On 19 January 2021, the Thai Cabinet approved the Ministry of Finance’s proposed regulation to revise bad debt write-off criteria for companies, juristic partnerships, and financial institutions (“Regulation”). Once enacted, the new Regulation will retroactively take effect from 1 January 2020 onwards. The change accords with TFRS 9, Thailand’s new financial instruments standard, which has applied to all publicly accountable entities since 1 January 2020.
Generally speaking, a bad debt is an account receivable that is unable to be collected. In such cases, a company may be eligible to remove the debt from their accounts receivable ledger, and therefore reduce its tax liability. In Thailand, before a creditor can write-off a debt, it must comply with certain criteria and procedures prescribed by the Revenue Department.
Debt thresholds will change for bad debt write-off procedures under Clauses 4, 5, and 6 of Ministerial Regulation No. 186 B.E. 2534 (1991):
