Taxation In Thailand
Written by admin on May 14th, 2011Tax Thailand System
The taxation system raises the revenue from the following taxes:
Corporate income tax;Personal income tax;Withholding tax;Value added tax;Specific business tax;Customs duties; andOther taxes (including excise tax, stamp duty and petroleum income tax).The Ministry of Finance administers the tax collections through three central Government Departments of Revenue; Customs; and Excise. Local Governments levy tax on land (local development tax) and on land with buildings (house and land tax).
Tax RegistrationsEvery individual and corporate entity must register for a Taxpayers Identification Card and in the case of a corporate entity the registration must be within 60 days from the date of received income.
All enterprises having income subject to either VAT or Specific Business Tax are also required to register for such tax at least 15 days prior to the commencement of business.
Corporate Income TaxCorporate entities which are registered under the Thai law, or which are registered under a foreign law and carrying on business in Thailand, are subject to corporate income tax.
Corporate entities include private and public limited companies, registered ordinary and limited partnerships, joint ventures, foundations and associations, and branches of foreign corporations.
Companies and partnerships are taxed on the income earned from sources within and outside Thailand (worldwide income), whereas foreign corporations are taxed only on income derived from sources within Thailand.
Corporate Income Tax RateThe corporate income tax rate for companies and partnerships (other than an SME, see below) is 30%, which is imposed on the assessable net profits of the business calculated in accordance with generally accepted accounting principles in Thailand, adjusted for specific matters imposed under the Revenue Code.
SME Tax RateA Small and Medium Enterprise (defined as a company or partnership with paid up capital not exceeding 5 million Baht as at the end of the accounting period) is granted reduced rates of corporate income tax as follows:
Profit Range
Tax Rate
0 – 1 million baht
1 – 3 million baht
3 million baht and over
15%
25%
30%
Assessable Net ProfitsThe following are taken into account when determining taxable net profits:
Tax losses may be carried forward for 5 years;Inventory is to be valued at the lower of cost or market price;Employer’s contributions to provident funds are tax deductible, subject to certain conditions;Bad debts may be written off only after the specific tax rules and procedures are followed;Expenditure, which has been determined on the basis of net profit at the end of the accounting period (e.g. bonuses based on net profit) are not allowed;Provisions/reserves cannot be treated as a deductible expense;Capital gains are treated as ordinary taxable income;Deductions for gifts, donations and contributions to public charities may not exceed the percentage stipulated in the law;Both realized and unrealized gains and losses from foreign exchange must be included in the computation of taxable net profit;Entertainment expenses are deductible up to maximum limits;50% of dividend income received by a Thai company from another Thai company is excluded from assessable income, subject to conditions;100% of dividend income can be excluded from the assessable income of Thai companies listed on the Securities Exchange of Thailand and for other private limited companies, subject to conditions; andTax costs (such as corporate income tax, VAT, tax penalties and surcharges) may not be deducted from assessable income. Depreciation DeductionsDepreciation of assets is limited to maximum rates prescribed in the tax law. These maximum rates are as follows:
Asset
Max. Depreciation Rate
Buildings
Durable buildings
Temporary buildings
5%
100%
Acquisition cost of depletive natural resources
5%
Acquisition cost of lease rights where there is no lease
contract or where the lease contract allows successive
renewals
Where the lease contract contains no renewal periods or the
renewal periods are limited
10%
100% divided by the number of limited
years
Acquisition cost of a right in a process, formula, goodwill,
trademark, business license, patent, copyright, or any other
right where the period of use is not limited
Where the period of use is limited
10%
100% divided by the number of limited
years
Other assets subject to depreciation
20%
Corporate Income Tax FilingsAn annual corporate income tax return is required to be filed within 150 days after the close of the accounting period and the computed amount of tax payable is required to be paid at the same time. surcharge of 1.5% per month (up to the amount of the tax payable) is imposed for late filings.
A half-year corporate income tax return based on estimated net profits for the full financial year must be filed within two months after the close of the first half of the accounting period, and the computed amount of half-year tax is required to be paid at his time. If the half-year tax payment is underpaid by more than 25%, a penalty of 20% of the amount underpaid is payable.
International TransportationFor companies or partnerships organized under foreign laws and engaged in the business of international transportation, corporate income tax is imposed in the following manner:
In the case of transport of passengers, tax is paid at the rate of 3% of the fares, fees and any other benefits collectible in Thailand in respect of the transport business, before the deduction of any expenses;In the case of transport of goods, tax is paid at the rate of 3% of the freight, fees and any other benefits collectible (whether in Thailand or elsewhere) in respect of the transportation of goods from Thailand, before the deduction of any expenses.Foundations and AssociationsFoundations and associations are subject to either 2% or 10% income tax, depending on the type of gross revenues, except that membership fees and dues are tax-exempt.
Withholding TaxThailand operates an extensive system of withholding tax for both domestic payments of various types of assessable income and international payments or repatriations of income out of Thailand.
The tax withheld must be remitted to the Revenue Department within the 7th day of the following month, and a surcharge of 1.5% per month applies for all late payments made.
Domestic Payments Withholding TaxThe major types of “assessable income” paid domestically and the applicable withholding tax rates are as follows:
Type of Domestic Payment
Withholding Tax Rate
Payment for hire of work, office of employment or services rendered
3%
Payment for goodwill, copyright, franchise fee, patent, or other rights
and annuities
3%
Payment of interest to individuals
Payment of interest to banks etc
Payment of interest to other companies
15%
1%
1%
Payment of dividends and bonuses to investors
10%
Payment for leasing of property
5%
Payment of liberal professional income such as law, engineering,
architecture and accounting
3%
Payment for contracting work
3%
Payment for advertising fees
2%
A withholding tax certificate is issued to the recipient of the payment, who then claims the withholding tax as a tax credit in his annual income tax return. In the event the withholding tax exceeds the annual tax liability, the taxpayer is entitled to a refund of the tax over-paid, although in practice such claims will trigger a Revenue Department tax investigation, which must be completed prior to refunding the tax.
International Payments Withholding TaxInternational payments or repatriations of income from Thailand to a foreign company not carrying on business in Thailand are subject to the following withholding taxes (subject to any reduction in the rates afforded by a Double Tax Agreement):
Type of International Payment
Withholding Tax Rate
Payment of dividends
10%
Payment of interest
15%
Payment of rent
15%
Payment of royalties
15%
Payment for services
15%
Payment of capital gains
15%
A non-resident withholding tax certificate (in English) can be obtained by the payer from the Thailand Revenue Department and passed onto the foreign recipient for claiming the tax credit or otherwise according to the rules in the recipient’s country.
Personal Income TaxEvery individual who derives income from employment in Thailand is subject to Thai personal income tax, whether such income is paid in or outside of Thailand, and irrespective of his length of stay in Thailand.
A person who is present in Thailand for more than 180 days in any tax year (calendar year) is subject to tax, both on income from employment or business carried on in Thailand and on income from foreign sources to the extent that such income is brought into Thailand.
Exemptions are granted to UN officers and diplomats under the terms of international and bilateral agreements.
Personal Income Tax RatesPersonal income tax is applied on a progressive basis, and the rates are as follows:
Income Range (Baht)
Tax Rate
0 – 100,000
100,001 – 500,000
500,001 – 1,000,000
1,000,001 – 4,000,000
4,000,001 –
0%
10%
20%
30%
37%
Exclusions from Assessable IncomeCertain categories of income are excluded for the purpose of computing personal income tax as follows:
Relocation expenses paid by the employer to the employee for travelling from another location to
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