Thai Cabinet Approves Amendment on Legal Interest Rate 泰國內閣同意修改法定利息匯率
On March 9, 2021, Thai Cabinet approved proposed bill of amendment to Thai Civil and Commercial Code (“CCC”) on interest rates to fit the current economic situation.
Following is introduction of amendments under CCC:
Ø Standard interest rate
Currently under Section 7 of CCC, whenever interest is to be paid, and the rate is not fixed by a juristic act or by an express provision in the law, it shall be 7.5% per year. This has been adopted for more than 95 years. The new standard interest rate is to be decreased to 3% per year, and will be reviewed every three years by the Ministry of Finance.
Section 7 provides general interest rate for any violation of law. For example, if your car is crashed by others, you can ask for the remuneration plus up to 3% interest.
Ø Default interest rate
Currently under Section 224 of CCC, a money debt bears default interest rate at 7.5% per annum. If the creditor can demand higher interest on any other legitimate ground, this shall continue to be paid. The new default interest rate nevertheless is to be decreased to 5% per year. However, it should be aware that a creditor is still able to raise the interest at a higher rate under other legitimate grounds.
Section 224 can only be used for debt. For example, when someone borrows your money, if the interest rate is written in the contract, it can be up to 5% only. However, if the interest rate isn’t written in the contract, Section 7 is applied, which is not more than 3%.
Ø Default interest rate in case a debtor has duty to make payment by installment
There is a new added section under CCC which is Section 224/1. According to this section, if a debtor fails to make any installment payment, a creditor is granted to request the default interest based on the amount of principal of such default installment only. If an article indicated in an agreement violates this section, it is invalid.
Please be aware that the new proposal interest rates are only applicable for debts or installment payment which is due when the amended CCC is effective. But it does not affect the interest charged during the period before this Act come into effect.
The amended CCC will become effective from 11th April 2021 onwards due to the emergency decree on Amendment of the Civil and Commercial Code B.E.2564 dated 9th April 2021.
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