T 315 Module Six Worksheet
- Using the website EY Worldwide Corporate Tax Guide as a starting point for your research, conduct a comparison of each type of tax listed below for the country you selected for your final project and the United States. In the notes column on the right, identify the implications of each tax for international organizations. To complete the worksheet, replace the bracketed text with the relevant information. Note that in some rare instances, there will be no implications for international organizations, in which case you would write that there are no implications.
| Tax | Selected Country Thailand | United States | Implications for International Organization |
| Corporate Profits Tax Rate (%) | 20 | 21 | This implicates that an international organization operating in Thailand is likely to get substantial corporate tax as compared to those operating in the US.
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| Capital Gains Tax Rate (%) | 20 | 21 | An international organization in Thailand will be relatively profitable than the one in the US because of the 1% difference.
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| Dividends (%) | 10 | 30 | In Thailand, 100% of the dividends received by an international organization shareholder is exempted from tax, whereas in the US, dividends received by such organizations are subject to 50% dividends-received deductions.
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| Net Operating Losses (Years) | [Insert text.] | [Insert text.] | [Insert text.] |
| Carryback (year) | 0 | 0 | Both in Thailand and the US, NOL carryback is prohibited. This means that an international organization cannot continue operating in Thailand and the US with huge recurrent losses.
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| Carryforward (unlimited) | 5 | unlimited | International organizations operating in Thailand enjoy only up to 5years of NOLs carryforward, and while those in the US enjoys unlimited NOL carryforward.
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- Discuss tax incentives in the country you selected for your final project, including the potential impact on an international organization operating there.
All Corporations and limited liability companies with their corporate management based in Thailand are liable to Corporate income tax unless otherwise stated in a tax treaty. The 20% Corporate income tax is levied on taxable income, notwithstanding whether the tax is retained or distributed. However, these rates vary from 0%, 15%, and 20%, depending on the company’s paid-up capital (EY. 2017). Capital gains of corporate entities are regarded as ordinary income, not only when they are retrieved from the sales of shares, which are normally exempted from trade tax and corporate income tax (Farer, 1962). All dividends received by Thailand and non-resident Corporate organizations from their Thailand and foreign corporate affiliates are exempted from tax. Tax on dividends is only exempted if the dividend payment is non-tax-deductible. Full tax exemption on dividends applies when the recipient is a company listed on Thailand’s Stock Exchange, or when the recipient company owns 25% or more equity interest in the distributing company.
Determine the treaty withholding tax rate in the country you selected for your final project, and discuss the potential impact on an international organization operating there.
A withholding tax of 10% is levied on interests accrued from bank loan payments, and transactions by financial institutions (EY. 2017). International organizations are liable to Thailand interest withholding tax, which is levied strictly on interest paid by financial institutions. The withholding tax also applies to interest derived from all transactions done over-the-counter, as well as on interest payments transacted on participating loans and convertible and profit-sharing bonds (Puapondh, Thienpreecha & Rattanopas, 2006). Additionally, interest accrued on bank loans with fixed property based in Thailand as security is liable to Thailand’s tax liability. However, the interests of that bracket are not taxable within the withholding tax treaty. Bank loans and credits granted for a duration of four years or more with the participation of a public financing institution are subject to a withholding rate of 3%.
References
- (2017). Worldwide corporate tax guide 2017. Retrieved on 9th April 2020 from; file:///C:/Users/GAKUO/Downloads/ey-worldwide-corporate-tax-guide-2019.pdf
Farer, T. J. (1962). Corporate Liquidations: Transmuting Ordinary Income Into Capital Gains. Harvard Law Review, 527-547.
Puapondh, S., Thienpreecha, M. K., & Rattanopas, M. D. (2006). A summary of Thailand’s tax laws.