Corporate Income Tax in Thailand: Who must pay what
Corporate income tax is an obligation that all companies who profit from doing business in Thailand must fulfil. The emphasis here is on “profit”, as should be the case when it comes to taxes, but for foreign companies and investors, the other important criterion is “in Thailand”. Where a company is established and where they make their profits will determine their Thai corporate income tax (CIT) liability.
This is a short primer from GPS Accounting on the types of entities subject to corporate income tax by the Revenue Department of Thailand.
Please note that the Thai government has been, and will continue, announcing incentives and other measures in response to the economic impact of COVID-19. As these measures are in constant flux, we are not including them in this article to avoid confusion. To ensure your company is taking advantage of all privileges available, please contact GPS Accounting to find out more.
Companies incorporated in Thailand: corporate income tax on worldwide profits
Any company incorporated in Thailand must pay CIT on any profits received from anywhere in the world. This applies to majority foreign-owned entities incorporated in Thailand, such as company limiteds, joint ventures, and partnerships. For all intents and purposes, being incorporated in Thailand, and therefore having a corporate residency in Thailand, prevails over the majority nationality of an entity.
As of this article’s publication date, the CIT rate for most companies is 20%. For SMEs with paid-up capital less than 5,000,000 THB and annual sales revenue less than 30,000,000 THB, the rates are:
| Net Profit (THB) | CIT (%) |
| Up to 300,000 | 0 |
| 300,000 to 1,000,000 | 15 |
| Over 1,000,000 | 20 |
Foreign companies established in Thailand: CIT on Thailand profits
For CIT purposes, there is a distinction between being “incorporated” and being “established” in Thailand. As mentioned above, being incorporated in Thailand comes with a tax liability on any profits made worldwide. However, foreign companies that “establish” a presence in Thailand through a branch office must pay Thai CIT for profits made in Thailand.
As of this article’s publication date, branch offices are subject to the same CIT rates as above, but they may be subject to additional 10% tax on funds remitted or credited back to their home offices.
Regarding the other entities available for foreign companies, specifically, foreign representative and regional offices, since by definition, and law, they cannot derive any income, they should not have a CIT liability in Thailand.
Foreign companies doing business in Thailand: Certain taxes on certain income
Foreign companies do not necessarily need a presence to do business in Thailand and make a profit. The Thai Revenue Code considers income earned from Thai sources, including service fees, dividends, rent, and interest, as taxable in Thailand. For this type of income, the Thai customer, or payor, has the obligation to withhold and pay the tax on the foreign entity’s behalf.
Exceptions to standard CIT rules and rates
As with other countries, Thailand does offer special tax incentives and privileges to qualified entities:
Foreign trade and double taxation treaties and agreements
Thailand is a party to double taxation and foreign trade agreements and treaties with around 60 countries. Depending on the agreed terms, foreign companies doing business in Thailand may have some relief for their tax liabilities in Thailand.
BOI companies are exceptions
Thailand’s Board of Investment encourages investment in targeted industries by offering a range of incentives. The tax incentives, depending on the industry and the company meeting certain criteria, range from exemption from various import duties to a CIT holiday from three to ten years, in some cases with no cap on income amounts.
GPS Accounting knows CIT nuances
Whether you are incorporated or established in Thailand, GPS Accounting can assist you with your corporate income tax. Not only will we complete and submit your filings appropriately and on time, but our skilled accountants and tax experts can work with your finance team to ensure that your tax liability is no more than required. Contact us today for a free initial consultation to find out how.
