Corporate Tax ID Registration
In the past, within 60 days from incorporation or start of operations you had?to register with the Revenue Department in order to obtain a corporate tax ID.
This application is not required anymore, because the company registration number will be used as a tax ID number. Only foreign entities operating business activities in Thailand must register with the Revenue Department and obtain the tax ID number.
Corporate Income Tax (CIT)
Incorporated firms operating in Thailand generally pay income tax at a rate of 20% of net profits, although reduced tax rates apply to companies listed on the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (MAI). Small companies pay taxes at reduced rates on a progressive scale on profits below 3 million THB.
Foundations and associations pay income taxes at rates of 2 to 10% of gross business income, depending upon the activity. Temporary exemptions from corporate income can be applied for in certain circumstances.
International transport companies face a rate of 3% of gross ticket receipts and 3% of gross freight charges.
All companies registered under Thai law are subject to taxation as stipulated in the Revenue Code and are subject to income tax on income earned from sources within and outside of Thailand. Foreign companies not registered or not residing in Thailand are subject to tax only on income derived from sources within Thailand.
Normal business expenses and depreciation allowances, under accrual accounting are allowed as deductions from gross income. Double-deductions are available for qualifying R&D and training expenditure. Inventory must be valued at cost or at market price, whichever is lower. Fixed Assets and buildings are depreciated over the useful life of the asset at rates of between 5 and 100%. Accelerated depreciation methods may be applied to certain asset classes. Tax deductions may be claimed for donations of up to 2% of net profits to approved public charities or for public benefit, 10% of net profits for approved educational causes and 20% of net profits to approved sporting bodies. Entertainment expenses are tax deductible to a limit of the lesser of 0.3% of gross sales income but not exceeding 10 million THB.
Thai companies are required to file corporate tax returns and make payments of corporate income tax twice a year, and employers are required to withhold personal income tax from their employees.
Except for newly incorporated companies, an accounting period is defined as a period of 12 months. Annual tax returns must be accompanied by audited financial statements. Tax losses can be carried forward for up to 5 consecutive years.
A corporate taxpayer must file a half-year return and pay a tax installment based on 50% of the estimated annual profit by the end of the 8 month of the accounting period. Failure to pay the estimated tax or underpayment by more than 25% may subject the taxpayer to a fine amounting to 20% of the amount in deficit.
Failure 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 subsequent non-compliance with an order to pay the tax assessed, may result in a penalty equal to twice the amount of tax due. Filing a return with a tax deficiency may result in a penalty equal to the amount of tax. All penalties must be paid within 30 days of being assessed.
Inter-corporate dividends are generally exempt from tax on 50 % of the dividend payment received, provided the shareholding is in place for longer than 3 months prior to, and for at least 3 months after, the payment date. Dividends are exempt from income taxes where there recipient holds 25% of more of the shares of the payer company. The exemptions do not apply where respective cross-holdings exist between the payer and the recipient company.
Personal Income Tax (PIT)
Every person, resident or non-resident, who derives assessable income from employment or business in Thailand, or has assets located in Thailand, is subject to personal income tax. Individuals residing for 180 days or more in Thailand for any calendar year are also subject to income tax on income from foreign sources if that income is brought into Thailand during the same taxable year that they are a resident.
Exemptions are granted to certain persons, including United Nations officers, diplomats and certain visiting experts, under the terms of international and bilateral agreements.
Personal income tax is applied on a progressive scale as follows:
|Annual Taxable Income (Baht)||Marginal Tax Rate|
|0 – 150,000||Exempt|
|150,001 – 300,000||5%|
|300,001 – 500,000||10%|
|500,001 – 750,000||15%|
|750,001 – 1,000,000||20%|
|1,000,001 – 2,000,000||25%|
|2,000,001 – 5,000,000||30%|
|5,000,001 – and above||35%|
Personal income taxes and tax returns must be filed prior to the end of March of the year following the year in which the income was earned.
A standard deduction of 50%, but not in excess of 100,000 THB, is permitted against income from employment or services rendered or income from copyrights.
