Specific Business Tax Exemption for SMEs as Approved by the Cabinet
Small and medium-sized enterprises (SMEs) are businesses that are typically smaller in size compared to large enterprises. SMEs are an important part of many economies, as they often contribute significantly to job creation and economic growth.
Specific Business Tax (SBT) is another kind of indirect tax introduced in 1992. Certain businesses that are excluded from VAT will instead be subject to SBT.
One of the functions of the Office of SMEs Promotion (OSMEP) is to help SMEs that have potential to grow but hardly have access to the source of investment funds. However, granting loans to SMEs in that fashion is subject to an SBT of 3%. Exemption of SBT in this kind of transaction will in turn help SMEs. As such, the Cabinet has approved an exemption of SBT to loans granted by OSMEP to SMEs under the OSMEP funds. The SBT is exempt from the day the project realized the interest, which was on 1 September 2020.
The Civil and Commercial Code Amendment Act (No. 23) B.E. 2565 (2022) will come into force and effect on 16 February 2023. The objectives of this amendment are to reduce career barriers and increase competitiveness of the country.
Key changes are as follows:
Sections
Amendments
Section 1097: Any three or more persons may, by subscribing their names to a memorandum and otherwise complying with the provisions of this Civil and Commercial Code, promote and form a limited company
Two (2) persons may form a limited company
Enacting Section 1162/1
Directors are able to remotely attend meetings via video conference
Section 1237: A limited company may also be dissolved by the court on the following grounds: (4) the numbers of shareholders are reduced to less than three
Minimized shareholders from less than three (3) to only one person
Section 1238: Amalgamation and merger
1) After amalgamating, a new company may only exist and others are dissolved or 2) A merging company exists and others are dissolved
Enacting Section 1239/1
A new mechanism was established to deal with shareholders who do not agree with amalgamation/merger
Section 1240: The company must publish once at least in a local newspaper and send to all creditors known to the company a notice indicating the particulars of the proposed amalgamation and requiring the creditors to present, within sixty days from the date of the notice, any objections they may have to it. If no objection is raised during such period, none is deemed to exist. If an objection is raised by any creditor, the company may not proceed with the amalgamation unless it has satisfied the claim or given security for it.
Protecting the company’s creditors and minimizing the time to make the process faster
Enacting Section 1240/1
Holding a shareholders’ meeting shall be completed within six (6) months from the amalgamation
Section 1243: The new company is entitled to the rights and is subject to the liabilities of the amalgamated companies.
Revised wording to be more specific in regard to rights and liabilities
Section 1246/1: A registered partnership or limited partnership having at least three partners may be transformed into a limited company upon having consent of all partners and upon following actions being taken: (1) notifying, in writing, the partners’ consent to transformation of a partnership into a limited company to the Registrar within fourteen days as from the date of all partners’ consent; (2) publishing once at least in a local newspaper and sending to all creditors known to the partnership a notice, in writing, indicating particulars of the proposed transformation of the partnership into a company and requiring the creditors to present, within thirty days as from the date of the notice, any objections they may have to it. If an objection is raised by any creditor, the partnership may not proceed with transformation unless it has satisfied the claim or given security for it
All partners, instead of having at least three partners, must agree to transform a registered partnership into a limited company.
Geographical Indication (“GI”) is a mark created for the certifying origin, quality, and reputation of products from specific local areas of each locality.
In Thailand, the Department of Intellectual Property is responsible for registration and certification of GI which has promulgated the Protection of Geographical Indications Act of B.E. 2546 (2003) (“GI Act”) to complied with Thailand’s obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The key points of the GI Act of Thailand are as follows:
1. GI must not be a common name of the goods and must not be contrary to public order.
2. Persons recognized by law and eligible to apply for registration and certification of their GI are: (1) government agencies, state agencies, state enterprises, local government organizations or other state organizations being juristic persons (2) natural persons, groups of persons or juristic persons operating business and trade and (3) groups of consumers or consumer organizations of GI products. In the case that applicants are not Thai, such applicants must have nationalities of countries being members of international agreement/convention related to GI that Thailand is a member with or have domiciles or real places of business in Thailand.
3. Foreign GI can apply for registration and certification under the GI Act provided that such foreign GI has been registered and certified in its country and been used until the date of applying for Thai GI.
