Tax Strategy
Challenges and Commitments
GGC conducts business with transparency and adheres to the principles of accuracy, transparency, verifiability and awareness of duties and responsibilities in relation to tax operations to build trust and maximize benefits to stakeholders related to the Company's business operations. This is sustainable in the long term. The company has prepared a tax policy under good corporate governance and operates its tax strategy efficiently, consisting of 3 pillars: Tax Ethics, Tax Risk Management, and Tax Transparency.
Key Stakeholders
Shareholder, Investor and Analyst
Customer
Government
Supplier and Business Partner
Community, Social and Environment
Tax Strategy Guidelines
GGC has formulated a tax policy to supervise risk management and disclose tax information with transparency, consistent with the Company’s strategy and business goals.
Tax Transparency
GGC publicly reports on the following for each tax jurisdiction in which we operate, which consists of the Company’s revenue, earning before tax, and corporate income tax paid as follows:
Corporate Income Tax Payment for 2022 (million THB)
*100% of revenue comes from Thailand.
** Sales and service income
*** Operating Profit before tax
GGC is engaged in primary activities in the Oleochemical Industry, with its main production base located in Thailand. In addition, it also cooperates with associates / business partners in various business operations to support future business expansion, which the Company is committed to supervising to ensure that associates and business partners will conduct business in accordance with the Company's set tax practices.
GGC Group's Main Business Units and Primary Activities
| Thailand | Business Activities |
|---|---|
| Global Green Chemicals Public Company Limited | Production, distribution and transportation of oleochemical products |
| Subsidiaries | |
| Thai Fatty Alcohols Co., Ltd. | Manufacturing and distributing biochemical products |
| GGC Biochemical Co., Ltd. | Holding company and local business operations |
| Joint ventures | |
| Thai Ethoxylate Co., Ltd. | Manufacturing and distributing chemical and ethoxylate products, such as Fatty Alcohol Ethoxylate |
| Indirect joint ventures | |
| GGC KTIS Bioindustrial Co., Ltd. | Manufacturing and distribution of biofuels |
In addition, the Company has disclosed the Reported Tax Rates and Actual Tax Rates in 2021 and 2022 as follows:
Unit: Million THB
| Details | 2021 | 2022 | Average |
|---|---|---|---|
| Earning before Tax | 421 | 1,089 | - |
| Reported Tax | 91 | 136 | - |
| Reported Tax Rate (percent) | 21.62 | 12.49 | 17.06 |
| Cash Taxes Paid | 13.72 | 33.29 | - |
| Cash Tax Rate (percent) | 3.26 | 3.06 | 3.16 |
In this regard, GGC properly manages corporate income tax according to Thai law. In 2022, the Company has a reported tax rate of 12.49 percent and the actual tax paid at 3.06 percent, which is lower than domestic rate of 20 percent, according to law. This is because the Company received the privilege of corporate income tax exemption and Single Jurisdiction Tax Code from the Board of Investment of Thailand (BOI). The Company has received tax exemption privileges in 1 main area:
Unit: Million THB
| Details | Rate | 2021 | Rate | 2022 |
|---|---|---|---|---|
| Operating profit before tax | 421 | 1089 | ||
| Income tax using the corporate income tax rate of Thailand. | 20% | 84 | 20% | 218 |
| Non-Taxed Income | (65) | - | ||
| Additional deductible expenses | (33) | (104) | ||
| Accumulated tax loss (Refers to Timing-Issues outside of the two years period) | (58) | - | ||
| Expenses that are not subject to taxation | 127 | 71 | ||
| Share of profit from investments in joint ventures | (15) | (9) | ||
| List of temporary differences | 46 | 13 | ||
| Others | 5 | (53) | ||
| Total | 21.62% | 91 | 12.49% | 136 |
Notes:
In 2022, Net Operating Loss entitled to tax exemption privileges is accounted for 140 million THB which stems from the operating loss from 2nd Methyl Ester Plant of 320 million THB. However, GGC generated net operating gain from “the Investment Promotion Certificate” tax exemption from the investment of the 2nd Glycerin Plant of 180 million THB, with explanation as follows:
- Income exempt from tax from BOI privileges in the amount of 6.666 million THB and 7,241 million THB in 2021 and 2022, respectively.
- The result of the deduction of expenses / income from tax privileges for investment promotion under the Revenue Code and the Investment Promotion Act in the amount of 43 million THB and 45 million THB in 2021 and 2022, respectively.