Corporate Tax levels when doing business in Thailand

Business in Thailand

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There is an old saying that there are only two things that we can be sure of in life – death and taxation.  This no different wherever you are in the World.  For your business in Thailand, companies are liable for 3 main types of tax.  These are Corporate Income Tax, Value Added Tax (VAT) and Withholding Tax.  This article aims to look at these 3 different types of taxation and the obligations that companies have related to them.

Every company that is trading in Thailand must apply for a Taxpayer Identification Number (TIN) within 60 days or their incorporation.  The only exception is foreign companies who must obtain their TIN before they register a Thai company and commence business in Thailand.  The TIN is applicable for all 3 taxes that are mentioned above.

Corporate Income Tax for a business in Thailand

The standard rate for Corporate Income Tax in Thailand as of 1 January 2013 is 20%. This post covers the new changes in 2014.   However as is often the case in Thailand, there are a few exceptions to this rule.  SME companies which are defined as “companies with paid up capital of not more than THB5 million and sales and service income of not more than THB30 million”.  The rules are as follows; any company making a net profit of THB150,000 or less is not liable for Corporate Income Tax.  If a company makes a net profit between THB150,000 and THB1 million they are liable for 15% taxation.  Any company who’s profit exceeds THB1 million; and their financial year began on or after 1 January 2013 is liable for tax at the standard rate as mentioned above i.e. 20%.  For companies whose financial year commenced prior to 1 January 2013 they are subject to taxation at 23%.

On top of this annual tax payment, any company in Thailand that pays Corporate Income Tax is required to make a semi annual tax prepayment based on an estimate of the annual net profit and this is payable within eight months from the beginning of the accounting period.

Valued Added Tax (VAT)

A company registered in Thailand must become registered for VAT in the following 3 scenarios:

  1. The company will be subjected to VAT such as in the case of a company dealing with exports.
  2. The annual turnover is in excess of THB1.8 million per year.  The company must apply to become VAT registered with 30 days of reaching this figure.
  3. If the company employs a foreigner and therefore requires a work permit.

All companies that are involved with the sale of and/or the importing of goods into Thailand are subject to VAT at 7%.  All companies that are involved with the export of goods or services from Thailand are subjected to a 0% tax debit but are able to claim the VAT credits back that they have accrued through out the month – which explains in greater detail point 1 above.

VAT returns should be submitted to the Area Revenues Branch Office on or before the 15th day of the following month.

Withholding Tax (WHT)

WHT is a tax paid by the payer of things such as employment income, dividends, interest royalties and technical service fees.  This is perhaps the most complicated tax but a brief description of the rates is shown below:

  • Employment Income – 5-37% paid in advance
  • Dividends – 10%
  • Interest – When paid to another Thai company 1% otherwise 10%
  • Royalties – When paid to a Thai company 3% otherwise 15%
  • Technical Service Fees – When paid to a Thai Company 3% otherwise 15%

The information provided is correct at the time of writing but is subject to change.  It is always advisable to speak to an expert to get correct, up to date advice prior to starting a business in Thailand.