Observation
We have identified that short-term loans to director are long outstanding and no interest recorded and equipment.
Implication
This issue implicates risk in repayment ability of the director which may lead to impairment of asset.
Even the Company mitigates the CIT risk by adding back all interest to these loans in the corporate income tax calculation, there are risks in the assessment from Revenue Department that may challenge more interest from loans including penalty and surcharge pursuant to Thai Revenue Code.
Recommendations
The Company should enter into loans agreement and specify the conditions of repayment and interest rate obviously.