Corporate Tax Rates
Corporate Income Tax is paid in Thailand by companies and partnerships established under Thai laws are subject to income tax on income earned from sources within and outside of Thailand. The juristic companies and partnerships for income tax purposes include, but are not limited to:
- Limited companies.
- Registered ordinary and limited liability partnerships.
- Joint ventures.
- Foundations and associations
- A branch of a foreign corporation earning from sources within Thailand.
Corporate Income Tax is imposed on the net profits as per the generally accepted accounting principles and according to the conditions described in the Revenue Code of Thailand. Corporate Taxpayer shall bear in mind that:
- Every return must be accompanied by audited financial statement.
- Pay 50 percent of the estimated annual income tax by the end of the eighth month.
- Failure to pay the estimated tax the taxpayer is fined the amount of 20 % of the deficit.
However the Corporate gets some kind of exemption on dividends.
- Dividends received by Thai companies or foreign companies carrying on business in Thailand are taxable as ordinary income. It is entitled to include in its taxable income only one-half of the dividends received from another Thai company, provided that shares have been held for a period of at least three months before and three months (HOLDING PERIOD) after receipt of such dividends.
- A Thai company will be EXEMPT from taxation on all dividends received from another Thai company if the recipient company holds at least 25% of the total shares with voting rights in the paying company and has so held such shares in compliance with the holding period, and the paying company does not hold any shares of the recipient company, either directly or indirectly.
- Thai companies listed on the Stock Exchange of Thailand are exempt from taxation on all dividends received from other Thai companies if they merely comply with the defined holding period.
If the Corporate taxpayer fails to file a tax return, late filing or filing a return containing false or inadequate information may subject the taxpayer to various penalties. Failure to file a return, and sub-sequent non-compliance with an order to pay the tax assessed, may result in a penalty equal to twice the amount of tax due. Penalties are due within 30 days of assessment. An annual income tax return must be filed within 150 days after the end of each accounting period, and must be accompanied by audited financial statements.
Income under this head includes:
- gross income from sale or disposal of petroleum,
- gross income arising from transfer of any property
- Any other income arising from conducting petroleum business.
- value of petroleum delivered as a royalty payment to the government
Double Tax Treaties
Petroleum income tax is charged on net profit at the rate of 50% after allowing deductions. The tax treaties entered by the Thai Government are mainly concerned with the avoidance of double taxation. The principle of Double Taxation Avoidance is that a person will not be subjected to tax in another country where he resides if he is already paid the tax in the country where he earns the income. It saves the person from paying tax twice. The treaty aims at providing for cooperation between governments in preventing the evasion of taxes. The scope of the Thai tax treaties covers taxes on income and on the capital of individual and juristic entities. The provisions of these tax treaties minimize or exempt certain types of income from taxation.
Value Added Tax in Thailand
The Value Added Tax (VAT) is generally imposed to goods and services supplied in or imported into Thailand. VAT includes municipal tax, which is charged at the rate of one-ninth of the VAT rate. Under the tax regime, value added at every stage of the production process is subject to tax. This tax affects: Producers, providers of services, wholesalers, retailers, exporters and importers. A zero per cent rate applies to certain businesses, for example, the Export of Goods or Services, international transportation by sea or air, and the sale of goods and services to United Nations-related organizations.
The trader will charge VAT on the sale of goods or provision of services to the consumer. The businesses which are excluded from VAT subject to specific business tax, businesses necessary for maintenance of life and social welfare (i.e. health care services, educational services, domestic transportation, sale of unprocessed agricultural products), cultural services, religious and charitable services. Traders who do only zero-rate supply business will not be required to collect VAT on their supplies, but can refund all VAT paid for purchase of goods and services from others. Services provided by traders residing abroad and utilized in Thailand are regarded as being rendered in Thailand and subject to VAT.
The VAT payer is required to file a monthly VAT return and pay the tax monthly, on or before the fifteenth day of the following month.
Failure to register as a VAT payer, file a VAT return, or issue a tax invoice to a customer, is subject to a penalty of twice the amount of the tax due. A monthly surcharge of certain percentage for failure to pay the VAT is levied on the tax due. In addition, punishment for non-compliance with VAT regulations allows for a maximum punishment of imprisonment up to seven years and a fine of up to Baht 200,000.
