Corporate Tax in Thailand

Enterprises in Thailand are required to pay various taxes, including corporate tax in Thailand, depending on the nature of the business they conduct and whether they are individuals or corporations. For the majority of companies, there are at least three types of Thai taxes involved: corporate income tax Thailand, value-added tax, and specific business tax.

Corporate Income Tax in Thailand

Corporate income tax (CIT) is the tax levied on the income or profits of companies and juridical partnerships accrued during an accounting period (i.e., the money it makes). Regardless of the type of company and whether it was established under Thai or foreign law, it is subject to CIT.

A company established under Thai law versus one that is established under foreign law is taxed differently. While the former is taxed on the income or profit it derives worldwide, the latter is taxed only on the income or profits derived from sources within Thailand. Specifically, a company conducting business in Thailand is generally taxed on the profits from business carried out in Thailand.

Tax Exceptions and Special Circumstances

An exception is made to companies engaged in international transportation. In the case of passenger carriage, they are taxed on fares, fees, and other benefits chargeable in Thailand before deducting any expenses. For those companies engaged in the transportation of goods, they are taxed on freight charges, fees, and other benefits, whether chargeable in Thailand or not, before deducting any expenses.

Additionally, a company that does not conduct business in Thailand but has an employee or agent in the country that receives income or profits in the country, will be taxed on this money. Furthermore, a company that does not conduct business in Thailand but receives certain categories of assessable income (e.g. interests, royalties, dividends, rent, or service fees) paid from or in the country, is taxed on the assessable income received.

Lastly, a company that conducts business in Thailand and later repatriates an after-tax profit to its head office is taxed on the after-tax profit repatriated.

Corporate Income Tax Rates in Thailand

Different tax rates are applied to different tax bases in Thailand. The standard tax rate for taxation on corporate profits is, generally, 20%. However, small and medium enterprises (SMEs) are eligible for a reduced progressive rate ranging from 0% to 20%.

An SME is defined by the Thai government as:

• Any enterprise with paid-up capital not exceeding 5 million baht on the last day of any accounting period, and with income from sale of goods or provision of services not exceeding 30 million baht in any accounting period.

For SMEs, the tax rate on received assessable income is 10% for dividends and 15% for other types of income. The tax rate for repatriated profits is also 10%.

How to Pay Corporate Income Tax in Thailand

Methods of corporate income tax payment also vary depending on the specific tax bases on which companies and juridical partnerships are taxed.

Companies paying tax on profits

Companies and juridical partnerships taxed on profits are required to file a tax return twice during an accounting period, which typically lasts for 12 months. The first tax return must be filed within 2 months from the last day of the first six months of the accounting period.

In this regard, companies and juridical partnerships are required to estimate their net profit or net loss for the accounting period. They must then calculate and pay tax amounting to half of the estimated total tax for that period. The tax paid can be treated as credit of the taxpayers in tax calculation.

The second tax return must be filed within 150 days from the last day of the accounting period. For this purpose, companies and juridical partnerships are required to submit a tax return that includes all necessary items for tax calculation such as a balance sheet, an operating account, and a profit and loss statement.

Companies paying tax on assessable income

For companies and juridical partnerships that are taxed on received assessable income (not profits after expenses), they are not required to file a tax return. Instead, it is the duty of the company to withhold the applicable tax and remit it to the Thai Revenue Department (RD) within 7 days from the last day of the month in which the income is paid.

For companies and juridical partnerships that are taxed on repatriated profit, they are also required to withhold the applicable tax and remit it to the RD within 7 days from the last day of the month in which the income is repatriated.

Value-Added Tax in Thailand

Value-Added Tax (VAT) is defined in Thailand as a tax levied on the supply of goods and services, or on the importation of goods by commercial entities. If a commercial entity sells goods or services or imports goods for a profit, then they are likely to be subject to VAT. This is true regardless of the purpose of these sales or if the entity is registered for VAT or not; they have a responsibility to pay VAT to the RD.

Unlike income tax, VAT is not collected from the company’s profits. Instead, customers pay VAT on top of the price of the goods or services they purchase. However, companies are required to collect, record, and remit this money as VAT to the RD.

Almost all supplies of goods and services are subject to VAT. Exceptions include:

• Supplies provided by business people whose total sales are less than 1.8 million baht
• Sales of unprocessed agricultural products
• Sales of goods or products related to agriculture (fertilizers, animal feed, pesticides,etc.)
• Sale of newspapers, magazines, and textbooks
• Sales of animals, whether dead or alive
• Educational services, including government and private schools
• Artistic and cultural services
• Medical, auditing, and court practice services
• Healthcare services including government and private hospitals and clinics
• Research and technical services
• Services provided by libraries, museums, zoos, and amateur sports
• Public performances
• Domestic transportation
• International road transportation
• Rental of immovable property
• Services of government agencies both local and national
• Religious activities and public charities
• Imported goods brought into a duty-free zone that are exempt from import duties under the law
• Goods exempt from import duties pursuant to Chapter 4 of the Customs Tariff Code, and
• Imported goods processed by the Customs Department and returned abroad.

 VAT Tax Bases

Tax bases in Thailand for VAT on the supply of goods or services and importation of goods vary. The “tax base” is the total amount of assets, income, and economic activity that can be taxed. The amount that a company has to pay in VAT is a percentage of this tax base.

For the supply of goods, the tax base is the total value received or receivable from the supply of said goods. Value in this case is defined as money, property, consideration, service fees, or any other benefit that is ascertainable in terms of money.