Currently, Thai GI (i.e., Doi Tung Coffee, Durian Prachin, Lamphun Barcode Thai Silk, Pakpanang Tabtimsiam Pomelo, Thung Kula Rong-Hai Hom Mali Rice, Khao Yai Wine etc.) have been registered and certified in several jurisdictions including European Union, Republic of China, Japan, Vietnam, Cambodia, Indonesia, Malaysia, and India. The Department of Intellectual Property has a further plan to register more Thai GI in several countries and also to promote those in the global market.
Data Privacy Breaches: Duty to Report to the Regulator
A data privacy breach refers to the unauthorized access, use, disclosure or destruction of personal data, either by an individual or by an organization. Data privacy breaches can occur in a variety of ways, including hacking, malware attacks, insider threats or simply human error.
Data privacy breaches can have serious consequences for both individuals and organizations. For individuals, a data privacy breach can lead to the theft of personal information, such as financial data or identity information, which can be used for fraud or identity theft. For organizations, data privacy breaches can lead to legal and regulatory consequences, as well as damage to their reputation and financial losses.
Under the General Data Protection Regulation (GDPR), a data privacy breach is defined as any unauthorized access, use, disclosure or destruction of personal data. This includes both accidental and intentional breaches. If an organization experiences a data privacy breach, it is required to notify the relevant supervisory authority and the individuals whose personal data has been breached. In Thailand, Personal Data Protection Committee (“PDPC”) has officially announced on how to report an incident of personal data breach to the Office of Personnel Data Protection (“Announcement”) which describes Data Controller’s duty to notify of data breach under Section 37(4) of Personal Data Protection Act B.E. 2562 (2019) (“PDPA”) where this Announcement shall come into force and effect since this date of the announcement, i.e. 15 December 2022.
As we all know, the Data Controller is required to notify the Office of PDPC of any personal data breach without delay and, where feasible, within 72 hours. A data breach shall have the meaning as a breach of security measures that results in unauthorized or illegal loss, access, use, amendment, alteration or disclosure of personal data, whether committed intentionally, negligently, unauthorizedly, unlawfully, through computer crime, cyber threat, flaw or other means occurred by the act of the Data Controller, Data Processor, employee, staff, contractor, agent, any related person or any other factors resulting in the Confidentiality Breach, Integrity Breach and/or Availability Breach.
When Data Controller becomes aware of or is informed of a personal data breach, the Data Controller shall evaluate the reliability of such breach without delay, whether the breach has occurred or reasonably being suspected by taking into account of organizational, technical and physical measures to confirm that a personal data breach has actually occurred. The Data Controller must conduct a risk assessment of all potential consequences for the Data Subject. For a high-risk case, the Data Controller must act independently or instruct the Data Processor to take preventive, suspending or corrective actions to ensure that the data breach is terminated or has no further impact. Furthermore, if a confirmed or reasonably suspected data breach is considered to jeopardize the Data Subject’s rights and liberties, the Data Controller must notify the Office of PDPC without delay and, where feasible, within 72 hours of becoming aware of it. Plus, the Data Controller must notify such high-risk data breaches and the remedial measures of the Data Subject as well.
Since 72 hours may be insufficient for the Data Controller and Data Processor to collect all data resulting in an inability to notify the Office of PDPC in time, in this case, the Data Controller shall prepare a reason clarification along with all documents mentioned in this Announcement and submit the same to the Office of PDPC within 15 days of becoming aware of such breach in order to have Office of PDPC consider exempting the Data Controller from liability under Section 37(4) of the PDPA, respectively.
As a result, Data Controllers and Data Processors should thoroughly read the Announcement in order to comply with the PDPA and protect the personal data that are being collected.
New Rule on Calculation of Interest for Default Payments and Sequence of Repayment
A default interest rate is the interest rate applied to a loan or other financial obligations when the borrower fails to make the required payments on time. Default interest rates are typically higher than the interest rate that was agreed upon at the time the loan was made and they are intended to compensate the lender for the increased risk and inconvenience of having to deal with a delinquent borrower. Some lenders may not clearly disclose the default interest rate applied to a loan or credit facility agreement or they may not clearly explain the circumstances under which the default interest rate will be triggered. This can make it difficult for borrowers to understand the terms of their loans and to anticipate the potential consequences of falling behind on payments.
