TAX: Every Trader must
within 30 days of commencing business, file for a business tax
registration. If more than one Office then separate regs are
needed. Company Income Tax in Thailand
is 30% on net profits so if you make a profit each year this
is what you pay. All Thai companies are subject to income tax on income earned
in and out of Thailand. Foreign companies not registered or not residing in Thailand are subject to tax
on income from within Thailand.
Normal business expenses and depreciation allowances, are rated
5- 100%. Your company inventory is valued at cost or market price, whichever
the lowest. Net losses can be brought forward for up to five consecutive years. Interest payments on some foreign loans may be exempt from a firm’s income tax. Inter-corporate dividends are exempt from tax on 50%
of dividends received. Holding companies and companies listed on the SET, dividends are
exempt, provided shares are held 3 months prior to and after receipt of dividends. Foundations and Associations pay
2--10% of gross business income, but depends on what they do. International transport companies
3% of gross ticket receipts & on gross freight charges.
: You are allowed to deduct gifts and donations up to 4% of net profit
– 2% to approved public charities or public benefit;
– 2% to approved education or sports bodies.
No deduction is permitted for expenditure that is net profit (e.g. bonuses paid as a
% of net profit) at the end of the accounting period. Entertainment & representation expenses are deductible up to
limit as gross sales %, or of paid-up capital at the accounting period closing date, whichever is greater.
Depreciation of assets of limited companies and partnerships is based on cost.
Annual depreciation rates permitted by law vary from
Taxes are due on a semi-annual basis within 150 days of the
close of a six-month accounting period, and employers are
required to withhold personal income tax from their employees.
Traders must keep records of all gross receipts and file monthly business
tax returns and pay business tax bby the 15th day of the following month
regardless they have had any gross receipts that month. You must file audited financial statements every 12 months. Small to
medium Thai Companies may pay around 7500 baht for this. A corporate taxpayer
files half-year returns and pays 50%
of estimated annual income tax at the end of the 8th accounting period month. Failure to pay
or underpay by more than 25% you will be fined up to 20% of the
deficit amount. Failure to file a tax return, late filing or filing a return containing false or inadequate information
you receive penalties. Failure to file a return, and subsequent non-compliance
order's to pay tax assessed, can be a penalty
up to twice the amount of tax due. Penalties must be also
within 30 days of assessment.
Payable on most documents at varying rates.
This is levied on certain types of products
like fruit juice, alcoholic beverages, cigarettes, tobacco, cinemas,
the Revenue Department now require companies and limited partnerships to withhold taxes on several additional types of transactions.
The categories subject to this new withholding tax include
transactions between companies to limited partnerships. eg. brokerage fees, copyrights or similar rights, debenture and promissory note interest and fire insurance premiums. Tax rates
vary from 1% to 3% of the transaction's value. Services not subject to
this tax are fees for public transport, service fees, & life insurance premiums
paid to hotels or restaurants. Royalties and services are now
subject to 3% withholding tax. A royalty can be a from one company
to another where say software is used by one company even if the
software is not licensed but just used by the other company.
Section 40(3) of the Revenue code. Purchasers of say software
programs must deduct 3% withholding tax as set under (Tor Por
101/2544,).Therefore if you purchase
software from a retailer for your company to use you must make a
withholding tax of 3% of the purchase price & issue a
withholding certificate to the shop. Following purchase you remit
this amount of deducted tax to the tax dept within 7 days of the
following month. If you fail to do this a surcharge will be
imposed on you.
Owners of land and/or buildings may have to pay annual taxes levied by the local government. Under
the Local Development Tax Act of 1965, rates per unit vary according to the appraised value of the land. However, land
personal use, animal husbandry, or land cultivation is exempt. Land taxed under the House and Land Tax Act of 1932,
is based on the value of the land and buildings or any other improvements,
& an annual tax is levied at the rate of 12.5% of the assessed assumed rental value of the
property. Owner-occupied residences are exempt. Property Tax. There is a transfer fee of 3% of the assessed value of real estate transferred.
Normal Tax Year End Individuals - 31 December, Companies - Any consecutive 12 months.
Companies with ten or more employees, the government, and employees are all required to contribute 1.5% of each employee's salary (up to Bht 225 per employee per month) to a social security fund.
Capital gains tax is treated as ordinary taxable income.
Taxes may be paid on-line.You will be able to make electronic payments (e-payments) for all
categories of taxes, including income tax, following the department's launch of VAT payments, its first online
service. Paying taxes online, you must apply for the service at http://www.rd.go.th . The Revenue Department will then ask to check a taxpayer's identity in person before they receive a user ID and password.
But you must have an account with one of three commercial banks - Krung Thai Bank, Siam Commercial Bank or Bank of
Asia.Later the service will be extended to those with accounts with Thai Farmers Bank, Citibank and Bangkok Bank.
A lack of basic computer skills of the taxpayer rather than lack of confidence in e-transaction security
were reasons why this isn't popular. The Revenue Department now provides an electronic manual with step-by-step procedures.
In May, some 135 companies had registered to use the service, but only 43 submitted all the requested information.
24 companies had made e-payment transactions, with the value of e-tax payments being
approx Baht 300,000.-In June, 128 companies had applied for the service,
& 1 company conducting a transaction this month so far.Corporate taxpayers are also encouraged to use the online VAT payment system.
If companies paid VAT on-line and were eligible for a VAT refund, they would receive it within 30
days, compared to 60 days.
Failure to file a return, and subsequent
non-compliance with an order to pay the tax assessed, may result in a
penalty equal to twice the amount of tax due. Penalties are due within 30
days of assessment.
Staff and management
INCENTIVES FOR LISTED COMPANIES:
The Royal Decree No. 387 became law on
6 September 2001 to reduce corporate income tax rate for listed companies
from 30% to to 25% Existing listed companies
Baht 0-300 million on net profits pay 25%; Baht 301 million or more
30%.A newly listed companies on the MAI (Market for
Alternative Investment), the newly trade board by the SET. 20%. New
listed companies on the SET pay 25% on net profits.
The reduction rate is applied to only 5 accounting periods, for existing
listed companies: starting from the accounting period on or after 6
September 2001. But, 5 accounting periods for new listings
registered on both the SET and the MAI will be counted from the accounting
period started on or after the listing day. New listed companies must be
listed within 3 years from 6 September 2001, i.e. 5 September 2004.The
government issued certain conditions to close loopholes for any companies
using concession rates. This means new listed company's will be granted
the above reduced rate only when it does not fall under the following
conditions: (A) De- listing from the SET during the period of 3 years
before re- listing on the SET or MAI. (B) A company amalgamated by another
existing listed company or acquiring businesses in whole or part from the
existing listed companies during the period of 3 years before listing on
the SET or MAI. (C) Must not be acquired in whole or part of
business of existing listed company throughout the period in which the
company is entitled to tax rate reduction. Otherwise, the entitlement to
tax reduction will be terminated, beginning from the accounting period
where the acquisition of business has occurred.
wish to thank Kuhn Ornachai for sending us the above information
& the Thai Embassy, NZ for supplying us with Business
Please ask your accountant to verify as we do not accept responsibility as
there could be changes since we received this information. This is only a
basic guide for those interested in the tax system of Thailand & parts
may not be accurate ).