Thailand

Basic taxes (briefly)

Personal tax 0-35%
Corporate tax (in detail) The standard income tax rate is 20%
Capital gains tax. Details All capital gains earned by a company are treated as ordinary revenue for tax purposes
VAT. Details The standard VAT rate is 10% (temporarily - until September 30, 2021 - reduced to 7%)
Other taxes Social Contributions, Property Tax, Inheritance Tax
Government fee No
Stamp duty 1 Baht

International tax agreement

   


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TAXES

General Info

In Thailand, taxes are collected by three main government agencies under the Ministry of Finance: The Revenue Department, The Excise Department, and The Customs Department.
Principal taxes can be classified as direct taxes which are collected directly by the government from taxpayers, and indirect taxes collected by intermediaries. Direct Taxes include corporate income tax, personal income tax, petroleum income tax. Indirect Taxes include VAT, specific business tax, excise tax, customs duties, stamp duties.

Personal tax

Personal income tax in Macau or the so called professional tax is levied on salaries, service payments and other rewards at progressive rate ranging from 0% to 12%:
Income Tax Rate
Less than 144 000 0%
144 000 – 424 000 7%-11%
Above 424 000 12%

Taxpayers are residents and non-residents. But non-residents are not entitled to the MOP 144 00 exemption. Therefore, non-residents are subject to a minimum tax rate of 5%.
According to the Macau Professional Tax Law, there is a standard 25% deduction on the taxable income in Macau. There is also a 30% reduction in the Macau professional tax liabilities for income derived in tax year 2013. Together, the effective tax rate for Macau professional tax is below 6.3%.
Tax tear coincides with a calendar year. Professional tax is paid by individuals themselves (independent jobs) or by employers quarterly or monthly. For non-residents tax can only be paid by employer monthly.

Corporate tax

Corporate income tax is a direct tax levied on net profits of Thai and foreign business entities deemed to be conducting business in Thailand, or deriving certain types of income in or from Thailand.
Thailand’s corporate income tax rate applied to net profits is 20%. However, tax rates can vary between 2 – 20% for different tax-paying companies where rates are applied either on net profits or gross receipts.

Deductible expenses

Deductible expenses include ordinary and necessary expenses, net losses carried forward from the previous 5 accounting periods, tax and interest, bad debts, and depreciation. For companies incorporated in Thailand, portions of dividend income received from other Thai companies may be excluded from taxable income.

Capital gains tax

There is no specific legislation governing capital gains. All capital gains earned by a company are treated as ordinary revenue for tax purposes.

VAT

Most businesses are subject to Value Added Tax (VAT), and certain businesses which are not, are subject to Specific Business Tax.
VAT is an indirect tax imposed by the Revenue Code on the value added to goods and services at each stage of production and distribution. VAT is effective on all retailers, manufacturers, wholesalers, producers, importers of goods, and services providers, unless their business is exempt or subject to a zero VAT rate under the Revenue Code.
The standard VAT rate is a flat rate of 7% that is inclusive of the 10% Municipal Tax on business, levied as 10% of taxes on business such as VAT and Special Business Tax.

Zero Rate VAT

Businesses subject to 0% VAT include:
  • export of goods;
  • services rendered in Thailand and utilized outside Thailand in accordance with rule, procedure and condition prescribed by the Director-General;
  • aircraft or sea-vessels engaging in international transportation;
  • supply of goods and services to government agencies or state-owned enterprises under foreign-aid program;
  • supply of goods and services to the United Nations and its agencies as well as embassies, consulate-general and consulates;
  • supply of goods and services between bonded warehouses or between enterprises located in EPZs.

VAT Exemptions

Businesses exempt from VAT include:
  • Small entrepreneur whose annual turnover is less than 1.8 million baht;
  • Sales and import of unprocessed agricultural products and related goods such as fertilizers, animal feeds, pesticides, etc.;
  • Sales and import of newspapers, magazines, and textbooks;
  • Certain basic services such as: transportation; healthcare services provided by government and private hospitals as well as clinics; educational services provided by government and private schools and other recognized educational institutions; professional services; renting of immovable properties; cultural services; services in the nature of employment of labour, research and technical services and services of public entertainers; goods exempted from import duties under the Industrial Estate law imported into an Export Processing Zones (EPZs); imported goods that are kept under the supervision of the Customs Department which will be re-exported and be entitled to a refund for import duties;
  • Other services such as religious and charitable services, services of government agencies and local authorities.

VAT Registration

Any person liable to pay Thai VAT must register for VAT (Form VAT 01) before commencing business operations, or within 30 days after its income reaches the 1.8 million baht annual threshold. The registration application must be submitted to District Revenue Offices if the business is situated in Bangkok or to the Provincial District Revenue Offices if it is situated elsewhere.

VAT tax period and returns

The VAT tax period is one calendar month, and VAT returns (Form VAT 30) must be filed monthly. VAT forms and any tax payments must be submitted to the Area Revenue Branch Office within 15 days of the subsequent month. This is required even if no income was derived in the preceding month.
For goods and services also subject to Excise Tax, any VAT filings and tax payments must be submitted to the Excise Department together with Excise Tax filings and tax payments within 15 days of the subsequent month.
For imported goods, VAT filings and tax payments must be submitted to the Customs Department at point of import.

