Tax Policy
The Bank has established this tax policy in line with its corporate governance principles. The policy observes an effective operational risk management framework encompassing risk definition, risk assessment, risk monitoring, risk mitigation and risk control. As a requirement, each unit in the Bank has a direct responsibility for managing its respective operational risk and establishing measures to mitigate, monitor and control the risk within acceptable level by allocating resources appropriately, while fostering a bank-wide operational risk management culture.
The Board of Directors is responsible for approving the Bank’s tax policy and ensuring policy compliance. The Audit Committee is responsible for reviewing and auditing the Bank’s operations to be in conformity to the tax policy. The Risk Management Committee has the responsibility to manage operational risk of the Bank which includes tax implications from business operations.
The Bank’s Tax Policy consists of 3 aspects as follows:
- Tax Governance
- Tax Risk Management
- Tax Transparency
Tax Governance
The Bank upholds corporate governance principles. It seeks to operate with integrity and strictly comply with applicable tax laws and regulations in Thailand and those other countries in which it has operating presence. The Bank shall oversee its operations to be in line with its tax policy framework and put in place robust processes to review the following tax governance principles as well as required approvals:
- To uphold and observe applicable tax laws and regulations, either explicit in writing or implied in the spirit of the concerned laws and regulations, with respect to direct and indirect tax, in Thailand and those other countries where the Bank has operating presence.
- To honour its tax obligations and be committed to responsibly paying tax as incurred on the actual underlying economic activities concerned in all jurisdictions where the Bank operates; and not move tax obligations from high tax-rate to low tax-rate jurisdictions.
- To not employ exotic tax structures for tax avoidance purposes.
- To not have nor adopt a policy to use “tax-havens” countries or jurisdictions for tax avoidance purposes, except such uses for the Bank’s own funding and liquidity management.
- To adopt the arm’s length principle when setting prices for intragroup transactions and transactions with related parties, and not apply transfer pricing method for improper tax planning.
- To seek to utilise tax benefits to the fullest extent possible as provided under relevant legal frameworks to maximise stakeholders’ value, such as tax holiday measures, government-sponsored tax incentives to promote loan loss provisions, etc.
Tax Risk Management
The Bank shall manage tax risk by observing the Bank’s Operational Risk Management Policy. It has emphasized to all units of the Bank to raise awareness and have an understanding of tax risk management and controls. This is in order to enhance operating efficiency and ensure compliance with applicable tax laws and regulations in Thailand and those countries where the Bank has operating presence. The Banks’ Tax Department provides specialist advice on tax issues to all units of the Bank.
The Bank sets forth the following measures in managing tax risk:
The Bank sets forth the following measures in managing tax risk:
- Tax management policies and procedures have been established and are to be updated when there are any changes in tax laws as necessary.
- There exists a requirement that prior to launching any new product, service or transaction, related tax impacts shall have to be identified, evaluated and analysed, and the specific guidelines for compliance with tax laws and regulations be established. If in doubt, the Bank shall seek advice from the concerned authorities to ensure prudent tax management.
- Tax reporting and tax payment procedures have been established to facilitate correctness and timeliness. It is also required that reviews of tax calculation be performed regularly. Tax-related reports and information shall have to be kept in appropriate format and in the place or the manner with proper access control.
- As part of operational risk management process, tax law compliance needs to be regularly reviewed and assessed with the engagement of internal and/or external auditors on arising tax issues or tax related losses where appropriate.
- All material tax matters shall be reported by the Tax Department to the management and the Board of Directors via the Manager of Accounting and Finance Division.
Tax Transparency
The Bank recognizes the importance of conducting its businesses in accordance with the good corporate governance principles and shall manage taxes and tax matters by promoting accuracy, transparency and adequacy in the interest of relevant stakeholders. The Bank has upheld tax transparency by the following measures:
- The Bank has disclosed tax policy to the general public via its website.
- The tax information disclosure is made in accordance with concerned regulatory requirements e.g. disclosure on the Bank’s financial reports as required by the Financial Reporting Standards.
- The Bank shall cooperate with the tax authorities in all jurisdictions where we operate. This includes, for instance, providing information in response to the tax authorities’ requests.
Tax Information
Unit: Million Baht
|
Consolidated |
The Bank |
|||||
|
2022 |
2023 |
Calculated Average |
2022 |
2023 |
Calculated Average |
|
|
Earning before tax |
37,229 |
52,046 |
44,638 |
31,857 |
45,453 |
38,655 |
|
Reported taxes |
7,484 |
9,993 |
8,738 |
5,466 |
7,920 |
6,693 |
|
Effective tax rate (in %) |
20.1% |
19.2% |
19.6% |
17.2% |
17.4% |
17.3% |
|
Cash taxes paid |
6,815 |
11,921 |
9,368 |
5,689 |
9,247 |
7,468 |
|
Cash tax rate (in %) |
18.3% |
22.9% |
21.0% |
17.9% |
20.3% |
19.3% |
- The Bank's average (2022-2023) effective tax rate is 19.58%. The industry's average effective tax rate is 21.29% and the corporate income tax rate in Thailand, where the majority of our income is generated, is 20%. The differences between the Bank's average rates and the industry's average rates could be mainly explained by a relatively lower corporate income tax rate in Thailand, tax exemption on dividends in compliance with the Thailand Revenue Code, and tax measures/incentives offered to corporates by the Thai government.
- The gap between the Bank’s effective income tax and the corporate income tax in Thailand is mainly due to the tax exemption on dividends and the tax measures allowing for an additional tax deduction.
- In 2023, The Bank did not receive any significant legal rulings from tax authorities.
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