Tax Liabilities on Vaccinations Paid by the Company for Employees

Due to the spread of the coronavirus disease (Covid-19) in Thailand, the Thai Government has encouraged people to get vaccinated in order to increase the general immunity against Covid-19. However, free vaccinations may not be provided very quickly and there may not be enough to meet the demand; therefore, many employers have decided to pay the cost for the provision of vaccines for their employees without charge. This is because the employees are a key factor in driving the organisations, and the welfare and health protection of employees and their families is at risk due to the fact that Covid-19 is still an emerging infectious disease which is highly contagious and spreads quickly. In addition to showing concern to its employees, the cost of the vaccine can be considered as an expense in the employer’s calculation of net profit as the employer is a juristic person. However, on the part of tax liability of employee, the Revenue Department considers that the influenza vaccination must also be included in such consideration as employee’s income and pay personal income tax. Currently, there is no specific law on tax exemptions on Covid-19 vaccination; however, there is a related law under Clause 2 (4) of the Ministerial Regulation No. 126 (B.E. 2509) (1966), which prescribes the criteria for exemption of medical expenses for natural persons as follows:

“Clause 2 The following incomes shall be prescribed as incomes under Section 42 (17) of the Revenue Code as amended by the Revenue Code Amendment Act (No. 10) B.E. 2496 (1956):

(4) Income equal to an amount paid by the employer for or on behalf of the employee as medical expenses of:

(a) the employee; the employee’s husband, wife, parent or child which is under the care of the employee, but applicable only to medical expenses incurred in Thailand”

However, the Revenue Department also used to consider employees to be exempt from annual health check-up payments, which is a welfare that is given to all employees according to company regulations because it is considered as medical expenses the employer pays or pays on behalf of the employee under the said Ministerial Regulation.¹

With respect to the consideration of the Revenue Department, under the principle of the interpretation of the law, if there is no specific definition given under any laws or regulations, a widely recognised dictionary must be used to interpret tax laws². The wording ‘medical expenses’ in Thai is the combination of the words “treat” and “nurse”; according to the Royal Institute Dictionary the meanings of "treat", "nurse" and "vaccine" are as follows:

“Treat”

(1) (verb) give medical care or attention to, e.g. health; take care, e.g. possessions; guard, e.g. city; and keep, e.g. cleanliness or friendship
(2) (verb) try to heal or cure, e.g. patient

“Nurse”

(1) (verb) look after/attend to patient
(2) (verb) nurture
(3) (noun) caregiver for patient

“Vaccine” (noun)

Product containing virus(es) or bacteria that have been killed or weakened so that they are harmless, administered by injection into the body to stimulate the immune system caused by the particular infection.

After consideration of the meaning according to the Royal Institute Dictionary, the word ‘medical’ (treat + nurse) from ‘medical expense’ in Thai under such Ministry Regulation means to be careful, take care, prevent, heal the patient and attend to the patient. Therefore, vaccinations or annual health checks are all aimed at being vigilant and to take care of an employee’s health under the definition of the Royal Institute Dictionary. In addition, the Revenue Department's ruling is in response to factual consultations with individual requesters; it is not a guideline to strictly apply to all taxpayers. Such ruling may contain inaccuracies in interpretations of the intention of the law. Furthermore, the provision of the Covid-19 vaccine to employees is intended or expected to allow employees to return to work at their working place(s) when there is a group/herd immunity, which shall be beneficial to the organisation in the future. Thus, the authors opine that if the employer issues a notification or welfare regulation to provide free Covid-19 vaccinations to its employees without discrimination, the employees should be exempt from income arising from such vaccination in accordance with Clause 2 (4) (a) of the Ministerial Regulation No. 126 (B.E. 2509) (1966); the same as the annual health check-up fees. However, the taxpayers should continue to follow the news or announcements as to whether the Revenue Department may reach a different clarification or the Government may consider further legal measures in relation to the Covid-19 vaccination provided by an employers to its employees without charge in the future.