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Guide
to Doing Business in Thailand
Taxation
Corporate
Income Tax
 Incorporated
businesses operating in Thailand pay income tax at a rate 30 percent
of net profits, while foundations and associations pay income taxes
at a rate of between two to 10 percent of gross business income,
depending on the activity. International transport companies pay
a rate of three percent of gross ticket receipts and three percent
of gross freight charges.
All
companies registered in Thailand are subject to income tax on income
earned within and outside of Thailand. Foreign companies not registered
or residing in Thailand are subject to tax only on income derived
from sources within Thailand.
A
corporate taxpayer is obliged to file a six-month return and pay
50 percent of the annual income tax by the end of the eighth month
of the accounting period. Failure to pay the estimated tax, to file
a timely tax return, or the filing of a return which contains false
or inadequate information will result in various penalties or fines
against the company due within 30 days.
Value
Added Tax
The
value added tax (VAT) system came into effect on 1 January 1992
and replaced a largely inefficient tax system that was redundant
and easily evaded. It was initially levied at 7 percent, increased
to 10 percent in 1997 but returned to 7 percent in 1999.
Value
added at every stage of the production process is subject to a seven
percent tax with the general calculation for remittance being:
| Output
tax - Input tax = Tax Paid |
VAT
is payable monthly with the output tax being the VAT collected on
sales by the operator of the business and the input tax being the
VAT paid by a company for goods or services used in the operator’s
business.
If
the result of the calculation is a positive figure, the operator
must submit the remaining tax to the revenue department within 15
days of the end of the month, while negative balances find the operators
entitled to a refund in the form of cash or tax credit paid to them
the following month.
Exports
are zero-rated, (VAT exempt) but they are eligible for remittances
from input taxes paid in the production of the products. Also zero-rated
are operators earning less than $US 16000 annually. Operators of
businesses earning between $US 16000-32000 can choose between paying
the normal VAT or a gross turnover tax of 1.5 percent.
A
specific business tax of between two or three percent is imposed,
in lieu of VAT, on the following businesses. The SBT is computed
on the monthly gross receipts at the following rates:
| Type
of Business |
Tax
Rate |
| Banking,
Finance, or Securities |
3% |
| Insurance |
|
| -Life
|
2.5% |
| -Against
Loss |
3% |
| Pawnshop
|
2.5% |
| Sale
of Immovable Property for Profit |
3% |
Personal
Income Tax
Every
person, resident or non-resident, who receives assessable income
from employment or business Thailand, or has assets located in Thailand,
is subject to personal income tax, whether such income is paid in
or outside Thailand. Exemptions are granted to certain persons,
including United Nations officers, diplomats, and certain visiting
experts, under the terms of international and bilateral agreements.
Personal
income tax is applied on a graduated scale as follows:
| Net
Annual Income (Baht) |
Tax
Rate |
| 0
– 100,000 |
5% |
| 100,001
– 500,000 |
10% |
| 500,001
– 1,000,000 |
20% |
| 1,000,001-
4,000,000 |
30% |
| >
4,000,001 |
37% |
Individuals
residing for 180 days or more in Thailand for any calendar year
are also subject to income tax on foreign sources if that income
is brought into Thailand during the same taxable year that they
are a resident.
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