Corporate Income Tax


Corporate Income tax is a direct tax, which is collected from legal entities or partnerships that do business in Thailand or receive income from Thailand. The tax period is 12 months.

Subjects of taxation

The tax is paid by all companies registered in Thailand, both Thai and foreign.

A legal entity registered in a foreign country but having a representative office or branch in the Kingdom of Thailand is also a taxpayer. If the company does not conduct a business, but gets profits (payment for services, dividends, interest, rent payments) such income is taxed on the basis of the gross amount received and paid in the form of withholding tax.

The tax rate

The Corporate Income Tax rate during recent years remained unchanged at 30%. Nevertheless, the government adopted a number of decisions to reduce the tax rate.

The company the authorized capital of which is less than 5 million baht and proceeds from the selling of goods or services during the reporting period does not exceed 30 million baht (SMEs) must pay tax on the increasing rate:


Income (THB)

Tax rates 2011

Tax rates 2012

Tax rates, 2013

Tax rates, 2015

0 – 150,000

0%

0%

0%

0%

150,000 – 300,000

15%

15%

150,001 - 1,000,000

15%

15%

15%

1,000,000 – 3,000,000

25%

23%

20%

3,000,001 and over

30%

20%

In the calculation of Corporate Income Tax of a company carrying on business in Thailand, it is calculated from the company's net profit on the accrual basis. A company shall take into account all revenue arising from or in consequence of the business carried on in an accounting period and deducting there from all expenses in accordance with the condition prescribed by the Revenue Code.

In calculating Corporate Income Tax, deductible expenses are as follows:

1. Ordinary and necessary expenses. However, the deductible amount of the following expenses is allowed at a special rate:

- 200% deduction of Research and Development expense,

- 200% deduction of job training expense,

- 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 Corporate Income Tax and Value Added Tax paid to the Thai government;

4. Net losses carried forward from the last five accounting periods;

5. Bad debts;

6. Wear and tear;

7. Donations of up to 2% of net profits;

8. Provident fund contributions;

9. Entertainment expenses up to 0.3% of gross receipt but not exceeding 10 million baht;

10. 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;

11. Depreciation (depending on the type of asset).

Certain types of income paid to 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 CIT 53) and submit the amount of tax withheld to the District Revenue Offices within seven 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. Interest 1

1 %

3. Royalties 2

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.

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

The rate of withholding tax when transferring funds to foreign companies:

Types of income

The Tax rate

Brokerage Services

15%

Royalties

15%

Interest

5%

Dividends

10%

Capital gains

15%

Property rent

15%

Freelancers services

15%

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

Interim tax return must be submitted within two months after the completion of the first six months of the reporting period.

Tax payment must be submitted together with the tax returns. Any company disposing funds representing profits out of Thailand is also required to pay tax on the sum so disposed within seven days from the disposal date.

Investment