Corporate Income Tax in Thailand

Understanding Corporate Income Tax in Thailand

Corporate Income Tax (CIT) is a tax imposed on the profits generated by companies operating in Thailand.

Both Thai-owned and foreign-owned businesses may be subject to Corporate Income Tax obligations depending on their activities and tax status.

Understanding CIT obligations is essential to ensure compliance with Thai regulations and avoid penalties.

Who is subject to Corporate Income Tax in Thailand?

Corporate Income Tax generally applies to legal entities carrying on business activities or generating taxable income in Thailand, including:

• Thai limited companies
• Branch offices of foreign companies operating in Thailand
• Partnerships and other legal entities generating taxable income in Thailand

Foreign-owned companies incorporated in Thailand are generally subject to the same Corporate Income Tax rules as Thai-owned companies.

However, specific tax treatment or incentives may apply depending on the business structure and circumstances, such as:

• BOI-promoted companies benefiting from tax incentives
• Specific activities qualifying for exemptions
• Companies benefiting from double tax treaty provisions

The corporate income tax rate in Thailand is 20 % on net taxable profit. However, the rates may vary depending on types of taxpayers.

For a small company (with paid-up capital less than 5 million baht at the end of each accounting period and less than 30 million bahts of Turnover), the rates are:

How is Corporate Income Tax calculated?

Corporate Income Tax is generally calculated on net taxable profit.

Typical calculation:

Revenue
− Allowable business expenses

= Taxable profit

Corporate Income Tax payable:

Taxable profit × applicable tax rate

Although financial statements are prepared for accounting purposes, certain expenses may receive different treatment for tax purposes.

Deductible expenses are as follows:

(1)  Ordinary and necessary business expenses. (However, some expenses can be deducted at special rate);
(2)  Interest, except interest on capital reserves or funds of the company;
(3)  Taxes, except for CIT and VAT paid to the Thai government;
(4)  Net losses carried forward (up to 5 years);
(5)  Bad debts (when there is a procedure to the court of Thailand);
(6)  Wear and tear;
(7)  Donations of up to 2% of net profits;
(8)  Further tax deduction for donations made to public education institutions;
(9)  Entertainment expenses up to 0.3% of gross receipt (not exceeding 10 million THB);
(10) Provident fund contributions;
(11) Asset depreciation.

Non-deductible expenses:

1. Reserves (with some exceptions);
2. Fund except provident fund under the rules, procedures and conditions prescribed by a Ministerial regulations;
3. Expense for personal, gift, or charitable purpose (except expense for public charity, or for public benefit);
4. Capital expense or expense for the addition, change, expansion or improvement of an asset (except for repair in order to maintain its present condition);
5. All fine or surcharge, criminal fine, income tax of a company or juristic partnership;
6. The withdrawal of money without remuneration of a partner in a juristic partnership;
7. The part of salary of a shareholder or partner which is paid in excess of appropriate amount;
8. Expense which is not actually incurred or expense which should have been paid in another accounting period except in the case where it cannot be entered in any accounting period, then it may be entered in the following accounting period;
9. Remuneration for assets which a company or juristic partnership owns and uses;
10.  Damages claimable from an insurance or other protection contracts or loss from previous accounting periods except net loss carried forward for five years up to the present accounting period;
11.  Expense which is not for the purpose of making profits or for the business;
12.  Expense which is not for the purpose of business in Thailand;
13.  Expense which a payer cannot identify the recipient;
14.  Any expense payable from profits received after the end of an accounting period.

Corporate Income Tax filing requirements in Thailand

Businesses subject to Corporate Income Tax have two filing obligations during the year :

PND51 – Mid-year Corporate Income Tax return

PND51 is used to estimate the company’s annual taxable profit and make a mid-year Corporate Income Tax payment.

The estimated tax is calculated based on the expected annual results of the company:

Estimated annual revenue
− Estimated deductible expenses
= Estimated annual taxable profit

The applicable Corporate Income Tax rate is then applied to the estimated taxable profit to determine the estimated annual tax liability.

As a general rule, companies pay 50% of the estimated annual Corporate Income Tax through the PND51 filing.

Estimating profits accurately is important. Under Thai tax regulations, if the actual annual net profit exceeds the estimated net profit declared through PND51 by more than 25%, the company will be subject to a surcharge on the tax shortfall. The surcharge is generally calculated at 20% of the additional tax amount resulting from the underestimation.

PND51 has to be submitted within 2 months after the end of the first six months of the accounting period.

The tax paid through PND51 acts as a prepayment and is credited against the annual Corporate Income Tax liability declared in PND50 after the end of the accounting period.

PND50 – Annual Corporate Income Tax return

PND50 is the annual Corporate Income Tax return used to declare the company’s final taxable profit and calculate its actual Corporate Income Tax liability for the accounting year.

The final tax liability is calculated based on:

Total annual revenue
− Deductible expenses
= Final taxable profit

The applicable Corporate Income Tax rate is then applied to determine the final tax due. The final tax payable is determined after considering any taxes already paid during the year, including PND51 tax prepayments. In case of a tax credit balance (where CIT already paid during the year exceeds the final CIT liability), the amount may be used to offset future tax liabilities.

PND50 has to be submitted within 150 days after the end of the accounting period.

The figures reported in PND50 should be consistent with the company’s accounting records and annual financial statements. Differences between accounting treatment and tax treatment may require specific tax adjustments.

Corporate Income Tax obligations in Thailand often involve more than applying a tax rate. Foreign-owned businesses and expat entrepreneurs may face practical challenges such as:

• Determining which expenses are tax deductible and which are not
  • Estimating annual profits accurately for PND51 filings
  • Managing tax adjustments and supporting documentation requirements
  • Avoiding penalties resulting from incorrect filings or underestimation of taxable profits

Proper tax planning and accurate reporting are essential to avoid unexpected tax liabilities and administrative issues. Our teams in Bangkok, Pattaya and Phuket support businesses throughout the year to ensure Corporate Income Tax obligations are managed efficiently.

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Do foreign-owned companies pay Corporate Income Tax in Thailand?

Yes. Foreign-owned companies operating in Thailand are subject to Corporate Income Tax obligations under the same rules as Thai-owned companies.

How should companies estimate profits for PND51?

PND51 is based on an estimate of the company’s expected annual taxable profit. The estimate should consider expected revenue, anticipated deductible expenses and the company’s financial performance during the first half of the year.

Companies should make reasonable and realistic estimates, as significant underestimation may result in additional surcharges under Thai tax regulations.

What happens if Corporate Income Tax returns are filed late?

Late filing may result in penalties, surcharges and additional administrative issues.