In 2020, the Bank of Thailand (“BoT”) issued Notification No. SorKorSor2. Re: Calculation of Interest on Default Payments and Sequence of Repayment to charge default interest that does not create too much burden to debtors who struggling with the financial situation to be in the possibility that debtors will be able to settle the debt in which it shall not accelerating the incurrence of non-performing loans (Non-Performing Loans: NPL), reflecting actual cost, does not cause debtors to lose financial discipline, supporting the process of debt restructuring negotiations, providing economic equity and also allowing debts write off to reduce the principal debt so that the debtors have a better chance to completely settle their outstanding debt.
However, in order to create equity among all groups of debtors, the BoT has therefore amended the said notification by issuing the Notification of BoT No. SorKorSor2. [unidentified number]/2566 Re: Calculation of Interest on Default Payments and Sequence of Repayment (“Notification”) which shall be enforced and come into effect from 1 April 2023 onward and the notification mentioned above shall be repealed. This Notification expands the scope of default interest rates to cover all groups of debtors and expands the scope of financial service providers to include credit card operators.
This Notification applies to certain financial service providers as follows:
Financial institutions according to the financial institutions’ business law;
Companies within a financial business group with the business of credit card, personal loan, nano finance, leasing, hire-purchase and asset management company;
Specialized financial institutions according to the financial institutions’ business law;
Credit card operators, personal loan operators and nano finance operators according to the Notification of the Ministry of Finance Re: Business which requires authorization under Clause 5 of the Announcement of the National Executive Council No.58; and
Asset management companies according to the asset management company law.
(collectively as “Financial Service Providers”)
Moreover, this Notification specifies various criteria as briefly summarized below:
Default Interest Rate
Regarding installment loans and revolving loans, Financial Service Providers can charge the default interest rate higher than the rate specified in the contract but not more than 3% per annum, relevant factors should be considered appropriately. For loans with floating interest rates, the interest rate on the date of default is used as a reference rate.
However, loans that have a specific maximum rate of interest, fines, service charges, and any other fees shall comply with its specific law.
Default Interest Calculation Base
Regarding installment loans, Financial Service Providers shall calculate the default interest based on the principal of the outstanding installments in each installment until at least the date the court accepts the lawsuit on this matter. To file a lawsuit against debtors to the court, debtors must be in arrears for more than 90 days from the due date.
Regarding revolving loans, Financial Service Providers shall calculate the default interest based on the full amount of the outstanding principal.
Default Interest Charged Grace Period
Financial Service Provider shall specify a grace period to not charge default interest in the event that the debtor may have force majeure that causes the debtor to be ineligible to pay the debt on time.
Sequence of Repayment
Regarding installment loans, upon receiving debt repayment, Financial Service Providers shall write off the debt incurred from fees, interest, and principal of the debt of the longest overdue installment first, and then write off the next longest overdue installment respectively.
Furthermore, this Notification also specifies the detail on notifying the debtors, sale or transfer of debt to other Financial Service Providers, Loans under foreign law, and Financial Service Provider’s foreign branches and companies in the financial business groups established in foreign countries.
Thailand – Self-Employed Workers Being Protected under a New Legislation
While the popularity of digital platforms is increasing day by day, the employment status of digital platform workers (also known as gig workers, independent contractors or online platform workers) can be a complex issue and can vary depending on the specific circumstances of the work arrangement and the laws of jurisdiction in which the work is being performed.
In some cases, digital platform workers may be considered employees, while in other cases they may be considered self-employed or independent contractors. The determination of employment status can have significant implications for the rights and protections that apply to the workers, as well as for the tax and other legal obligations of the workers and the platforms.
There is often debate and controversy surrounding the employment status of digital platform workers, and different countries and jurisdictions have taken different approaches to define and regulate this type of work.
Self-employed workers are arguably not considered employees and therefore are not protected under traditional labor laws. In most countries, labor laws are designed to protect the rights and interests of employees, who are typically defined as individuals who work for another person or organization in an employment relationship.
Self-employed workers, on the other hand, are arguably considered to be their own bosses and are not considered employees. They may operate their own business or provide services to clients on a freelance or contract basis. As a result, they are generally not entitled to the same protections and benefits as employees, such as minimum wage, overtime payment, unemployment insurance and compensation.
