across the Thai economy, affecting all forms of transport, trade and other services. Many hotels and restaurants have temporarily suspended operations due to lack of business, as well as to prevent the further spread of the virus. The lack of liquidity also threatens the future of other business areas as well as employment levels.
These relief measures were drafted by the Ministry of Finance and are based on the principles of "Timely, Targeted and Temporary as Necessary". The measures were approved by the Thai Cabinet on 10 March 2020, and are as follows:
- Low-interest loans (at 2% interest for a period of 2 years, not over 20 million Baht per customer) in the total amount of 150 billion Baht.
- Suspending the principal, reducing the interest rate for the debts of the Government Saving Bank and Government Housing Bank.
- The Bank of Thailand has become more lenient in granting commercial bank loans.
- The Social Security Fund will provide a credit line (at 3%, for a period of 3 years) in the amount of 30 billion Baht.
- Reducing the withholding tax from 3%
- The withholding tax imposed on payment for services, hire of work, commissions (paid to juristic persons) and liberal professional fees will be reduced from 3% to 1.5% for payments made from 1 April to 30 September 2020. The withholding tax will subsequently be reduced to 2% from 1 October 2020 to 31 December 2021 (if the payment is made via e-Withholding Tax system).
- Small and Medium Enterprises (SMEs) participating in low-interest credit measures to help entrepreneurs. Having a single account, 1.5 times deduction can be made for interest expenses that occur between 1 April 2020 and 31 December 2020
- Allowing SMEs to deduct three times
the salary expenses paid in April 2020 to July 2020 for corporate
income tax purposes. For employees who are insured under the law on
the Social Security Fund and receive wages of not more than 15,000
Baht per person per month. To be eligible for the deduction, the
following conditions must be met:
- The SME's annual revenue does not exceed THB 500 million
- The total number of employees does not exceed 200 persons
- The salaries eligible for the 300% deduction do not exceed THB 15,000 per month per employee
- Employees must be insured under the social security fund
- The number of insured employees in the said period should not be lower than the number of covered employees as of 31 December 2019.
- Dissemination of VAT refunds to
domestic entrepreneurs within 15 days after filing the form.
- VAT operators who participate in the 'Good Exporter' program will receive VAT refunds faster than usual. The VAT refund will be granted within 15 days (compared to a standard 30-day period) if VAT returns are filed via e-filing system and within 45 days (compared to a standard 60-day period) for paper filings.
- Refund the deposit for electricity usage.
- Reducing contributions to the Social
Security Fund by employers and employees.
- The Social Security Office announced that the rate for compulsory social security contributions by employers and insured persons would decrease from 5% to 4% for the six-month salary cycles from March to August 2020. The Government's contribution remains the same at 2.75%
- Government agencies to reduce rental fees for state property.
The Ministry of Finance expects to release further guidelines and conditions relating to these measures.
The Finance Ministry has also set up specific hotlines to answer specific questions as follows:
- Financial Measures, Tel: 0 2273 9020 Ext. 3235.
- Tax Measures, Tel: 0 2273 9020 Ext. 3509, 3529, and 3512.
- Measures to reduce contributions to the Social Security Fund of employers and employees/measures to build confidence in the capital market system, Tel: 0 2273 9020 Ext. 3643.
- Measures to alleviate the burden of fees, rental fees, and compensation for services provided by government agencies and state enterprises/measures to alleviate the burden of water and electricity bill payments/measures to assist those affected by the Coronary Infection Disease 2019 or COVID 19. Tel: 0 2273 9020 Ext. 3558.
- Measures to increase spending efficiency, budget expenditure for the fiscal year 2020, Tel: 0 2127 7000 Ext. 4588.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.