Specific Business Tax in Thailand
This tax is imposed on certain types of businesses whose value added is difficult to define such as banking, finance, life insurance, pawnshops, and real estate. Such businesses are considered to be outside the VAT system and therefore are not subject to VAT. Specific business tax is computed on monthly gross receipts which do not include municipal tax.
Municipal Tax in Thailand
When specific business tax is paid, municipal tax is paid at the rate specified by the Government is imposed thereon. When VAT is paid, one-ninth of its rate goes to municipal tax.
Stamp Duty Tax
Stamp duty can be imposed on the instruments listed in the Stamp Duty Schedule of the Revenue Code at different rates specified therein. The instruments are such as promissory notes, bills of exchange, powers of attorney, letters of credit, etc. If the instrument is executed in Thailand, the stamp duty is due within 15 days after the execution date. However, if the instrument is executed outside Thailand, the stamp duty is due within 30 days after arrival of the instrument in Thailand.EXCISE TAX This tax is imposed mainly on luxury items such as gasoline and petroleum products, tobacco, liquor, soft drinks, playing cards, crystal glasses, etc. Excise tax will be computed according to the Excise Tax Tariff on an ad valorem basis or at a specific rate, whichever is higher. All goods subject to excise tax also remain subject to VAT. The excise tax is collected by the Excise Department and usually imposed at the time of delivery of the goods from factories.
Customs Duty Tax
Customs duty is mainly imposed on import and some export goods specified in the Customs Tariff statute. Exported goods that are subject to customs duty include rice, rubber, leather, and teak. In general, the invoice price is the basis for computation of duty and normally applied to CIF (Cost, Insurance, and Freight) value for import and FOB (Free On Board) for export.
Thailand being a member country of the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) adopts practices and standards in accordance with the GATT codes in determining customs price.
Company Tax: Thai and ForeignThai Company
A Thai company generally pays tax at 30% of net profit. However, some types of company are entitled to a rate reduction.Rates:
- Small Business with Paid-up Capital Less than 5 Million Baht
25% of net profit < 300 million baht for 5 consecutive accounting periods starting from 6th September B.E.2545. 25% of net profit 1-3 million baht
- Company Registered in the Stock Exchange of Thailand (set)
20% of net profit < 1million baht ,15% of net profit< 1 million baht starting from 1st January B.E.2547. Newly registered company in the Stock Exchange of Thailand (SET) and Market for Alternative Investment (MAI).
- 3 Years Starting from 6th September B.E.2545
25% of net profit for newly registered company in SET for 5 consecutive accounting periods. 20% of net profit for newly registered company in MAI for 5 consecutive accounting periods.
- Bangkok Banking Facility and Regional Operating Headquarters
10% of net profit from qualified income
- Association and Foundation
2% or 10% on gross receipts
A foreign company carrying on business in Thailand, whether it has a branch, an office, an employee or an agent in Thailand shall pay 30% tax only on profit deriving from business in Thailand. However, international transportation company shall pay tax at the rate of 3% on gross receipts.Foreign Company Abroad
A foreign company that does not carry on business in Thailand will be subject to withholding tax on certain categories of income derived from Thailand. The withholding tax rates may be further reduced or exempted depending on types of income under the provision of Double Taxation Agreement.Rates:
|Remittance of profits||10%|
|Other income such as interests, royalties, capital gains, rents and fees||15%|
Currently, Thailand has concluded tax treaty agreements with 49 countries: Armenia, Australia, Austria, Bangladesh, Bahrain, Belgium, Bulgaria, Canada, China P.R., Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Indonesia, Israel, Italy, Japan, Korea, Laos, Luxembourg, Malaysia, Mauritius, Nepal, the Netherlands, New Zealand, Norway, Oman, Pakistan, the Philippines, Poland, Romania, Singapore, Slovenia, South Africa, Spain, Srilanka, Sweden, Switzerland, Turkey, Ukraine, United Arab Emirates, United Kingdom of Great Britain and Northern Ireland, United States of America, Uzbekistan, and Vietnam.