With the above in mind, workers who work for digital platforms such as riders raised an issue that while they are under the rules of digital platforms, i.e. uniform wearing, working hours, etc.; they are not protected under normal labor law. The Thai Government had looked into this issue and recently, the Cabinet approved in principle to draw up new legislation to protect almost 20,000,000 self-employed workers. Under this new legislation, self-employed workers will be entitled to the following:
Basic occupational rights;
Safety at work;
Social security;
Forming an organization;
Be promoted, protected and developed towards a good quality of life;
Fair work and contract, such as not specifying conditions that cause the work to be rushed with risk or have to work too hard to the point of loss of health;
Fair compensation;
Remuneration according to the specified rate and period;
Welfare and basic insurance;
Establishing a fund for workers to have access to the source of funds appropriately;
Right to appeal for the investigation and suspension of work; and
Right to collective bargaining of workers.
At the moment, the Council of State is considering details of this new legislation. The draft then needs to go through the Parliament which will take a year until it becomes enforce.
Time Extension for Operating of Liquor Production Facilities
To facilitate the liquor production licensees who may not construct liquor factories, install machinery and equipment used for liquor production or initiate a liquor production on time as set out in the licenses, the Excise Department has drafted a Notification of the Excise Department on Determining Causes of Necessity, Procedures for Requesting and Permission to Extend the Construction Period of a Liquor Factory, Installation of Machinery and Equipment Used for Liquor Production and the initiating of Liquor Production (“Notification”) for the purpose of extending the period of time for Initial liquor production.
This Notification applies to the liquor production licensees who may not be able to construct liquor factories, install machinery and equipment used for liquor production or initiate a liquor production on time as indicated in the licenses due to (1) natural disaster, (2) laws, notifications or regulations issued by government agencies, (3) waiting for permission from other agencies or (4) other necessary causes with explicit evidence. Those liquor production licensees may submit an application requesting for an extension together with relevant documents before the period specified in a liquor production license has lapsed. The application may be submitted to an Excise Official for their consideration at the Area Excise Office or Branch Area Excise Office in the area where the liquor factory is located. After consideration, the Excise Official will render its order as follows:
In the case that the Excise Official considers the submitted application and its supporting documents are incorrect or incomplete and such issues can be amended at that time, the Excise Official shall notify the applicant to make an amendment immediately. Or else, if such issues cannot be amended at that time, the Excise Official shall record such issues and list of additional documents to be submitted together with imposing a period of time as deemed appropriate so that the applicant may amend or submit additional documents within such period of time.
In the case that the Excise Official considers that the submitted application and its supporting documents are correct and complete or the applicant has corrected issues or submitted additional documents as ordered within the imposed period of time, the Excise Official shall report to either the relevant Area Excise Office or the Director of the Bureau of Standard and Tax Collection 1 for further consideration.
Furthermore, kindly be noted that this Notification is only a draft that has not yet been published in the Royal Gazette. Hence, it is not enforced at the moment. Upon approval by all relevant authorities as required by laws and published in the Royal Gazette, it shall repeal the Notification of the Excise Department on Determining Causes of Necessity, Procedures for Requesting and Permission to Extend the Construction Period of a Liquor Factory, Installation of Machinery and Equipment Used for Liquor Production and Initiating of Liquor Production issued on December 1st, 2554 (2021) and this Notification shall become enforced since the date of publication in the Royal Gazette.
Thailand – New Regulation over the Defective Products
Nowadays consumers may face problems with defective products which the consumers find out about them later as the products never show any malfunction at the time of delivery. A draft Liability of Defective Product Act (“Act”), which was approved in principle by the cabinet on 22 November 2022, has been proposed to keep up with the problems and for the benefit of protecting the rights of consumers.
The draft Act will cover manufacturing for sale, hiring for manufacturing for sale and ordering or importing products into the kingdom for sale. This also includes a seller or a hire-purchaser where a manufacturer or an importer of such products cannot be identified. The products fallen under this draft Act are in the categories of electric and electronic types of equipment, vehicles, motorcycles, including other products prescribed by the Royal Decree.
This draft Act is requiring for the business operators to be liable for defect in products that cause depreciation expenses or deterioration of products within 2 years from the date of delivery regardless of whether the business operators are aware of the defect of the products or not. In case that the products are defective within 1 year from the delivery date, it is presumed that the products are defective at the time of delivery.
Moreover, the business operators are responsible for any defect in the case that the business operators install or assemble the products or where the consumers assemble the products or install the same according to the manual provided by the business operators, but the manual does not specify how to install or assemble the products correctly or completely.
The draft Act prescribes the rights of consumers against the business operators who are liable for defect as follows:
Claiming the business operators to repair the products;
Asking the business operators to exchange the products;
Asking for a price reduction; and
Terminating the agreement.
