Thai Financial Reporting Standard 15 (TFRS 15): “Revenue from Contracts with Customers,” effective Jan 1, 2019, establishes principles for recognizing revenue to reflect the transfer of control of goods or services to customers. The amount recognized should reflect the consideration the entity expects to be entitled to.
5 Steps for Revenue Recognition:
- Identify the contract(s) with a customer.
- Identify the performance obligations in the contract.
- Determine the transaction price.
- Allocate the transaction price to the performance obligations.
- Recognize revenue when (or as) the entity satisfies a performance obligation.
Tax Revenue Recognition Steps:
Revenue calculation for companies or juristic partnerships must follow the Accrual Basis. Revenue must be included in the accounting period it arises, even if payment is not yet received, per Section 65 of the Revenue Code and Order Tor.Por. 1/2528.
| Topic | Accounting (TFRS 15) | Tax Method (Revenue Code) |
| Accounting Entry | Dr. Cash / Cr. Revenue (97 units) / Cr. Refund Liability (3 units) | Dr. Cash / Cr. Revenue (100 units) |
| Revenue Recognition | Does not recognize revenue for the 3 units expected to be returned. | Recognizes revenue for all 100 units, regardless of return probability. |
| Cost Recording | Dr. COGS (97 units) / Dr. Right to Recover Products / Cr. Inventory | Dr. COGS (100 units) / Cr. Inventory |
| Note | Measured based on carrying amount less recovery costs. | Recognizes full cost of 100 units sold. |
Scenario: Selling Product A for 100 THB with a 40% discount coupon for future use.
Accounting: Recognizes 89 THB initially. The remaining 11 THB is recognized only when the coupon is used or expires.
Tax: Recognizes the full 100 THB revenue immediately. No additional revenue is recognized when the coupon is used or expires.
Conclusion: Accounting and tax methods often differ depending on specific facts. Entities require expert tax accountants to adjust these differences for accurate Corporate Income Tax calculations