Tax Practices in Thai Bond Market ( http://www.thaibdc.or.th/Doc/tax.pdf )

A) Taxation of Traditional Debt Instruments

Type of Income Domestic Investors Foreign Investors Individuals Corporate Individuals Corporate 1. Interest 15% withholding tax Interest paid by government or government organizations is subject to 1% withholding tax. Interest on deposits or negotiable instruments paid by commercial banks or other financial institutes is subject to 1% withholding tax. Other interest income is not subject to withholding tax but recipient must include in the calculation of net profit for the purpose of Corporate Income Tax. 15% withholding tax Interest on bonds issued by a governmentals organization or by specific financial institutions are exempted from withholding tax only if the bonds are sold abroad. 15% withholding tax Interest on bonds issued by a governmentals organization or by specific financial institutions are exempted from withholding tax only if the bonds are sold abroad. Double Taxation Agreement must also be taken into consideration. 2. Discount 15% withholding upfront Interest paid by government or government organizations is subject to 1%. Other interest income is not subject to withholding tax but recipient must include in the calculation of net profit for the purpose of Corporate Income Tax. 15% withholding upfront 15% withholding tax Double Taxation Agreement must also be taken into consideration. 3. Capital Gains For zero coupon debt instruments, if 15% is already withheld upfront, capital gain is exempted. Other interest income is not subject to withholding tax but recipient must include in the calculation of net profit for the purpose of Corporate Income Tax. For zero coupon debt instruments, if 15% is already withheld upfront, capital gain is exempted. 15% withholding tax Double Taxation Agreement must also be taken into consideration.

B) Taxation of Securitization

Taxpayer Transactions Tax Liabilities Originator - transfer or asset between SPV and   originator - receive servicing fee - Contact and Document - exempt from VAT and SBT - subject to Corporate Income Tax, transfer at a price    lower than market value is considered justifiable - subject to VAT and Corporate Income Tax - exempt from Stamp Duty Special Purpose Vehicle (SPV) - transfer or asset between SPV and   originator - Contact and Document - exempt from VAT - subject to Corporate Income Tax, transfer at a price    lower than market value is considered justifiable - exempt from Stamp Duty Investor - receive interest from debenture - 15% withholding tax

C) Taxation of Short Selling and Securities Lending

Type of Income Domestic Investors Foreign Investors Individuals Corporate Individuals Corporate Securities Lender - Transfer of   Securities and   Collateral - Exempt from income   tax - Exempt from income tax - Exempt from income   tax - Exempt from income tax - Manufacturing   Interest - 15% withholding tax   or include in the   calculation of   Personal Income Tax   at the end of the   year - Include in the calculation   of net profit for the   purpose of Corporate   Income Tax. - 15% withholding tax   or include in the   calculation of   Personal Income Tax   at the end of the   year - 10% withholding tax - Lending Fee and   Rebate - Withholding tax at   income tax rate and   include in the   calculation of   Personal Income Tax   at the end of the   year - 15% withholding tax - Include in the   calculation of net   profit for the   purpose of   Corporate Income   Tax. - 15% withholding tax Securities Borrower - Transfer of   Securities and   Collateral - Exempt from income   tax - Exempt from income tax - Exempt from income   tax - Exempt from income tax - Capital Gains - Exempt from income   tax 1. at the time of selling,     income = income from     short sale - cost 2. at the time of buying the     securities back, income     = closing price on the     date of entering into the     contract - cost of     securities on the date of     buying back - Exempt from income   tax - withholding tax as per   Section 70 of the   Revenue Code

Taxations

Revenue Department's announcement on the procedures, conditions, and taxation of stock trading Tax Exemption Act, 1999 (No. 64) Revenue Department's announcement on the procedures and conditions of tax exemption for stock trading (No. 82) Specific Tax Act, 1999 (No. 391) Tax Exemption Act, 2001 (No. 392) Tax Exemption Act, 2001 (No. 393) Tax Exemption Act, 2001 (No. 364) Tax Exemption Act, 2001 (No. 388) Finance Ministry's rules and regulations on special tax exemption, 2001 (No. 231)

Fees

Bond registration Registered fees calculation