When a company or juristic partnership lends money to another party as part of its ordinary business operations, it is required to register for specific business tax. However, if the lending is not part of ordinary business and is conducted only occasionally, registration for specific business tax is not required. This is in accordance with the Revenue Department Director-General’s Announcement on Specific Business Tax regarding “Businesses Exempt from Registration for Specific Business Tax,” dated December 30, 1992 (B.E. 2535).

Nevertheless, whether the lending is part of ordinary business or occasional, interest received must be subject to specific business tax under Section 91/2(5) of the Revenue Code, categorized as “operating business similar to a commercial bank,” at a rate of 3.3%.

Summary of Requirements:

1. The company must charge interest on loans
   According to Section 65 bis (4) of the Revenue Code, in cases where assets are transferred, services are provided, or money is lent without adequate compensation, service fee, or interest—or if compensation, service fee, or interest is below market rate without reasonable cause—the tax officer has the authority to assess the fair market value of such compensation, service fee, or interest as of the date of transfer, service, or loan.

2. Interest rate the company must charge

   • If the company lends its own funds, interest should be calculated at the prevailing fixed deposit rate at the time of the loan.

   • If the company lends borrowed funds, interest should be calculated at the loan rate prevailing on the date the loan is granted under the same conditions, or at a rate not lower than the rate at which the company borrowed the funds.

3. Tax filing
   Interest received must be reported on form Por.Thor.40 by the 15th day of the month following the month the interest is received or accrued.

4. Income recognition for corporate income tax
   Interest received from lending is considered business income and must be included with other income to calculate net profit for corporate income tax purposes under Section 65 of the Revenue Code for the relevant accounting period.

5. Loan agreements and stamp duty
   The company must execute loan agreements and affix stamp duty to provide proof of the loan. (Reference: Revenue Department letters Kor Kor 0811/172 dated March 1, 2000, and Kor Kor 0702/560 dated January 21, 2015)

Exemptions from Specific Business Tax (under Section 26/2534):

1. Loans to affiliated companies
   If companies within the same group lend to each other, whether using their own funds or borrowed funds, and regardless of the interest rate charged, interest from such inter-company loans is exempt from specific business tax.

   • “Affiliated companies” must meet the following criteria:
     a. Two or more juristic persons.
     b. One company or partnership holds at least 25% of the total voting shares in the other company or partnership.
     c. Shares must have been held for at least 6 months prior to the loan date.

2. Loans to employees
   A company or partnership that has regulations regarding an employee provident fund or other employee funds and lends funds to employees as welfare, charging reasonable interest, is exempt from including such interest as income for specific business tax purposes.

   • Criteria:
     a. There must be regulations regarding an employee provident fund or other employee fund.
     b. Loans must be for employee welfare with written regulations.
     c. Interest must be charged reasonably (it may be lower than market rates).