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Corporate income tax

Corporate income tax in Thailand

Corporate income tax in Thailand is a legal requirement for all businesses operating within the country. The Thai government has a progressive tax system in place, which means that the more income a business earns, the higher the tax rate will be. In order to comply with the corporate income tax laws in Thailand, it is important for businesses to understand the requirements and the process of filing their taxes.

Additionally, it is crucial for businesses to stay informed about the various tax rates and exemptions that may apply to their specific situation, as well as any changes or updates to the tax laws. Failure to comply with corporate income tax laws can result in penalties and fines, which can have a negative impact on the financial stability of the business. By understanding and properly managing corporate income tax, businesses can ensure compliance and optimize their financial performance.

Businesses can benefit from utilizing professional services, such as those offered by Phuket Legal Firm, to ensure timely and accurate compliance with corporate income tax laws.

Taxable Person

A taxable person in Thailand refers to any individual or business that is responsible for paying corporate income tax. This includes companies, partnerships, and sole proprietorships that are registered in Thailand and conduct business within the country. Foreign companies that have a permanent establishment in Thailand are also considered taxable persons.

In calculating CIT, deductible expenses are as follows.

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,
- 150% deduction of job training expense,
- 200% deduction of expenditure on the provision of equipment for the disabled;
Interest, except interest on capital reserves or funds of the company
Taxes, except for Corporate Income Tax and Value Added Tax paid to the Thai government
Net losses carried forward from the last five accounting periods
Bad debts
Wear and tear;
Donations of up to 2% of net profits
Provident fund contributions
Entertainment expenses up to 0.3% of gross receipt but not exceeding 10 million Baht
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 depreciated shall not be less than 100 divided by the percentage prescribed below.

1. Building
1.1 Durable building – durable building acquired within	5 %
5 September 2001 – 4 September 2002	initial allowance of 20% on the date of acquisition and the residual shall be depreciated at the rate in 1.1
– plant of SMEs*	initial allowance of 25% on the date of acquisition and the residual shall be depreciated at the rate in 1.1
1.2 temporary building	100 %
2. Cost of acquisition of depleted natural resources	5 %
3. Cost of acquisition of lease rights
3.1 no written lease agreement	10 %
3.2 written lease agreement containing no renewal clause or containing renewal clause but with a definite duration of renewable periods	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, copyright or any other rights:
4.1 unlimited period of use	10 %
4.2 limited period of use	100 % divided by number of years used
5. Other depreciable assets not mentioned above excluding land and stock-in-trade
5.1 machinery used in R&D	20 % initial allowance of 40 % on the date of acquisition and the residual can be depreciated at the rate in 5
5.2 machinery used in SMEs*	initial allowance of 40 % on the date of acquisition and the residual can be depreciated at the rate in 5 100 % or
5.3 cash registering machine	initial allowance of 40 % on the date of acquisition and the residual can be depreciated at the rate in 5
5.4 passenger car or bus with no more than 10 passengers capacity	depreciated at the rate in 5 but the depreciable value is limited to one million Baht
6. Computer and accessories
6.1 SMEs*	initial allowance of 40 % on the date of acquisition and the residual can be depreciated
6.2 other business	over 3 years depreciated over 3 years

Tax Rates

The corporate income tax rate in Thailand is 30% on net profit. However, the tax rate may vary depending on the type of taxpayer. For example, certain small and medium-sized enterprises may be eligible for a reduced tax rate of 20%. Additionally, certain types of income may be subject to different tax rates, such as capital gains which are taxed at a rate of 15%. It is important for businesses to understand the different tax rates that may apply to their specific situation in order to ensure compliance and avoid penalties.

Taxpayer	Tax Base	Rate
1. Small company(From year 2008)	Net profit 150,000 baht	Exempt
	– Net profit not exceeding 850,000 Baht	15%2
	– Net profit over 1 million Baht but not exceeding 3 million Baht	25%
	– Net profit exceeding 3 million Baht	30%
2. Companies listed in Stock Exchange of Thailand (SET)	Net profit for first 300 million Baht	25%3
	– Net profit for the amount exceeding 300 million Baht	30%
3. Companies newly listed in Stock Exchange of Thailand (SET)	Net Profit	25%4
4.Company newly listed in Market for Alternative Investment (MAI)	Net Profit for first 5 accounting periods after listing	20 %4
	– Net Profit after first 5 accounting periods	30 %
5. Bank deriving profits from International Banking Facilities (IBF)	Net Profit	10 %
6. Foreign company engaging in international transportation	Gross receipts	3 %
7. Foreign company not carrying on business in Thailand receiving dividends from Thailand	Gross receipts	10%
8. Foreign company not carrying on business in Thailand receiving other types of income apart from dividend from Thailand	Gross receipts	15%
9. Foreign company disposing profit out of Thailand	Amount disposed	10%
10. Profitable association and foundation	Gross receipts	2% or 10%
11. Regional Operating Head quarters (ROH)	Net Profit	10%

Small company refers to companies with paid-up capital less than 5 million Baht at the end of each accounting period.
The 15% rate applies for accounting periods beginning on or after 1 January 2004.
The reduced rate applies for currently listed companies for 5 accounting periods beginning on or after 6 September 2001.
The reduced rate applies for newly listed companies (registered within 6 September 2001- 5 September 2005) for 5 accounting periods beginning on or after 6 September 2001.

Withholding Tax

Withholding tax is a tax that is withheld from an individual or business’s income at the source of payment. In Thailand, withholding tax is required for certain types of income, such as dividends, interest, and rental income. The withholding tax rate varies depending on the type of income and the recipient of the income.

Tax Return and Payment

Thai and foreign companies operating in Thailand must file their corporate tax returns (Form CIT 50) within 150 days after their accounting period ends. Tax payment must be submitted with the returns. Companies disposing of profits out of Thailand must pay tax within 7 days of the disposal date (Form CIT 54). Companies subject to corporate income tax must also make tax prepayment (Form CIT 51) and estimate their annual net profit and tax liability and pay half within 2 months after the first 6 months of the accounting period. Income paid to foreign companies not operating in Thailand is subject to a flat rate, with the payer required to file returns (Form CIT 54) and make payments within 7 days of the following month.

How Phuket Legal Firm Can Help

Filing corporate income tax in Thailand can be a complex and time-consuming process, and it is important to have a professional handle the process to ensure timely compliance and avoid penalties and fines. Phuket Legal Firm offers comprehensive corporate income tax services to our clients in Thailand. Our team of experienced professionals can assist with the preparation and filing of tax returns, as well as provide guidance on the ongoing compliance requirements of corporate income tax. By using our services, businesses can save time and money by ensuring compliance with the laws and regulations and receiving valuable advice and assistance throughout the process.