Standard deductions ranging from 10% to 60% are allowed for other categories of income, as categorized below:
? Rental income: 10% to 30% depending on type of property leased
? Professional fees: 60% for income from medical practice, 30% for other professionals
? Income derived by contractors: 60%
? Income from other business activities: 60%
Taxable Income may be reduced by the following allowances
? General allowance, available to all taxpayers: 60,000 THB
? Allowance for taxpayer’s non-working spouse: 60,000 THB
? Child allowance: 30,000 THB
? Allowance for taxpayer’s parents or spouse’s aged parents: 30,000 THB per qualifying dependent
? Contributions made by taxpayer and spouse to an approved provident fund at the amount contributed but not exceeding 15% of wages or 500,000 THB per year
? Interest payments on loans for purchasing, hire purchasing or construction of residential buildings by the taxpayer and spouse at the amount paid but not exceeding 100,000 THB
? Amounts contributed to the social security fund by the taxpayer and spouse
? Contributions made by taxpayer and spouse to approved retirement funds at the amount contributed but not exceeding 15% of wages or 500,000 THB per year
? Contributions made by taxpayer and spouse to approved long term investment funds at the amount contributed but not exceeding 15% of wages or 500,000 THB per year
? Donations contributions at the actual amount donated but not exceeding 10% of taxable income after allowances
Thailand has treaty agreements to eliminate double taxation with the following countries:
Armenia, Austria, Australia, Bahrain, Bangladesh, Belgium, Bulgaria, Canada, China, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Hungary, Indonesia, Israel, Italy, India, Japan, Kuwait, Laos, Luxembourg, Malaysia, Mauritius, Nepal, Netherlands, New Zealand, Norway, Oman, Pakistan, the Philippines, Poland, Romania, Singapore, Slovenia, S Korea, S Africa, Spain, Sri Lanka, Sweden, Switzerland, Seychelles, Turkey, Ukraine, United Arab Emirates, United Kingdom and Northern Ireland, United States, Uzbekistan and Vietnam.
The treaties generally place taxpayers in a more favorable position for Thai income than they would be under the Revenue Code, as profits will only be taxable if the taxpayer has a permanent establishment in Thailand.
Value Added Tax (VAT)
Value Added Tax (VAT) is a non-cumulative consumption tax levied on the sale of goods and the provision of services.
Those who are affected by this tax are traders, manufacturers, importers, exporters, wholesales, retailers, wholesalers and persons or legal entities that provide services under a registered business or in a professional capacity. These persons are required to issue proper tax invoices.
Any person or legal entity that has an annual turnover exceeding 1.8 millions THB is required to register for VAT. The VAT registration must be made within 30 days of reaching the income threshold. A business may opt to register for VAT, regardless of turnover. A VAT registration is a precondition of employing foreign labour.
1. VAT Exempt
Certain type of supply are exempt from VAT, including:
? Supplies made by entities with an annual turnover not exceeding 1.8 millions THB
? Sales or import of unprocessed agricultural products and related goods such as fertilizers, animal feeds, chemicals
? Sales or import of newspapers, magazines and textbooks
? Certain industries
? Educational services
? Artificial and cultural services
? Medical, audit and lawyer practice services
? Research, library, museum, zoo, employment of labour, amateur sports and public entertainers
? Domestic and international transportation by way of land
? Real estate rental
? Service provide by local government authorities
? Sales of goods or services to Thai ministry, departmental, department
? Sales of goods or service to religious institutions
2. Zero Rated
The supply of certain goods and services attract a zero-rate VAT. These include:
? Exports of goods and services provided in Thailand and utilized outside Thailand in accordance with the rule, procedure and conditions of Revenue Code
? International transportation by air or sea
? Sales goods and services to Thai government or state enterprises under loan or aid programs
? Sales goods and services to the United Nations agencies, embassies and consulates
? Sales goods and services between bonded warehouses and between operators located in EPZs
3. 10% Rated
The majority of goods and services are subject to VAT when sold domestically by a VAT-registered supplier.
The normal VAT rate is 10%, but has been reduced at 7% until 30 September 2019.
4. Customs VAT
Where imported goods are no exempt or subject to zero-rate VAT, VAT will be levied by the Customs Department when the goods are imported.
5. Imported Service VAT
Services utilized in Thailand supplied by foreign service providers are also subject to VAT in Thailand. In such a case, service recipient in Thailand is obliged to file VAT return on behalf of the service providers and pay tax, if any.
Output Tax – Input Tax = Tax payable,
where Output tax is the VAT which the operator collects from the purchaser when a sale is made, and Input tax is the VAT which an operator pays to the seller of a goods or service which is then used in the operator’s business.
Unused input tax can creditable against output tax within the next 6 months.
If the result of this calculation is a positive figure, the operator must submit (PP. 30) the remaining tax to the Revenue Department not later than 15 days after the end of each month. However, for a negative balance, the operator is entitled to a refund in the form of cash or a tax credit. A claim for a tax refund must be made within 3 years.
Failure to file and submit in time the VAT returns is subject to a fine up to twice the amount of the tax due, plus 1,5% surcharge.
