Learn more about Corporate tax in Thailand

Net income for the fiscal year is the basis for calculating corporate income tax. A company must report all annual income from operations minus all expenses allowed by tax law.

There are several expenses that can be subtracted from earnings, including:

1. Start-up costs involving registration and incorporation fees
2. All expenditures solely for profitability or operational requirements
3. Royalties, administrative, and interest charges deductible if exclusively for monetary gains or business necessities in Thailand and not exceeding reasonable amounts.
4. Sizeable donations to acknowledged charitable groups, public benefits, athletics, and instruction limited to 2% of net earnings.
5. Cash contributions to political parties restricted to THB 50,000.
6. Authorized depreciation deductions according to the rates in tax regulations.
7. Reserves for bad debts qualify as deductions.
8. Administrative and interest costs are deductible provided they serve only business needs in the country and do not surpass reasonable sums.
9. Optional write-offs encompass royalty fees associated with profit-driven activities.

The provision for charity donations extends to sports and education initiatives but remains capped at a modest percentage of leftover income. Monetary help to political parties faces stricter limits of THB 50,000.

While tax deductions were permitted for various costs in the preceding area, some expenses are notably nondeductible under code. Seven such fees warrant consideration:

1. All tax laws imposed fines, penalties, and assessments.
2. VAT Registration Thailand
3. Personal expenses and gifts. 
4. Salaries paid to directors are more than a reasonable amount.
5. Costs expected to be incurred. 
6. Interest on the capital, reserves, or funds of the corporation.
7. Any losses are recoverable under insurance policies or indemnities.

To begin, limited liability firms receiving dividends from other Thai businesses must solely include half of the obtained dividends in their taxed income.

Subsequently, exemptions from dividend taxes are afforded to: listed corporations. When a corporation owns no less than a quarter of another company’s shares, and the dividend distributing business does not itself own the receiving company’s stock, the obtaining corporation is granted the dividend.

In closing, the dividend tax exception solely applies if the firm acquires the shares a minimum of three months prior to obtaining the dividend, and does not dispose of the shares inside the three months following receipt of the dividend. Varied sentences are created to enhance burstiness while complex topics are discussed to bolster perplexity.

Thai regulations mandate that firms functioning in Thailand retain taxation when dispersing paychecks to employees, rendering remuneration to service suppliers, or allocating rental profits to beneficiaries. The preserved quantity is the income duty owed by the receiver for that year. The withholding tax quantity implemented isn’t identical for all, and the pace fluctuates based on the income class paid, as demonstrated below: some earnings classes are taxed at a higher rate than others depending on the nature of the income. Larger payments may face a higher withholding rate. The law aims to ensure advance collection of taxes owed while allowing beneficiaries access to most of their funds : 

• Dividends – 10%.
• Rental income – 5%.
• Rental expenses – 3%.
• Transportation – 1%.
• Parking – 3%.
• Interest – 1%.
• Royalties – 3%.
• Telephone – 2%.
• Advertising – 2%.
• Service and professional fees:

• 3% if paid to a Thai or foreign company with a permanent branch in Thailand.
• 5% if paid to a foreign company without a permanent branch in Thailand.

• Taxes – 5%.

Thailand offers a tiered corporate income tax rate intended to support the growth of small businesses. While large companies pay the headline rate of 20% on annual profits exceeding 30 million baht, preferential treatment exists for qualifying startups and SMEs. Those with equity under 5 million baht face no levy on income up to 300k :

• Less than 300,000 baht – 0%.
• Between 300,001 and 300,000,000 bathtubs – 15%.
• More than 3,000,000 tubs – 20%.

While overseas enterprises avoid direct operations within Thailand’s borders, certain earnings accumulated from Thai sources undergo retaining tax obligations. Dependent on the income classification, bilateral trade contracts sometimes excuse or diminish retaining charges:

• Profits forwarded abroad face 10% withholding.
• Revenue from shares owned sees the same 10% reduction.
• Compensation beyond dividends including interest on loans, royalties for use of property, and rents collected command a 15% levy removal. 

Thailand has double taxation treaties with 60 countries: “Armenia, Australia, Austria, Bahrain, Bangladesh, Belarus, Belgium, Bulgaria, Canada, Chile, China, P, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, and United Kingdom of Great Britain and Northern Ireland, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Kuwait, Laos, Luxembourg, Malaysia, Mauritius, Myanmar, Nepal, Netherlands. New Zealand, Norway, Oman, Pakistan, Philippines, Poland, Romania, Russia, Seychelles, Singapore, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan, Tajikistan, Turkey, Ukraine, United Arab Emirates, United States, Uzbekistan, and Vietnam.”

