THE CABINET yesterday gave the green light to a draft agreement on the exemption of double taxation between Thailand and Cambodia.
It aims to back this up with a similar deal with Brunei as part of Thailand’s effort to complete cooperation on this and other economic initiatives with all the 10 Asean members.
The agreement will be co-signed in both countries’ joint Cabinet meeting during a visit by Prime Minister Prayut Chan-o-cha and his Cabinet to Cambodia tomorrow, said Kobsak Pootrakool, Vice Minister at the Office of the Prime Minister.
In yesterday’s Cabinet meeting, chaired by Defence Minister Prawit Wongsuwon, it was determined that the Ministry of Foreign Affairs be assigned to proceed with overseeing the diplomatic procedures and domestic law changes required by the initiative.
The Ministry of Finance has said that Thailand started negotiations on the exemption of double taxation in 1964 and now has about such 60 agreements in place. Of these, eight involve Asean countries, excluding Cambodia and Brunei.
In line with the goals of the Asean Economic Community (AEC), the member countries are required to complete these kinds of agreements by 2025. The latest move supports the Thai business sector's interests in pursuing more investment abroad, including in Cambodia and the other AEC nations.
The Thailand-Cambodia double-taxation agreement will take effect for residences in either or both counties, while tax will be collected on an income basis determined by a taxpayer’s lodgings for 183 days, or half a year.
Under the deal, tax paid in the other country will be deductible in a taxpayer’s home countries at an amount equal to the tax actually paid but no more than the amount calculated in their home country. Tax exemptions or deductions will be regarded as a form of tax credit.
The agreement will last for 10 years from its effective date.
Income tax levied on air transport between the two countries will also be waived, while the taxing of dividends, interests, royalties and fees for technical services arising from capital assets will be arranged with regard to the tax rates in the country where income is paid at no more than the agreed rates.
Regarding a deal with Brunei, Thailand plans to proceed with the discussions on a double taxation agreement in order to complete all the requirements under the Asean goals for greater regional competitiveness, improved potential for business for collaboration and the prevention of tax avoidance among the member countries.