Specific Business Tax (SBT)
Specific business tax is imposed on certain types of businesses for which it is difficult to determine the VAT. The specific business tax rates are between 0.1% to 3% and applies on the following businesses:
? Commercial banks, finance and similar businesses
? Insurance companies
? Financial securities firms and credit financiers
? Sales on the stock exchange
? Sales of immovable properties
? Pawn shops
Specific business tax returns must be filled monthly within 15 days of the following month. Failure to do so, may result in a penalty of twice of the tax due.
Remittance tax applies only to profits transferred or deemed transferred from a Thailand branch to its head office overseas. It is levied at the rate of 10% of the amount to be remitted before tax, and must be paid to?the Revenue Department within 7?days of the following month in which the remittance is made.
However, outward remittances for the purchase of goods, certain business expenses, principal on loans to different entities and returns on capital investment, are not subject to an outward remittance tax. The tax does not apply to dividends or interest payments remitted out of Thailand by a company or partnership; these are taxed at the time of payment.
Section 70 of the Revenue Code addresses income paid to foreign juristic persons. When a company or partnership incorporated under a foreign law and not carrying on business in Thailand receives “assessable income” paid either from or in Thailand, the payer is usually required to deduct tax at a rate of 15% of the gross remittance. However,?Dividends are subject to 10% WHT, but exemptions apply in some cases (dividends paid out of profits are subject to tax holidays).
Petroleum Income Tax
The Petroleum Income Tax Act replaces the Revenue Code in imposing a tax on income from firms which own an interest in a petroleum concession granted by the Department of Mineral Resources or which purchase oil from a concession holder for export.
Net income from petroleum operations includes revenue from production, transport or sale of oil and gas, the value of gas delivered to the government as a royalty and the proceeds of a transfer of interest in a concession. The tax rate is not more than 50% of net profits.
Petroleum tax return and payment must be submitted within 5 months after the closing date of the accounting period. Failure to file correct returns or late filing may lead to specific petroleum tax penalties and surcharges.
The stamp duty is taxed on certain documents. The Revenue Code contains a Stamp Duty Schedule listing the instruments subject to stamp tax.
Stamp duty tax rates vary from one document to the other and are between 0.05% to 1% of the document’s value. In some cases, the stamp duty is a flat fee.
In general, the beneficiary of the instrument must pay the stamp duty. Fines for failure to stamp documents range from two to six time the duty amount.
Excise tax is levied on the sale of a number of goods, including petroleum products, tobacco, liquor, soft drinks, perfume and cosmetic products, automobiles or even on certain entrainment or recreation businesses.
The excise tax is paid by the manufacturer, merchant, or importer within 30 days before the date of production, the start date of import, or the start date of service. The fine for failure to file or pay excise tax is twice the amount of the tax to be paid, plus 1.5% surcharge.
Owners of land and/or buildings in designated areas may be subject to annual taxes levied by the local government.
Under the Local Development Tax Act, owners or the possessors of land on which nothing is built, mountains and water basins must pay an annual tax of 0.25% to 0.95% of the appraised value of the land. However, land for the personal residence of the owner, animal husbandry, or land cultivation is exempted from this Act.
Under the House and Land Tax Act, owners of buildings, houses, structures or land rented or used for commercial activities must pay an annual tax of 12.5% of the actual or assessed rental value of the property. Only owner-occupied residences are exempt from this tax.
The Customs Department collects customs duties on over 9,000 imported goods and on certain goods exported, such as rice, hides, skins and leather, scrap iron or steel, rubber, teak, and other kinds of wood.
Customs duties are collected in accordance with the Harmonized Commodity Description and Coding System (Harmonized System).
Most tariff duties are ad valorem, which is a duty laid upon goods at a certain rate, ranging between 5% and 60%, of their value. However, in certain cases both ad valorem and a specific rate are given, and the higher tariff will apply.
Goods imported for re-export are generally exempted from import duty and VAT.
The Petroleum Authority may grant duty reductions or exemptions on certain goods imported by a promoted company or concessionaire.
Duty reductions or exemptions on imported goods may also be granted to members of the ASEAN Free Trade Area (AFTA) and the World Trade Organization (WTO), and to parties of free trade agreements and international agreements to which Thailand is a party (Australia, Chile, India, Japan, New Zealand, Peru).
Thailand is also a member of the General Agreement on Tariffs and Trade (GATT).
To lower costs and enhance competitiveness, the Thai Cabinet approved a variety of tariff measures. The measures include reduced tariffs on capital goods, raw materials, and other products.
Customs duty is imposed on the transaction value of imported goods, which is the price actually paid or payable for the goods when sold for export to the country of importation, plus some costs and charges. Customs duties must be paid upon arrival.
Non-compliance with customs procedures, false declarations, smuggling, and evasion of customs duties are considered offences and penalties can include imprisonment for up to 10 years, instead of or in addition to the fine.