Tax exemption, for new relief measure “Asset Warehousing”
COVID-19 has caused many businesses to stumble.
Asset Warehousing program was launched to help the business operator survival. It was designed to meet the needs of business operators who have been severely affected by the COVID-19 outbreak.
The essence of this program is that small business debtors can temporarily reduce their financial burdens by transferring their assets to banks under the repurchase agreement.
For example:
business A originally has 40 million baht in debt and has assets that can be valued as collateral of 50 million baht. In this case, business A is able to transfer its assets worth 40 million baht to the bank.
Transfer assets, as collateral, to the creditors allows business operators to suspend the loan repayment or make full settlement to creditors with option to rent those collateral assets to keep the business up and running as well as offering buy-back option to the operators at agreed price when they’re ready. This program aims at helping businesses to bounce back quickly after the crisis and this could be considered as a highlight of the program.
What about a “tax burden”, the question that needs an answer?
The Revenue Department confirms relief measures, including a tax exemption, to help business operators, participating in the “Asset Warehousing” program, to stop worrying.
There are 2 Measures from the Revenue Department to reduce the tax burden arising from the implementation of the “Asset Warehousing” program for borrowers are as follows:
1. Exemption from personal income tax and corporate income tax for debtors of financial institutions for income received from the debt relief of financial institutions.
2. Exemption from personal income tax, corporate income tax, VAT, specific business tax and stamp duty for debtors of financial institutions and financial institutions for the asset transfer, sale of goods and ,stamp duty charge.
At present, these tax benefits are only applicable to loans from financial institutions, but the Revenue Department also plans to issue tax measures to support debt restructuring of creditors who are not financial institutions.
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