Overview of a Corporate Income Tax in Thailand
The term corporate income tax shall be applied to either business incorporated in Thailand or foreign business which generates an income in Thailand. A Thai company refers to a company incorporated under Thai Law while foreign company refers to a company incorporated under Foreign Law. Specifically, the term applies to the following business entity; a limited company, a limited partnership or a registered partnership as well as an association and a foundation. It also applies to any joint venture and any trading or profit-seeking activity carried on by a foreign government or its agency or by any other juristic body incorporated under a foreign law.
The corporate income tax for a Thai company shall be based on a worldwide net profit at the end of each fiscal year. The corporate income tax for a foreign company shall be based on a net profit which arises from income generates in Thailand.
The corporate income tax shall be calculated at the end of every company’s fiscal year, which is normally 12 months. It shall be based on the net profit. Therefore, all revenue that relates to the business shall be taken into consideration. It shall be deducted with cost and any related company’s actual expenses or deductible expenses. The expenses have to be complied with what is recognized and specified by Revenue Code.
The normal corporate tax rate is 30%. However, the Revenue Office has specified special corporate tax rate for small business as follows:
- Small company with the net profit of up to 1 million baht, 15% tax rate applied;
- Small company with the net profit over 1 million baht but not exceeding 3 million baht, 25% tax rate applied;
- Small company with the net profit of over 3 million baht, 30% tax rate applied.
The small company refers to a company with paid-up capital less than 5 million baht at the end of each accounting period. Therefore, in any case of the company with more than 5 million baht capitalization, a 30% tax rate is applied.
Nonetheless, the above-mentioned rate is applied to certain types of business ie. a company limited, the different rules and rates are applied to a different type of taxpayers. For example, the tax rate of 10% shall be applied to a Foreign Company disposing profit out of Thailand or 3% tax rate applied on Foreign Company engaging in international transpiration, etc.
About the Author (Author Profile)
Sirinee Kamphaengkaew is an Attorney at Law for Siam Legal specializing in corporate law. She was educated at American University's College of Law in Washington, D.C., and at Chulalongkorn University in Bangkok. She earned a Bachelor of Law with Honors, and two Masters of Law, focusing on Business Law and Intellectual Property Law. She has been a member of the Law Society of Thailand since 2005, and is fluent in both Thai and English.