THANATHIP & PARTNERS
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Tax Exemption for Startup Fundraising through Venture Capital
March 2022
By Wisara Harnchonboth, Kirinee Argritarch
The Cabinet has approved tax measures to promote fundraising in Startups by providing certain tax benefits for investment, both directly and indirectly through Venture Capital, in Thai Startups that engage in certain industries. As a result of this measure, it is expected that there will be an increase in investment in (i) Thai Startups for approximately Baht 320 billion and (ii) an employment rate by 2066 as well as strengthen our economic growth.
In this connection, the Revenue Department has proposed a draft Royal Decree for certain tax exemptions, which may be summarised as follows:
- Personal and corporate income tax will be exempted for both domestic and foreign investors including foreign CVC and PE Trust for gains arising from the sale of (i) shares in Startups and CVC and (ii) trust units in Thai PE Trust and from the liquidation of CVC and Thai PE Trust, provided that each of the Thai CVC and PE Trust must invest in Startups.
- The investment must be made in Thai Startups that engage in the target industries certified by the agency announced by the Director-General of the Revenue Department such as the National Science and Technology Development Agency or the National Innovation Agency, and has income from the target industries of not less than 80% of the total income in two accounting periods before the sale of shares.
- Investors must hold shares or trust units for at least 24 months prior to their sale.
- Thai CVC and PE Trust must have a share capital of not less than Baht 20 million and registered with the Office of the Securities and Exchange Commission.
- The period for receiving tax benefits is from the date following the publication of the Royal Decree in the Government Gazette until 30 June 2032.
This document is solely intended to provide an update on recent development in Thailand legislation and is not purported to provide a legal opinion, nor a legal advice to any person.
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