If there is an agreement in advance excluding liabilities of the business operators for any defect, such agreement is voided.
Under this draft Act, the statute of limitation for claiming under this draft Act is 2 years from the date that the defect is found or business operators refuse to be responsible for the defect. However, it does not extinguish the consumer’s rights to demand the business operators being liable for such defect by virtue of rights under other laws.
This draft Act will need to be processed through several steps before becoming into effect. It will possibly take a few years.
Utilization of Electronic Means for the Benefits of Public Company Limited
In order to facilitate the business and those involved, and to be in line with the rapid changes in current technology, the Department of Business Development (“DBD”) has therefore issued 3 notifications applicable to public limited companies (“PLC”) which was announced in the Royal Gazette on November 15th, 2022, which have the brief details as follows:
Notification of the Department of Business Development on Utilize Electronic Means for Advertisements
This notification stipulates that the person who has to notify, inform, or advertise any information related to PLC to other people or the public by publishing in a newspaper may utilize electronic means for advertisements. This could be done by posting on a publicly accessible website such as a company’s website, online newspaper website, or the Stock Exchange of Thailand’s website. Such advertisement shall be effective from the date of such advertising, and the texts or documents advertised must be in Thai language and must be the same set of documents or the same contents as those sent to other persons or the public.
Notification of the Department of Business Development on Criteria for Sending Letters or Documents Electronically
This notification stipulates that a company or a board of directors may send letters or documents electronically to the directors, shareholders, or creditors of the company only if such person has informed their intention or given explicit consent in writing or electronically, and such letters or documents must be sent electronically to the channel specified by each director, shareholder, or creditor of the company. In order to inform one’s intention or give explicit consent to the company, such intention or consent must be informed to the company by the channel, method, and time specified by the company.
The directors, shareholders, or creditors of the company must inform the company in case they intend to change their e-mails or other e-channels that have already been notified to the company or intend the company to cancel sending letters or documents electronically. If such intention is not informed to the company, it shall be deemed that sending of letters or documents to e-mails or other e-channels that have already been notified to the company has been duly applied.
Notification of the Department of Business Development on Authorization of a Proxy for Shareholders’ Meeting by Electronic Means
Shareholders may appoint a proxy to attend a shareholders’ meeting by electronic means which must be prepared in a form of electronic data which has technology and measures to prevent changes or amendments, contain the information in accordance with the proxy form prescribed by the registrar, and must be able to identify a shareholder who assigns a proxy. In the case of using an electronic signature, the process of proving and verifying the identity of a shareholder who assigns a proxy must at least meet the standards required by the law regarding the electronic transaction.
A shareholder who assigns a proxy must submit such electronic proxy to the chairman of the board of directors before the proxy attends the shareholders’ meeting and when the proxy information has been entered into an electronic proxy system, it shall be deemed that the shareholder has successfully assigned a proxy by electronic means.
Nevertheless, one shareholder is eligible to assign a proxy by electronic means to only one person, hence the shares cannot be divided to appoint multiple proxies. On the other hand, a person may accept for being a proxy from several shareholders.
In addition, payment for stamp duty due to proxy by electronic means will be as prescribed by the Revenue Department.
New Regulation on Giving Gifts to or Receiving Gifts of Government Officials
The Cabinet approved to a draft new Regulation on Giving Gifts to or Receiving Gifts from Government Officials (“Regulation”) to replace the existing regulation issued in B.E. 2544 (2001).
The objective of this Regulation is referring to Section 63 of the Constitutional Law of the Kingdom of Thailand, in that the State must promote, support, and educate people about the damage caused by corruption. As well as establish effective mechanisms to promote.
Under this Regulation, the definition of the word “gift” shall mean money and property including any other benefits that may be considered as money. This includes privileges of discounting the price of property or services and any digital assets. A government official shall not give gifts to its superior or its family members; unless, it is a gift that is customarily given but does not have a value of more than Baht 3,000.
In case where family members of a government official receive any gift and later on the government official finds out that it was received in violation of this Regulation, such government official shall record details and report the same to its superiors within 30 days from the date of receipt. Such superior shall immediately order to return the gift to the giver. If it is not possible to return such gift, the agency of such official shall assume the ownership of such gift and retain it for a year. After that, such gift shall be sold and become the property of the state. If any official violates this Regulation, it shall be penalized according to the Code of Ethics of Government Officials.
