Thailand training tax incentives and unintended consequences
Recently in Thailand they passed an amendment to the tax code that I received as a note from our Smiling Albino accountant. In that note they said:
Please also note, that in line with Government Policy, with regard to educational seminars, you are entitled to deduct 200% as a company expense.
My gut said that it was a poorly conceived subsidy intended to help improve the professional education level of Thais. Of course my first reaction was to see if the training sessions we run for our office staff and guides could take advantage of this new break. While the marginal tax rate is low it’s important to use the tax code to your advantage when possible (and legal of course). I figured that given the extreme break that it would create unintended consequences or incentives that would be well beyond what the framers of the new law conceived.
Within a few weeks of the announcement I was proven correct. It turns out that this break includes rental on conference facilities - including those small meeting rooms in hotels. So some folks in Thailand are now forgoing office space, and when needed, merely renting meeting rooms and getting a significantly better tax break on it. So a training subsidy has now easily been turned into a reduction in rent, likely affecting office landlords around the country.
If you continue to watch this one unfold I suspect that you’ll see some office buildings convert themselves into conference centres with meeting breakout rooms that look a lot like private offices. Ancillary affects could also include increased purchases of notebook computers, and the services of companies and consultants that help turn the most un-educational meeting look like a training session. Of course following all of this, the government will figure out that the law is being used as they did not intend. And, instead of repealing or fixing the provisions in the law, they will create an investigation team to track down abusers, creating headlines that the government can use to show that they’re cracking down on corruption. It’ll be great.
Anything here rankle you? Feeling overly perturbed or elated? Leave a comment below. or subscribe to the Sauce Captain feed.
Comments
No comments yet.
Sorry, the comment form is closed at this time.