Corporate income Tax in Thailand

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Corporate income Tax

Corporate Income Tax (CIT) is a direct tax levied on a juristic company or partnership carrying on business in Thailand or not carrying on business in Thailand but deriving certain types of income from Thailand.

Taxable Person

  • Company or a juristic partnership incorporated under Thai law
  • Company or a juristic partnership incorporated under foreign law
  • A business operating in a commercial or profitable manner by a foreign government, organization of a foreign government or any other juristic person established under a foreign law.
  • Joint Venture
  • A foundation or association carrying on revenue generating business, but does not include the foundation or association as prescribed by the Minister in accordance with Section 47 (7) (b) under Revenue Code
  • A juristic person who is considered as a company or juristic partnership by the Minister and approved by the Royal Thai Government Gazette

File a Tax Return

Annual Tax payment: Thai and foreign companies carrying on business in Thailand are required to file their tax returns (Form CIT 50) within 150 days from the closing date of their accounting periods.

Half year tax payment: A company is obliged to estimate its annual net profit as well as its tax liability and pay half of the estimated tax amount (Form CIT 51) within 2 months after the end of the first 6 months of its accounting period. The prepaid tax is creditable against its annual tax liability.

As regards to income paid to foreign company not carrying on business in Thailand, the foreign company is subject to tax at a flat rate in which the payer shall withhold tax at source at the time of payment. The payer must file the return (Form CIT 54) and make the payment to the Revenue Department within 7 days of the following month in which the payment is made.

Accounting Period

An accounting period shall be 12 months.

In the case of a company or juristic partnership closing down and being unable to pay the tax within 150 days, counting from the last day of the accounting period, the company or juristic partnership can send a petition within 30 days from the date of official termination of the contract provided by government officials. The Director-General of the Revenue Department may grant an extended accounting period which can exceed 12 months.

Tax Calculation & Tax Rate

Regarding the calculation of the CIT of a company carrying on business in Thailand, this is calculated from the company’s net profit on the accrual basis.

The corporate income tax (CIT) rate is 20%.

Companies and juristic partnerships with paid-in capital not exceeding 5 million Thai baht (THB) at the end of any accounting period and income from the sale of goods and/or the provision of services not exceeding THB 30 million are subject to tax at the following rates:

Net profit (THB) Tax rate (%)
0 to 300,000 0
300,001 to 3 million 15
Over 3 million 20

A foreign company not carrying on business in Thailand is subject to a final withholding tax (WHT) on certain types of assessable income (e.g. interest, dividends, royalties, rentals, and service fees) paid from or in Thailand. The rate of tax is generally 15%, except for dividends, which is 10%, while other rates may apply under the provisions of a double tax treaty (DTT).

In calculating CIT, deductible expenses are as follows.

  1. 1 Ordinary and necessary expenses. However, the deductible amount regarding the following expenses is allowed at a special rate:
    1. 200% deduction of research and development expense,
    1. 200% deduction of job training expense,
    1. 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 CIT and Value Added Tax paid to the Thai government;
  4. Net losses carried forward from the last five accounting periods;
  5. Bad debts;
  6. Donations of up to 2% of net profits;
  7. Provident fund contributions;
  8. Entertainment expenses up to 0.3% of gross receipts but not exceeding 10 million Baht;
  9. 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;
  10. Depreciation: Provided that in no case shall the deduction exceed the following percentage of cost as shown below. However, if a company adopts an accounting method, which the depreciation rates vary from year to year, the company is allowed to do so provided that the number of years over which an asset depreciates shall not be less than 100 divided by the percentage prescribed below.
Types of Assets Depreciation Rates
1. Building
1.1 Durable building
1.2 Temporary building
5%
100%
2. Cost of acquisition of depleted natural resources   5%
3. Cost of acquisition of lease rights
3.1 No written lease agreement
3.2 Written lease agreement containing no renewal clause or containing renewal clause but with a definite duration of renewal periods
10%
100% divided by the original and renewable lease periods
4. Cost of acquisition of the right in a process, formula, goodwill, trademark, business license, patent, copy right or any other rights:
4.1 Unlimited period of us
4.2 Limited period of use
10%
100% divided by number of years used
5. Computer and accessories  
6.1 SMEs*  
 
6.2 Other business
Initial allowance of 40% on the date of acquisition and the residual can be depreciated over 3 years
Depreciated over 3 years
7. Computer programs
7.1 SMEs*    

7.2 Other business

Initial allowance of 40% on the date of acquisition and the residual can be depreciated over 3 years
Depreciated over 3 years

* SMEs refer to any Thai companies with fixed assets less than 200 million Baht and number of employee not exceeding 200

people.

Withholding Tax

Certain types of income paid to individuals or companies are subject to withholding tax at source. The withholding tax rates depend on the types of income and the tax status of the recipient.

The payer of income is required to file the return (Form CIT3 or CIT 53) and submit the amount of tax withheld to the District Revenue Offices within 7 days of the following month in which the payment is made. The tax withheld will be credited against final tax liability of the taxpayer. The following are the withholding tax rates on some important types of income.

Types of income Withholding tax rate
1. Dividends 10%
2. Interest1 1%
3. Royalties2 3%
4. Advertising Fees 2%
5. 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
6. 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.

– Government agencies are required to withhold tax at the rate of 1% on all types of income paid to companies.

Source: Revenue Department & BOI guide