Insights

Value Added Tax (VAT) is a tax on the sale of goods or the provision of services. The current rates are 7% and 0%.

VAT paid (Input VAT) is deducted from the VAT charged on sales (output VAT). 

Any person or entity who regularly supplies goods or provides services in Thailand and has an annual turnover exceeding 1.8 million baht is subject to VAT in Thailand.

VAT registered person is required to issue tax invoices. Tax invoice must contain at least the following elements:

• The words “tax invoice” in a prominent place;
• The name, address and tax ID of seller;
• The name, address and tax ID of purchaser;
• The Serial number of tax invoice;
• Detail of nature quantity and value of goods or services;
• The amount of VAT calculated and the value of goods or services before VAT; 
• The date of issuance;
• The wording “Head Office” or “Branch” of the seller or purchaser place where the goods or services are sold or provided.

The VAT returns (forms PP 36 and  PP 30), are submitted to the Revenue Department before the 7th and 15th day of the following month in which the payment was made and the tax invoice was issued.

Withholding Tax (WHT) is deducted from payments to service suppliers, dividends and interests. A withholding tax certificate must be provided to the seller to justify the deduction.

The withholding tax constitutes a prepayment of Corporate Income Tax for the seller. 

Payment must be made by the purchaser on the 7th following the month of the invoice payment.

Services (Paid in / out of Thailand) 3% / 5%
Non-life insurance 1%
Software 3%
Royalties (Paid in / out of Thailand) 3% / 15%
Office or Equipment rental 5%
Advertising 2%
Dividends 10%
Prizes 5%
Interests 1%

Corporate Income Tax (CIT) is tax due by Partnerships and juristic Limited Companies carrying on business or generating incomes from activities done in Thailand.

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. Tax payment must be submitted together with the tax returns. 

In addition to the annual tax payment, any company subject to CIT on net profits is also required to make tax prepayment (Form CIT 51). A company is obliged to estimate its annual net profit as well as its tax liability and pay half of the estimated tax amount within two months after the end of the first six months of its accounting period. The prepaid tax is creditable against its annual tax liability.

Taxable profits are based on the sum of all revenues less deductible expenses during the fiscal year.

Deductible expenses are as follows:

(1)  Ordinary and necessary 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 (5 years);
(5)  Bad debts (except if a procedure to the court of Thailand);
(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 (not exceeding 10 million THB);
(10) Further tax deduction for donations made to public education institutions;
(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.

The corporate income tax rate in Thailand is 20 % on net profit. However, the rates 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), the rates are:

0 to 300,000THB of net profit 0%;
300,000 to 3,000,000THB of net profit 15%;
Over 3,000,000THB of net profit 20%.

Taxable persons are classified as resident or non-resident. 

A resident is a person living in Thailand for more than 180 days per year and has the obligation to declare the totality of its income on the Thai territory as well as on the portion of income from foreign sources that is brought into Thailand.

A non-resident is a person living less than 180 days per year in the Kingdom of Thailand. However, a non-resident has an obligation to declare incomes derived from sources in Thailand.

Assessable incomes

(1) Income from professional services rendered to employer (wages and salaries…);
(2) Incomes from goodwill, franchise, copyright or derived from a will or any juristic act;
(3) Incomes from dividends, share of profit, interests on deposits with Thai banks, payments received as a result of the reduction of capital, a bonus, an increased capital holdings, gains from amalgamation, acquisition or dissolution of juristic companies or partnerships, and gains from transferring of shares or partnership holdings;
(4) Income from letting of property and from breaches of contracts, installment sales or hire-purchase contracts;
(5) Income from liberal professions.
(6) Any other income from business, commerce, industry, agriculture, transportation, or any other activity not mentioned above.

Allowances and Deductions 

RATE

A taxable person is liable to file personal income tax return and pay to the revenue department up to the last day of March following year.