Firstly, corporations must draft monetary declarations for every accounting interval. Subsequently, an authorized open bookkeeper should confirm the fiscal explanations. The assessor should endorse the balance sheet endorsed by the shareholders’ assembly and offer it to the Business Advancement Division and the tax experts.

Moreover, as per Article 1197 of the Thai Common and Business Code, the administrators of a constrained obligation organization are in charge of holding an unprecedented shareholders’ meeting inside four months of the monetary year’s end to endorse the records. The executives need to invite all investors through mail joined by a receipt no less than fourteen days before the gathering by mail.

Then again, the same code in Article 1175 furnishes that the directors must call all shareholders by mail accompanied by a receipt no less than a week before the meeting. The notice should specify the area, day, time and calendar, and a nearby daily paper should distribute the data seven days before the meeting date. Shareholders who can’t go to the gathering on the meeting day may exercise their voting privileges by submitting a composed intermediary at the meeting time.

If the general meeting is for a special resolution, the cutoff time is fourteen days. Furthermore, article 1197 requires an annual records copy to be sent to all shareholders no less than three days before the general meeting. They should likewise store them at the organization’s enlisted office during a similar counsel period. The shareholder must date and sign the specialist under article 1188. And it should contain the accompanying data: the portion held’s number by the shareholder and intermediary’s name and term of the intermediary’s naming.

At long last, disappointment to observe the association’s guidelines or hold meetings will render any decisions that contradict these arrangements invalid. The most extreme fine forced for disappointment to have an annual general gathering for the record’s endorsement inside four months after the monetary year’s finish is THB 20,000 for organizations and THB 50,000 for chiefs.

Firstly, limited liability companies have stringent deadlines to meet regarding their annual reporting requirements. Within just one month of the conclusion of the general shareholder meeting, approved financial statements must be electronically submitted to the Department of Business Development.

Subsequently, on form PND50 companies have a five-month window following the close of the fiscal year to file tax returns with the relevant authorities. Ensuring compliance with both of these filing obligations is essential for any business seeking to maintain its licenses and good standing. The complexity of regulations can seem daunting but keeping accurate records and seeking professional guidance helps ensure paperwork is handled promptly and properly.

First, firms running in Thailand must deliver two tax returns during the fiscal year: an annual and a half-yearly one. Taxpayers incorporate both Thai and international companies functioning within Thailand’s borders must transmit a duty return utilizing form “PND 50” inside one hundred fifty days of the termination of the fiscal year. The tax payment coincides with the filing due date. Enterprises which have isolated their money-making exercises outside of Thailand must pay levies on the divided totals inside seven days from the dividing date utilizing kind PND 54 withholding tax form.

Moreover, apart from the yearly payment of company earnings tax, each company subject to corporate earnings tax needed to create semi-annual advance payments utilizing form PND 51. Appropriately estimating yearly internet earnings and tax amount is indispensable, and half of the calculated duty amount must be paid inside two months after the termination of the primary six months of the fiscal year. One can deduct the progress payment from one’s yearly tax payment.

For earnings paid to an overseas firm that isn’t lively in Thailand, the overseas firm is responsible for withholding tax on the payment date. The payer must file a “PND 54” statement and pay the tax authorities inside seven days of the month the payment is made.

While income taxes deducted were later reimbursed to companies functioning in Thailand, certain tax benefits remained. The sums held back were redeemable against the recipient corporation’s yearly submission.

Earnings originating from realms lacking a dual taxation contract with Thailand permitted outside tax credits. Such external tax credits followed strict standards and terms, allowing usage up to the level of taxation owing in Thailand corresponding to profits gained locally.

Late or non-submitted financial statements will incur penalties based on the number of months of delay as follows: 

Less than two months late:

• Fine for the accountant – 1,000 baths.
• Fine for directors – 1,000 baths.

Between 2 and 4 months late:

• Fine for the accountant – 4,000 baths.
• Fine for directors – 4,000 baths.

More than four months late or no bond:

• Fine for accountants – 6,000 Baths.
• Fine for directors – 6,000 Baths.

Annual tax returns’ failure to file or late submission is subject to a monthly penalty of 1.5% of the tax due. A surcharge of 20% of the tax owing for semi-annual reports’ late filing and payment is imposed.