Corporate Income Tax Rate’s when you’re doing business in Thailand

Doing business in Thailand

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Regardless of where we live in the world tax is something that we all have to pay and when you’re doing business in Thailand it’s no different. Corporate Income Tax as the name would suggest is a tax that is levied on any company or partnership that is carrying out business in Thailand or obtaining an income from Thailand. A tax period is normally for the standard 12 months with the only exception to this being for a new company or a company changing the dates of their tax year.

Check out our post on personal taxes if you’re here working in Thailand, and make sure you’ve got your Thai work permit sorted.

Any company regardless of whether they are a small Thai company or international conglomerate are require to file a tax return known as a CIT 50 with 150 days of the end of their tax year. Naturally, the relevant amount of tax payable is also expected to be paid at the same time. Any business that takes profits out of Thailand is expected to completed and additional form known as a CT 54 and submit this along with payment within 7 days of the funds leaving the country.

In addition to the tax payment made relating to CIT 50 the company must complete a CIT 51. This is a pre-payment of tax for the following year. The company must estimate net profits and is then expected to pay half of the tax due within 2 months after the end of second quarter in the tax year. This tax can be credited against the annual payment.

Any tax payable is calculated on an accruals basis of net profits. All revenue should be taken into account and then relevant, allowable expenses then deducted. Deductible expenses are shown below: (source: Thai Revenue Department)

1. Ordinary and necessary expenses. However, the deductible amount of the following expenses is allowed at a special rate:

  • 200% deduction of Research and Development expense,
  • 200% deduction of job training expense,
  • 200% deduction of expenditure on the provision of equipment for the disabled;

2. Interest, except interest on capital reserves or funds of the company;
3. Taxes, except for Corporate Income Tax and Value Added Tax paid to the Thai government;
4. Net losses carried forward from the last five accounting periods;
5. Bad debts;
6. Wear and tear;
7. Donations of up to 2% of net profits;
8. Provident fund contributions;
9. Entertainment expenses up to 0.3% of gross receipt but not exceeding 10 million baht;
10. Further tax deduction for donations made to public education institutions, and also for any expenses used for the maintenance of public parks, public playgrounds, and/or sports grounds;
11. Depreciation

The relevant tax rates are also shown below: (Source: Thai Revenue Department)

Taxpayer Tax Base Rate
(%)
Small company1 – Net profit not exceeding 1 million baht
– Net profit over 1 million baht
15%
20%
Companies listed in Stock Exchange of Thailand (SET) – Net profit for first 300 million baht- Net profit for the amount exceeding 300 million baht 25%230%
Companies newly listed in Stock Exchange of Thailand(SET) Net Profit 25%3
Company newly listed in Market for Alternative Investment (MAI) – Net Profit for amount not exceeding 50 million baht 25%*
Bank deriving profits from International Banking Facilities (IBF) Net Profit 10%
Foreign company engaging in international transportation Gross receipts 3%
Foreign company not carrying on business in Thailand receiving dividends from Thailand Gross receipts 10%
Foreign company not carrying on business in Thailand receiving other types of income apart from dividend from Thailand Gross receipts 15%
Foreign company disposing profit out of Thailand. Amount disposed 10%
Profitable association and foundation. Gross receipts 2% or 10%

Notes:

* The reduced rate applies for currently listed companies for 3 accounting periods from 2008-2010.
1. A small company refers to any company with paid-up capital less than 5 million baht at the end of each accounting period
2. The reduced rate applies for currently listed companies for 3 accounting periods from 2008-2010.
3. The reduced rate applies for newly listed companies for 3 accounting periods from 2008-2010

Thai company’s are also required to submit a CIT 53 which relates to Withholding Tax that is payable on certain types of income. The rates for Withholding Tax are shown below: (Source: Thai Revenue Department).

Types of income Withholding tax rate
Dividends 10 %
Interest1 1 %
Royalties2 3%
Advertising Fees 2%
Service and professional fees 3 % if paid to Thai company or foreign company having permanent branch in Thailand;5% if paid to foreign company not having permanent branch in Thailand
Prizes 5%

Notes:

1. Tax will be withheld on interest paid to associations or foundations at the rate of 10%.
2. Royalties paid to associations or foundations are subject to 10% withholding tax rate.

*Disclaimer. All information is correct at time of going to press but is subject to change without prior notice or warning.