Thailand Taxation N S I Business Consultant Co.,Ltd.

Income Tax Guide for Foreign Company

In Thailand, there are many kinds of business identities. The type of business you chose will affect your tax rates and tax benefits.
In general, the most common types of business are:

Thai company

A company registered under Thai law.

Foreign company

A company carrying on business inThailandbut registered under foreign law.

A company not carrying on business inThailandbut deriving income fromThailand.

Thai Company

A Thai company generally pays tax at 30% of net profit. However, some types of company are entitled to a rate reduction.
Rates:

Small business with paid-up capital less than 5 million baht

20% of net profit < 1million baht ,15% of net profit< 1 million baht starting from 1st January B.E.2547

25% of net profit 1-3 million baht

Company registered in the Stock Exchange of Thailand (SET)

25% of net profit < 300 million baht for 5 consecutive accounting periods starting from 6th September B.E.2545.

Newly registerd company in the Stock Exchange of Thailand (SET) and Market for Alternative Investment (MAI) within 3 years starting from 6th September B.E.2545

25% of net profit for newly registered company in SET for 5 consecutive accounting periods.

20% of net profit for newly registered company in MAI for 5 consecutive accounting periods.

BangkokInternational Banking Facility and Regional Operating Headquarters

10% of net profit from qualified income

Association and foundation

2% or 10% on gross receipts

Foreign Company

A foreign company carrying on business inThailand, whether it has a branch, an office, an employee or an agent inThailandshall pay 30% tax only on profit deriving from business inThailand. However, international transportation company shall pay tax at the rate of 3% on gross receipts.

Foreign Company Abroad

A foreign company that does not carry on business in Thailandwill be subject to withholding tax on certain categories of income derived from Thailand. The withholding tax rates may be further reduced or exempted depending on types of income under the provision of Double Taxation Agreement.
Rates:

Remittance of profits	10%
Dividends	10%
Other income such as interests, royalties, capital gains, rents and professional fees	15%

Tax Registration

A foreign company carrying on business inThailand, whether setting up a branch or an office must apply for tax identification number from the RevenueDepartment. An application form (Lor Por 10.3) together with other relevent documents i.e. a copy of a company’s registration license, house registration, etc. shall be submitted to the Area Revenue Office within 60 days for the date of registration or operation.

Tax Treaties to Avoid Double Taxation

Currently, Thailand has concluded tax treaty agreements with 51 countries: Armenia, Australia, Austria, Bangladesh, Bahrain, Belgium, Bulgaria, Canada, China P.R., Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hong Kong, Hungary, India, Indonesia, Israel, Italy, Japan, Korea, Laos, Luxembourg, Malaysia, Mauritius, Nepal, the Netherlands, New Zealand, Norway, Oman, Pakistan, the Philippines, Poland, Romania, Seychelles, Singapore, Slovenia, South Africa, Spain, Srilanka, Sweden, Switzerland, Turkey, Ukraine, United Arab Emirates, United Kingdom of Great Britain and Northern Ireland, United States of America, Uzbekistan, and Vietnam

Tax Filing and Payments

Thai & Foreign Company Carrying on Business in Thailand

Any Thai or foreign company carrying on business inThailandmust submit their tax returns and payments twice a year.

The semi-annual tax return must be submitted (CIT 51 form) within two months after the end of the first six months, the amount of tax due shall be half of the entire year projection of the company’s annual net profit.

The annual tax returns (CIT 50 form) must be submitted within 150 days after the closing date of its accounting period.

International Transportation Business

A company shall submit tax return (CIT 52 form) and payment within 150 days after the closing date of its accounting period.

Foreign Company Not Carrying on Business in Thailand

A taxpayer inThailandshall withhold tax at source at the time of payment and submit it together with CIT 54 form to the Area Revenue Office within 7 days of the following month after the payment is made.

Electronic Filing and Payments

A company can easily submit income tax return (CIT 50, 51, 52, 54) and make tax payment via internet at http://www.rd.go.th The service opens daily form 6 am. – 10 pm.

Tax Benefits

A company that chooses to register under Thai law shall enjoy various tax benefit schemes such as;

Income tax holiday from 3 to 8 years for business with Investment Promotion Privileges.

Reduction or exemption of import duties on raw material and imported machinery for business with Investment Promotion Privileges or industries setting up in Export Processing Zone and Free Trade Zone.

Double deduction for the cost of transportation, electricity and water supply for industries with Investment Promotion Priviledges.

200% deduction for the cost of hiring qualified researchers doing research and development project.

150% deduction for the cost of employee’s training in order to improve human capital.

Small and medium size company can choose to deduct special initial allowance on the date of acquisition for computer (40%), plant (25%) and machinery (40%).

Tax Benefits for Small and Medium Enterprises

Tax benefits		Related laws/regulations
Small and medium enterprises (SMEs)
1. Reduce corporate income tax rate for Thai company with paid-up capital of 5 million Baht and below. These companies are subject to a CIT rate of 20% on net profit up to 1 million Baht and 25% on net profit over 1 million Baht up to 3 million Baht. Profit exceeding 3 million Baht is subject to CIT ordinary rate of 30%. (Effective for accounting period starting on or after 1st January B.E.2545)		Royal decree 394 B.E.2545 CIT rate of 15% on net profit up to 1 million Baht(Effective for accounting period starting on or after 1st January B.E.2547) Royal decree 431 B.E.2548
2. Thai company with durable assets (excluding land) less than 200 million Baht and hiring employee less than 200 people grant an initial allowance on assets as follows:		Royal decree 395 B.E.254
-	Computer hardware and peripheral can depreciate on the acquisition date at 40% of its total cost. The remaining will be depreciated at a regular rate for at least 3 accounting periods.
-	Durable building and plant can depreciate on the acquisition date at 25% of its total cost. The remaining will be depreciated at a regular rate not exceeding 5% of the total cost per annum.
-	Machinery and equipment can depreciate on the acquisition date at 40% of its total cost. The remaining will be depreciated at a regular rate not exceeding 25% of the total cost per annum. (Effective for assets which are acquired on or after 31st January B.E.2545)
3. Full corporate income tax exemption for qualified venture capital (VC) company on dividend income and capital gain from sale of stock receiving from investing in Thai company with durable assets (excluding land) less than 200 million Baht and hiring employee less than 200 people. A qualified VC company must be as the following:		Royal decree 396 B.E.2545, Minister of Finance Notification: securities business license
-	A company incorporate in Thailand which doing venture capital business as prescribed in Ministerial Notification with capital not less than 200 million Baht and paid-up capital at least of 50% in the first year. The remaining capital will be paid up within 3 years starting from the date of registration.
-	VC company must be registered with the office of Securities and Exchange Commission (SEC) within 3 years from 31st January B.E.2545.
-	VC company must have share of paid up capital in SMEs not less than 20% for the first year, 40% for the second year, 60% for the third year and 80% for the forth year.
-	VC company must hold SMEs stock for at least 7 consecutive years or at least 5 years if that SMEs can register in Stock Exchange of Thailand.
-	A manager of VC company must hold a securities business license in a type of joint investment management which is approved by the offices of the securities and exchange commission (SEC). (Effective on or after 31st January B.E.2545)
4.Income tax exemption on dividend or income from sales of securities receiving from the VC's exempt income. (Effective on or after 31st January B.E.2545)		Royal decree 396 B.E.2545-Ministerial regulation no.126 clause 2(58)