Tax benefits for investments in Thai startups

      Tax benefits for investments in Thai startups 

      The capital gains tax exemption from the sale of shares in Thai startups is a measure issued by the government to incentivize more investors, which is another important mechanism to drive the country’s economy.

The requirements for tax exemption for investors in Thai startups are as follows:

1. The investor may be a natural person or juristic person, both Thai and foreigner, or founder of the startup;
2. The investor can make investments by themselves or through a Thai company that engages in the Corporate Venture Capital (CVC) or Thai PE Trust. The investor must hold shares or trust units for at least 24 months;
3. For CVC or Thai PE Trust, it must have a registered capital of at least 20 million baht and be registered with the Office of the Securities and Exchange Commission (SEC).

Tax benefits for investors

1.  “Direct investment” refers to the investment in a Thai startup by a natural person or juristic person regardless of nationality, including foreign VCs and foreign PE Trusts.

• This law provides capital gains tax exemption for investors, whether natural persons or juristic persons, who meet the requirements and conditions prescribed by law;

•  As for dividends, this law does not provide tax exemption, but investors can exercise their right for dividend tax exemption in accordance with the requirements under Section 65 bis (10) (b) of the Revenue Code;

•  Thai PE Trust is not a taxable unit and therefore does not have to pay income tax according to the Revenue Code. Therefore, this law does not provide income tax exemption for Thai PE Trust;

•  Normally, investors who invest in any company may receive dividends and they may gain profits from the sale of shares. The dividends and profits are also subject to income tax.

2. Investment through a CVC or Thai PE Trust refers to a natural person or a juristic person making investments through a company that engages in corporate venture capital (CVC) or holds trust units in a PE Trust that has been registered with the SEC Office with a capital of not less than 20 million baht. The income tax for the profits from the transfer of CVC shares or the transfer of trust units of Thai PE Trust is also exempted.

•  CVC or PE Trust with no retained earnings

      Investments in startups that generate income of at least 80% of total income in 2 consecutive accounting periods are subject to tax exemption in proportion to the investment;

• CVC or PE Trust with retained earnings

      Investments in startups that generate income of at least 80% of total income in 2 consecutive accounting periods are subject to tax exemption in proportion to the investment;

• Terminated CVC or PE Trust 

      Investments in startups that generate income of at least 80% of total income in 2 consecutive accounting periods are subject to tax exemption in proportion to the investment.