The tax base also includes any excise tax that arises in connection with such supply. However, the tax base does not include VAT itself and any discounts or allowances, unless such discounts or allowances are clearly shown in the tax invoices.

For the importation of goods, the tax base is the combination of CIF (cost, insurance, freight) price, import duty, excise tax (if any), and any other taxes and fees. For exportation of goods, the tax base is the combination of the FOB (free on board) price, excise tax (if any), and any other taxes and fees.

VAT Rates in Thailand

VAT is charged at two main rates: the standard rate and the zero rate. The standard rate of 7%  is applied to almost all supplies of goods or services. This rate is valid until 30 September 2025.

The zero rate is applied to certain items, including

• Exported goods
• Services provided in Thailand but used, either partly or wholly, in a foreign country
• International transportation by aircraft or ship
• Sales of goods and services involving only bonded warehouses and/or enterprises located in a duty-free zone.

Who Pays VAT in Thailand, and How It Is Paid

Typically, the payment of VAT is required for commercial entities whose annual sales exceed 1.8 million. These entities must register with the government as “VAT registrants.”

As VAT registrants, they are required to charge VAT on the goods or services they supply at the designated tax point and issue tax invoices in the legally prescribed format. They must also file reports on:

• Input Tax: The value-added tax collected by a VAT registrant on purchases from another VAT registrant.
• Output Tax: The value-added tax collected by a VAT registrant from the purchaser of goods and services.

VAT registrants are also required to remit any VAT payable to the RD within 15 days from the last day of each month. The amount to remit is calculated by offsetting input tax against output tax. If output tax exceeds input tax, the difference must be remitted; if input tax exceeds output tax, the taxpayer is entitled to a refund or credit for the excess amount.

 Who is Exempt from VAT Registration in Thailand

Even if their sales exceed 1.8 million baht per year, the following commercial entities are not required to register as VAT registrants:

1. Business people residing abroad and entering Thailand for the purpose of selling goods or providing services temporarily.
2. Commercial entities providing service from abroad that are used in Thailand.
3. Other commercial entities as prescribed by the Director-General of the RD.

Although they are not obligated to register as VAT registrants or perform the duties of a VAT registrant, they are still subject to VAT. In this case, it is the responsibility of the payers for goods or services to withhold and remit the amount that these entities owe to the RD.

Specific Business Tax

Specific business tax (SBT) is a tax levied on certain types of businesses in Thailand.

Some examples of businesses that are subject to SBT:

• Banking
• Financial services providers, securities traders, and credit financiers
• Life insurance
• Pawnbroking
• Business with regular transactions similar to commercial banks
• Businesses that sell immovable property in a commercial or profitable manner
• Sellers of securities in a securities market
• Any other business prescribed by law to pay the SBT.

However, the following types of business are exempt from SBT:

• The Bank of Thailand, the Government Savings Bank, the Government Housing Bank, and the Bank for Agriculture and Agricultural Cooperatives
• The Industrial Financial Corporation of Thailand
• Savings cooperatives, only in respect of loans provided to its members or to another savings cooperative
• Provident funds under the law governing provident funds
• The National Housing Authority, only in respect of sale or hire-purchase of an immovable property
• Pawnbroking business of a ministry, sub-ministry, department, or local government authority
• Any other business exempted by law

The SBT Tax Base

The tax base for SBT is generally gross receipts received or receivable from business activities.

In the context of banking, finance, securities, credit financiers, and other businesses engaging in commercial transactions, gross receipts are interest, discount, fee, service charge, or gross profit from the purchase or sale of, or received from, any bill of exchange or debt instrument. This also includes gross profits from the exchange or trading of currencies, issuance of any bill exchange or debt instrument, or remittance of money abroad.

For life insurance businesses, gross receipts are interest, fees or service charges.

For pawnbroking businesses, gross receipts are interest, fee, cash, property, consideration, or gain with value received or receivable from the sale of forfeited pawned goods.

For businesses engaging in the sale of securities in a securities market or commercial sale of real estate, gross receipts are calculated before the deduction of any expenses.

For any other business, gross receipts are prescribed by law.

SBT Rates and Payment Methods in Thailand

SBT is charged at three main rates:

• 0.1% on gross receipts from sale of securities in a securities market.
• 2.5% on gross receipts from life insurance business and pawnbroking business.
• 3.0% on gross receipts from most other sources.

Generally, companies liable to pay SBT are required to file a tax return every tax month, regardless of whether or not they have any gross receipts during that month. The deadline is on or before the fifteenth day of the following month.

However, for those liable for SBT, which conduct business solely in sale of immovable property in a commercial or profitable manner, they must file a tax return at the time of registering the rights and juridical act related to the immovable property at the land office.

Company Registration and Corporate Tax Advisory Services in Thailand

If you aren’t sure what your current or future business’s responsibilities are regarding corporate tax in Thailand and want to avoid trouble with the Thai Revenue Department, contact the experienced tax advisors at Siam Legal. Our knowledgeable consultants can advise you on which taxes you need to pay and at what rates, as well as strategies on how you can minimize your tax burden.

If your company hasn’t been set up yet, we can help with that too. As a full-service law firm, we employ a corporate law team that can guide you in registering your Thai business legally, applying for business incentives and tax advantages, and structuring your company’s taxes. With Siam Legal’s assistance, your business can start its journey to success on the right foot and have every possible advantage.