Thailand Issues Second COVID-19 Stimulus Package
- On March 24, 2020, the Thai government issued its second stimulus worth 117 billion baht (US$3.56 billion).
- This second package aims to mitigate the economic impact of the outbreak through cash handouts for households, soft loans for businesses, and tax exemptions.
- Investors should seek the assistance of local advisors to better understand how they can benefit from these relief measures.
On March 24, 2020, the Thai government issued its second stimulus package to mitigate the economic impact of the COVID-19 outbreak.
This second package, named Phase 2, is valued at 117 billion baht (US$3.56 billion) and includes cash handouts for workers not registered in the country’s social security system, tax breaks for businesses, and soft loans.The first package, valued at 100 billion baht (3.2 billion), also focused on supporting businesses in the form of low-interest loans, deductions in withholding tax, and VAT refunds. The latest measures total to 10 percent of GDP and will help companies boost their liquidity in the wake of the expected contraction of the economy this year.
Investors should seek the assistance of local advisors to better understand how they can benefit from these relief measures.
Assistance of businesses
Assistance for businesses comes in the form of low-interest loans, exemption of certain taxes and import duty, and tax filing extensions.
Loans for SMEs
Small and medium-sized businesses (SMEs) are eligible to receive up to 3 million baht (US$91, 803) in loans with an interest rate set at three percent. This rate is available for the first two years of the loan.
Customs and import duty exemptions
The package provides exemption of customs duty for products and materials related to the treatment and prevention of COVID-19 before September 2020. Further, there is an import VAT exemption for materials donated to hospitals, government agencies, or charities used to combat COVID-19 between March 1, 2020, and February 28, 2021.
Extension on tax filings
For the 2019 fiscal period, companies that were due to file between April 1 and August 30, 2020, the filing period has been extended to August 31, 2020. For the 2020 fiscal period, companies that were due to file between July 1, 2020, and September 29, 2020, the filing period has been extended to September 30, 2020.
Businesses that were forced to close due to the national lockdown have been granted extensions on the filing of tax returns for three months and are now due in May.
Filing for excise tax for oil and oil-related products is extended to the 15th of the following month starting from April to June 2020. Operators of bars, nightclubs, pubs, or other entertainment establishments can file their excise tax on June 15, 2020.
Moreover, the Board of Investment-promoted companies have been granted an extension until July 31, 2020.
Tax relief for debt restructuring
The package provides tax relief for debt restructuring by creditors of non-financial institutions, such as leasing operators and credit card issuers, etc. The tax relief is in the form of exemption of income tax, VAT, and stamp duty.
Assistance to households
To support households, the government is providing cash handouts and soft loans, in addition to an extension for personal income tax (PIT) filing.
Workers not covered by the Social Security Fund (SSF) will receive 5,000 baht (US$153) in cash for the next three months. The government hopes this will benefit some three million workers in the country.
Workers covered under the SSF program will receive an increased unemployment compensation equivalent to 50 percent of salaries.
A 10,000 baht (US$305) emergency loan at a 0.1 percent interest rate per person has been made available. This loan requires no collateral. A 50,000 baht (US$1,500) emergency loan has also been made available with an interest rate at 0.35 percent. Investors should contact the Thai Ministry of Finance to fully understand what the eligibility criteria are.
Extension on the filing of personal income tax and health insurance increase
The deadline for the filing of PIT has been extended to August 31, 2020, from its original date June 30, 2020.
Furthermore, there is an increase in the deduction of health insurance premiums to 25,000 baht (US$765) from 15,000 baht (US$459). There is also tax exemption on risk compensation for medical workers involved in the treatment and prevention of COVID-19.