Withholding tax

In general, certain types of income paid to companies such as dividends, interest, service and professional fees, royalties, advertising fees, and prizes, are subject to withholding tax at source. That is, taxes on these types of income must be deducted at source by the income payer, who is required to file tax returns and pay in the tax withheld to the district revenue offices with 7 days of the following month after income payment.
Withholding tax rates vary depending on the type of income and the income recipient’s tax status:
Type of Income Rate
Dividends 10%
Interests 1%
Service and professional services 3-5%
Royalties 3%
Advertising fees 2%
Prizes 5%

For companies disposing (remitting) profits out of Thailand, the 10% tax shall be withheld at source. The company is required to pay in the tax within 7 days from the remittance date.
For foreign companies not conducting business in Thailand, applicable income taxes shall be withheld at source by the income payer residing in Thailand.

Other taxes and duties

Specific Business Tax an indirect tax imposed on businesses which are not subject to VAT and engaged in banking, finance and similar business; life insurance; etc. SBT rates are between 2.5 - 3.0%.
Petroleum Income Tax a direct tax on income derived by any company that owns an interest in a petroleum concession granted by the government, or a company that buys oil for export from a concession holder. Petroleum Income Tax is 35% or 50% depending on the status of the petroleum concession holder.
Local Development Tax levied on land at a very low tax ratr.
House and Land Tax imposed at a rate of 12.5% on annual rental payable on land with buildings.
Customs duties levied on imported and export items at a rate ranging from 5% - 60%.
Excise tax an indirect tax imposed on the manufacturer or importer of petroleum and petroleum products; non-alcoholic beverages; electrical appliances; etc. at a rate of 1% up to 50%.

Stamp duty

Stamp duty is an indirect tax on documents, not on transactions or persons. Persons subject to paying stamp duty are holders, executors, or beneficiaries of documents which are subject to stamp duty.
Examples of documents subject to stamp duty include lease land or buildings, loan documents, and Memorandum of Association of limited companies.
Stamp Duty rates depend on the type of document. The rates range form Baht 1 per Baht 1000 on most contracts and agreements to a fixed amount per instrument on most commercial and other documents.
Penalties for failure to stamp documents are very high. Penalties can be imposed at the rate of up to six times the original duty. Furthermore, documents that have not been properly stamped are not admissible as evidence in civil court proceedings.

Government fee

There is no annual government fee for Thai companies in Thailand, but there is a registration fee which depends on amount of capital. For the first Baht 1 million is Baht 6,500 and will plus Baht 6,000 for every capital increase of Baht 1 million.

Foreign exchange control

The Bank of Thailand administers Thailand’s system of exchange control on behalf of the Ministry of Finance. The BOT has delegated authority to agents, including all commercial banks located in Thailand, to approve many commercial transactions. However, some transactions still require the direct approval of the BOT. While permission is discretionary, approvals are normally granted if reasonable grounds are given for remittance and the proper procedures are followed. In all matters involving foreign currency, currency inflows must be properly recorded, and contracts and other legal papers adequately documented.

Double Tax Agreements

Thailand has tax treaties (also called double tax agreements) with 48 countries:
49 DTCs: Australia, Austria, Bahrain, Belgium, Bulgaria, Canada, Chile, China, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Kuwait,Luxembourg, Malaysia, Mauritius, Netherlands, New Zealand, Norway, Pakistan, Philippines, Poland, Romania, Russia, Seychelles, Singapore, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Ukraine, United Arab Emirates, United Kingdom, USA.

ACCOUNTS

Accounting books

According to the Accounting Act 2000, all investors conducting business in Thailand are required to retain their books of accounts and relevant documents at their office for at least five years. In certain businesses, however, the Director General of the Revenue Department may extend this retention period to seven years, with approval from the Minister of Finance.

Financial statements

The balance sheet and the profit and loss account has to be examined by the Company's auditor and submitted to the general meeting for consideration. The audited financial statements must be prepared in compliance with Thai Accounting Standards and approved by the shareholders in a general meeting within four months after the end of the accounting period. Accounts must be audited once a year and filed with the Revenue Department and Commercial Registration.
Within 1 month after AGM date, companies must submit their audited financial statement, an updated list of shareholders, and other required documents to the Department of Business Development (DBD), the Ministry of Commerce.
Penalties will be imposed on the company and the director(s) for failure to comply with these requirements. Failure to submit the financial statement to the ministry will result in the director(s) being liable for the penalties as stipulated under relevant laws.

Annual Return

Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:
  • Incorporation information (registration date, registered address);
  • Information about directors and their resignation;
  • Information about secretaries and their resignation;
  • Information about registered capital, nominal value of shares and amount of issued shares;
  • Information about shareholders and share transfer.

In Thailand companies are not obliged to prepare or file Annual Return.

Tax returns

The tax year can be any 12-month period selected by the company. For companies conducting business in corporate income tax is payable twice yearly. Tax filings may be carried out on paper or using electronic forms. For taxes paid on net profits, audited balance sheet and profit and loss statements must be submitted with tax forms. For taxes paid on gross receipts, a statement of gross receipts must be submitted with tax forms.
The first tax payment is 50% of total tax based on estimated net profits and tax liabilities for the year. Both Thai and foreign companies subject to corporate income taxes on net profits are required to file the tax prepayment form (Form CIT 51) within two months after the end of the first six months of its accounting period.
Annual income tax returns (Form CIT 50) must be filed within 150 days from the close of the company’s financial year; tax payments must be submitted simultaneously with tax returns.

    Taxes of Thailand

    Min. rate for corporate tax 20%
    Capital gains tax Regular rate
    VAT 10%
    Withholding tax 10%/15%/15%
    Exchange control Yes
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