Whether you are a Thai national or an ex-pat in Thailand, if you are earning in Thailand, you must pay taxes. To know about the tax amount, payment deadlines and regulations, it is very essential for you to know about Taxation in Thailand. This article will help you to know the taxation policies and framework of Thailand in the form of FAQs.
We have been one of the premium Accounting and Taxation firms in Bangkok since 2013. The questions in this FAQ are the most common questions asked by our clients. Therefore, by sharing this article, we are sharing practical information related to Taxation in Thailand.
Am I eligible for Corporate Income Tax (CIT) in Thailand?
If you have a business in Thailand and are earning from it either by staying within or outside Thailand, you are liable to pay Corporate Income Tax (CIT) in Thailand.
What types of businesses are liable to pay Corporate Income tax (CIT) in Thailand?
All companies of juristic or partnership type of formation are liable to pay CIT in Thailand. It can be registered partnerships, limited partnerships or unincorporated joint ventures. Additionally, Branch offices which are extensions or representation of offices held overseas are also liable to pay CIT on the revenues they have earned from Thailand.
What types of foreign companies are considered to be doing business in Thailand?
Foreign companies that are earning revenues from Thailand are deemed to be doing business in the nation. Moreover, it includes Branch offices of such companies with headquarters outside Thailand.
What are the taxes that I have to pay in Thailand?
Depending upon the type of activities and sources of your earnings, the following types of taxes are mandatory in Thailand:
- Corporate Income Tax (CIT): Companies that are earning revenues by doing business in Thailand are liable for this type of tax. This tax is applicable only for business units and can never be applicable on personal income.
- Value Added Tax (VAT): This tax is applicable for business units that involve in the supply or import of goods or services within Thailand.
- Special Business Tax (SBT): Companies dealing with Banking, Finance, Real Estate and Life Insurance have exemptions from VAT. However, they are liable to pay the Special Business Tax (SBT) as they are not inclusive in the VAT system.
- Customs Tariff and Stamp Duty: Such types of taxes are imposed on individuals or business units involved in the import and export of goods. The Customs Tariff Statute and the Stamp Duty Schedule of the Thailand Revenue Code govern this type of taxation. Moreover, the value of the tax depends upon the category and quantity of the goods you import or export.
What is Taxable Income?
The first step of determining the taxable income is to calculate the gross profit. It is the difference between the total expenditure of a company during the tax period and the total revenue generation of the business. In the process, the allowable expenditure is –
- Ordinary Expenses;
- Donations amounting to 2% of the Net Profit;
- Interest Expenses;
- Depreciations subject to specific rates and allowances; and,
- Entertainment expenses of up to 0.3% of the gross receipts or paid-up capital, whichever higher. However, the expense should not exceed 10 million baht.
How can I file No Tax Returns?
According to the Thailand Revenue Department, all Thai and foreign companies must file their tax returns within 150 days from the closing date of their taxation period. However, for a No Tax return filing, a company must file the return mentioning the losses causing offset against the taxable income.
What is Foreign Tax Relief?
Foreign Tax Relief is applicable to those businesses in Thailand that are paying taxes to other nations. Moreover, it must be on the basis of the income for the payable CIT in Thailand. However, if any company incorporation is under the Double Tax Treaty, there can be foreign tax credit against the Thai tax. However, by no means, the foreign tax should exceed the corporate income tax in Thailand.
What are Withholding Taxes in Thailand?
Withholding tax (“WHT”) is a deduction from payments made to suppliers who provide a service. However, whether WHT is applicable and what rate to deduct depends on the nature of the service. Additionally, WHT also applies to interest and dividend payments. However, there is no WHT for non-taxpayers.
Depending upon the nature of the services, WHT rates vary. Moreover, the few most common WHT rates are –
- 5% of rents
- 3% of rental services
- 3% of parking
- 1% of transportation
- 3% of telephone
- 2% of advertising
- 1% of non-life insurance premiums
- 3% of professional fees
- 3% of royalties
- 1% of interests
- 10% of dividends
- 5% of prizes
However, water, electricity, public transportation (including airfare) and life insurance policies have exemptions from the WHT rules.
What is the Corporate Income Tax rate in Thailand?
The general rate of Corporate Income Tax in Thailand is 20%. However, the rate varies depending upon the type of taxpayers.
What happens if a company pays income tax in Thailand and sends the dividend to the mother country in some other country?
Company incorporations in Thailand can be under bilateral treaties and complies with Double Tax Agreements. In such cases, the company no longer needs to declare income tax again. To date, this is possible for companies with headquarters in China, Japan and the United States of America.
Should a company with VAT registration submit a tax form even if it is not earning any revenue?
Irrespective of whether there is revenue earning or not, a company with VAT registration must submit a tax form within the deadlines.
These were the most common questions which we face from our clients. This is at the time before they gave us the charge to handle the taxation activities or issues of their organization. The Revenue Code is the principal governing law in Thailand that decides all types of tax forms. Be it corporate income tax, personal income tax, excise duty or customs duty, the Revenue Code is what they follow.
For more guidance and assistance, book your free consultation session by mailing us at [email protected].
