Tax Disclosure
GC consistently acts with a transparent and collaborative approach with all institutions and associations to support the development of effective tax systems in the various countries where it operates.
The table below shows the Consolidated sale revenue breakdown by tax jurisdiction for the year 2023.
| Consolidated sale revenue breakdown by tax jurisdiction for the year 2023 | |
|---|---|
| Thailand | 84% |
| USA | 3% |
| China | 2% |
| Germany | 2% |
| France | 1% |
| Others | 8% |
Sales revenue of main products breakdown by geographical locations of customers for the year 2023
SALES REVENUE OF MAIN PRODUCTS
Breakdown by Geography Year 2023
- Represent the sales revenue based on the geographical location of customers.
- More than 80% of sale revenue reported in consolidated financial statement was from business operations conducted in Thailand.
Total sales and services revenue of GC Group is mainly from Thailand. Thai governments develop tax incentives which generally be available to any business that meets the relevant criteria as commonly using in many countries in order to encourage investment, usually results in job creation and the expansion of infrastructure, aiding social and economic development. For example, i) in Singapore, company can use tax exemption for eligible criteria and ii) in Switzerland, the tax holiday is generally granted for five to ten years based on the federal law on regional politic.
GC Group uses available and appropriate tax incentives and tax holidays where we have a qualifying business activity. Most of our local operations relating to refinery and petrochemical mainly obtained tax privileges granted by the Thai Government, namely “the Board of Investment (BOI) of Thailand”, which offered into three main areas (please see in more details : https://www.boi.go.th/index.php?page=incentive):
- Corporate income tax exemption (tax holiday) for 8 years from the date on which the income is first derived from such operations; and
- A 50% reduction in the normal income tax rate for another 5 years, commencing from the expiry date in (i) above; and
- Double deduction of transportation, electricity, and water costs from corporate taxable income for 10 years.
Recently, Thailand BOI has announced new measure for companies impacted by global minimum tax under the BEPS 2.0 Pillar Two project. This new measure allows the option for companies currently applying BOI income tax exemption incentives in Thailand to elect applying 50 percent of the statutory corporate income tax (CIT) rate at 20 percent, thereby applying a 10 percent CIT rate for the remaining tax exemption period which is limited to a maximum of ten years. Furthermore, Thai Revenue Department announced that it is in the process of drafting a bill to collect Top-up Tax (Pillar 2 - Global Anti-Base Erosion Rules) with an indicative timeframe for the draft bill to be released for approval within 2023 and effective in 2025. Therefore, GC Group keeps monitor a tax impact assessment since Pillar 2 includes as well as potential updates of the BOI’s current investment promotional measures.
The statutory corporate income tax (CIT) in Thailand is levied at the rate of 20% on taxable profits. Partial Business Unit of GC Group’s Effective Tax Rate (ETR) was generally much lower due to tax exemption and privileges obtained from BOI as mentioned above. Nonetheless, ETR does vary year by year dependent upon the effective periods of the privileges and operating performances.
We have disclosed ‘Tax Reporting by Countries’ and ‘Reported Tax Rate and Cash Tax Rate’ which is beyond the requirement of Public Listed Company on the Stock Exchange of Thailand or Government in Thailand,
Tax Reporting by Countries for the Year 2023
The table below presents total revenue, operating profit, income tax expense, income tax paid (received), number of employees, name of entities, and main business activities for countries in which GC Group operates. The financial information can be reconciled to our consolidated financial statement for the year 2023. Sector-specific taxes, VAT, and other fiscal contributions/levies, which often exceed the total corporate income tax, are not included.
More information on Tax Reporting by Countries: Tax Reporting by Countries for the Year 2023
GC Group performance comparison between 2023 and 2022 described the following
- In 2023, the Company had total sales revenue decreased from the previous due to decreases across the petroleum and petrochemical products due to the ongoing economic recession that has not yet recovered. Another factor was the Russia-Ukraine conflict in 2022 has triggered a global energy crisis. This resulted in an unusual surge in petroleum product prices in 2022.
- Net operating profit at Baht 2,217 million increased from the previous year. mainly due to the extraordinary items e.g. i) gain on sales of GCL shares at Baht 4,017 million, ii) gain from repurchase of USD bonds of Baht 1,890 million, and iii) net gain from foreign exchange and financial derivative of Baht 790 million.
- Income Tax Accrued (Current year) decreased which was driven by some of local and oversea operations had profitability. This current tax expense only reflects operations in the current year and does not include deferred taxes or provisions for uncertain tax liabilities. Whist, income tax paid incurred which were mainly from the corporate income tax accrued from the previous year, which had the obligation to pay in current year.
Reported Tax Rate and Cash Tax Rate for the year 2023
Unit : Million THB
| 2022 | 2023 | Calculated Average | |
|---|---|---|---|
| Earnings before Tax |
(9,909)
|
2,217
|
-
|
| Reported Taxes |
(2,273)
|
1,352
|
-
|
| Reported Tax Rate (Percent) |
0.0%
|
61.0%
|
12.0%
|
| Cash Taxes Paid |
2,754
|
1,450
|
-
|
| Cash Tax Rate (Percent) |
(27.8%)
|
65.4%
|
(54.7%)
|
Even though GC has encountered group - wide net operating losses in FY2022, the Company had Profit before Tax of Baht 2,217 million in 2023 which significantly increased, mainly due to extraordinary items e.g. i) gain on sales of GCL shares ii) gain from repurchase of USD bonds, and iii) gain from foreign exchange and financial derivatives.
As the Group has operating profit, resulted in Reported Tax Rate is 61.0% and Cash Tax Rate is 65.4%, which mainly increased from some of local and oversea operations had profitability.
In general, the difference between Reported tax rate and Cash tax rate was mainly caused by the following factors:
- Deferred tax; the temporary difference between tax and accounting rules
- Timing of tax payments; the tax liability of a certain year is generally partly paid in current year, and partly in the following year.
Reconciliation of Effective Tax Rate
GC group’s Effective Tax Rate reconciliation has shown with explanation as follows
| Description | Rate | 2022 (Million THB) |
Rate | 2023 (Million THB) |
|---|---|---|---|---|
| Profit (loss) before income tax expense |
(9,909)
|
2,217
|
||
| Income Tax using Thai corporation tax rate |
20%
|
(1,982)
|
20%
|
443
|
| Effect of different tax rates in foreign jurisdictions |
(317)
|
(239)
|
||
| Income not subject to tax |
(425)
|
(202)
|
||
| Non-deductible tax expenses |
2,486
|
1,746
|
||
| Expenses deductible at a greater amount |
(2,121)
|
(487)
|
||
| Tax loss carry forward |
(12)
|
38
|
||
| Over provided in prior years |
249
|
(68)
|
||
| Share of profit of investments in joint ventures and associate |
(511)
|
77
|
||
| Other |
360
|
44
|
||
| Total |
0.0%
|
(2,273)
|
61.0%
|
1,352
|