Corporate Income Tax in Thailand For Thai and Foreign Companies

In Thailand, all of the laws in connection with taxationexpenses include ordinary and necessary expenses;
are governed by the Thai Revenue Code. Theinterest with exception of company's funds and
Ministry of Finance administers the procedures ininterest on capital reserves; taxes, with exception of
connection with tax collections. The government'sVAT and CIT paid to Thai government; net losses
Revenue Department collects taxes under four mainthat have been carried forward from the previous
categories such as corporate income tax, valuefive years; bad debts; wear and tear and
added taxes (VAT), stamp duty, and personaldepreciation; contributions in connection with
income tax.provident fund; donations up to 2% of net profit;
The country's tax collecting authorities also includeand entertainment expenses which can be up to
the Customs Department, which collects import as0.3% of the overall receipt however, it should not
well as export duties; the Excise Department, whichexceed ten million baths. Further, special rates have
is responsible for the collection of excise tax; andbeen fixed for deductible expenses. For instance,
other local authorities which collects municipal anddeduction is about 200% in the case of Research
property taxes. Above mentioned is just a brief infoand Development expense. Likewise, in the case of
on the taxation system in Thailand. In this article,job training, it is 150% deduction in connection with
discussed further in detail is regarding corporateits expenses.
income tax as well as its features and rates.Now we will discuss at what rate corporate income
Corporate Income Tax (CIT) is in the form of directtax is deductible. Usually, corporate income tax rate in
tax, and is imposed on juristic companies as well asthe country is 30% of net profit. However, rates
registered partnership firms that are formed underdiffer depending upon the nature of tax payers.
the laws of the country, such as limited partnerships,For example, in the case of small companies with a
private limited companies, public limited companies,paid up capital less than five million baths, corporate
and ordinary registered partnerships.income tax rate would be on the basis of below
Corporate income tax is imposed on both local andmentioned
foreign companies. It is calculated on the net profit- If net profit does not exceed one million baths,
and has to be paid at the end of every accountingthen the rate at which corporate income tax would
period. But, a Thai company is entailed to pay tax onbe charged is 15%
the basis of its worldwide net profit. On the other- If net profit is more than one million baths and up
hand, a foreign company operating in the country isto three million baths, then CIT rate would be 25%
required to pay corporate tax only on the net profit- In case, the net profit is more than three million
that it has derived from carrying out of the businessbaht, CIT rate would be 30%
in Thailand. But, a foreign company would be leviedIn the case of companies listed in SET (Stock
corporate tax on its overall receipts, provided it isExchange of Thailand), the corporate income tax rate
engaged in businesses such as international transportwould be as follows
business.- For net profit up to 300 million Baht, the rate would
Likewise, a foreign company, although it does notbe 25%
have any business in the country, may be imposed- For the balance net profit, the rate is 30%
corporate tax on its receipts, in case, it derives anyFor companies newly listed in the SET, the rate
kind of income from Thailand, such as, interests,would be 25% of the net profit. Likewise, in the case
service fees, professional remuneration, and dividend.of banks that derive profits from IBF (International
Mostly, corporate income tax (CIT) is calculated onBanking Facilities), the rate would be 10% of net
the net profit of the company and that too on theprofit. Corporate income tax rates also vary in the
accrual basis. While calculation, a company takes intocase of foreign companies. For example, For instance,
account all revenues derived during an accountingthe CIT rate would be 3% of net profit in the case
period, and deducts them all of the expenses thatof foreign companies engaged in the business of
have been incurred during an accounting period as perinternational transportation. Similarly, the rate is 10%
the Revenue Code.in the case of foreign companies that receive any
On calculation of corporate income tax, deductiblekind of remuneration or dividend from the country.