Corporate Income Tax in Thailand - What You Should Know in 2024

You probably know how beloved Thai food, beaches, and people are by foreign travelers. 

However, did you know foreigners also love to start businesses here? Thailand’s strategic location and competitive tax landscape make it an attractive destination for entrepreneurs. While the taxes are not as low as Hong Kong’s taxes or Singapore’s taxes, the difference in rates is minor and Thailand’s pool of talent and treaties for doing business in Southeast Asia still make it a prime location. 

This guide will provide you with a comprehensive understanding of Thailand’s corporate tax system, including the applicable tax rates, filing deadlines, and the incentives available, particularly for small and medium-sized enterprises (SMEs).

According to Thai law, businesses must adhere to the specific requirements outlined in the Revenue Code when filing their annual tax returns. The Revenue Department, which is part of the Ministry of Finance, is responsible for overseeing taxes in Thailand. Historically, the director-general of the Ministry of Finance has enacted policies that make it easy to comply with tax laws, even for foreigners. For example, an English version of the Revenue Code is available for your convenience.

Thailand’s tax system is straightforward, as there are no local government taxes on income in Thailand, only taxes on the national level. Businesses are not taxed on their gross income here, but on their net profits. 

Thailand’s corporate tax system is a progressive structure. This means the tax rate increases as a company's taxable income grows. 

In simpler terms, higher profits result in higher taxes.

For specific industries, there may be differing tax rates and rules. The biggest example is the Petroleum Income Tax, which may be set as high as 50% of the annual net profits. 

Thai-registered companies are subject to corporate income tax (CIT) on their global earnings. 

Foreign entities conducting business within Thailand must also pay CIT on their Thai-sourced profits, regardless of their country of incorporation. This includes companies with local employees, representatives, or offices.

Beyond the corporate income tax, businesses here are subject to a variety of other taxes and levies, including customs duties, stamp duty, and real estate taxes. Businesses are also required to manage withholding tax on payments made to individuals, such as salaries, dividends, and interest.

Customs Duties

Customs duties, ranging from 0% to 80%, are based on the Harmonised System and ASEAN Harmonised Tariff Nomenclature (AHTN) 2022, with preferential rates for goods from Free Trade Agreements partner countries. Offenses against customs law typically result in fines and recovery of tax arrears rather than criminal prosecution. Excise tax is imposed on luxury goods and services, calculated using ad valorem and/or specific rates, with additional interior taxes and other levies for specific products. 

In simpler terms, the customs duties depend on the value of the goods, outlined in various international agreements.

Stamp Duty

Stamp duty applies to various documents, with rates depending on the type of instrument and a penalty for late payment ranging from 200% to 600% of the duty payable. There are no capital taxes in Thailand. Employers must withhold personal income tax from salaries and remit it to the Revenue Department, while social security contributions are capped at THB 750 per month for both employer and employee. 

Real Estate Taxes

Local taxes include land and building tax, based on appraised value, with rates between 0.15% and 3%, and signboard tax, determined by the size and language of commercial signs. 

Value-Added Tax (VAT)

Businesses with annual revenue exceeding 1.8 million baht are required to register as VAT taxpayers.

Thailand currently imposes a 7% Value-Added Tax (VAT) on most goods and services. However, this reduced rate is scheduled to increase to 10% by September 2024. The Revenue Department emphasizes that even importers are subject to VAT, whether registered as operators or not. 

Specific Business Tax (SBT)

Specific Business Tax (SBT) is a tax applied to businesses that aren't subject to Value-Added Tax (VAT). 

The tax rate depends on the type of business. For instance, commercial banks typically pay a 3% SBT, while life insurance companies and pawn shops are taxed at a rate of 2.5%. Businesses similar to commercial banks also fall under the 3% SBT bracket.

Thailand offers various tax incentives to attract foreign investment, including deductible expenses for research and development activities. Most incentives that attract foreign investment are through the Thailand Board of Investment (BOI). The BOI may use the term tax holiday to refer to a complete exemption from tax during the specified “holiday” period. 

Corporate Income Tax (CIT) Exemptions Through BOI

Thailand offers up to eight years of corporate income tax exemption for businesses engaged in knowledge-intensive activities, aiming to bolster the country's economic competitiveness.

Activities that use advanced technology to develop infrastructure or add value to domestic resources can also get 5 to 8 years of tax deductibles.

However, unlike mere deductibles, complete exemptions can only be up to 13 years. 

SMEs and Startups

For SMEs, there are special incentives and exemptions that can greatly reduce the corporate income tax rate. SMEs with paid-up capital less than THB 5 million and annual revenue below THB 30 million are eligible for most of the reduced taxes. But if you have an SME that does not qualify for the 0% tax exemption, you may still qualify for various other schemes. For example, investors in government-promoted startups can enjoy tax-free profits from share transfers until June 2032.

Import Duty Exemptions

For machinery and raw materials, Thailand offers duty exemptions for companies using them in R&D or export production.

Specific projects can get BOI approval for exemptions, too, if they are considered to be in alignment with national goals. 

Regional Incentives

While Bangkok is a popular destination to do business, the Thai government offers incentives to go to other provinces, too, with 3 additional years of corporate tax exemption up to a total of 13 years. 

The following provinces qualify for this scheme:

Sector-Specific Incentives

High-tech industries, such as those involving semiconductors, may qualify for up to ten years of tax holidays. Businesses producing smart, eco-friendly packaging can receive an eight-year tax holiday.

Double Tax Prevention Treaties

Thailand began its Double Taxation Agreement (DTA) network in 1963 with Sweden, subsequently expanding it to cover 56 countries by 2006. Foreign companies are taxed in their foreign law jurisdictions already, so being taxed again in Thailand was seen as not optimal for all involved parties.

Covering personal, corporate, and even petroleum income taxes, DTAs delineate tax obligations for both the source and residence countries. 

The following foreign law jurisdictions have a DTA with Thailand:

You can check the specific agreements on the Revenue Department’s DTA page.

When forming a joint venture or juristic partnership under foreign law, it is important to understand the implications for tax liability and the types of assessable income that will be subject to direct tax in Thailand. For example, a limited company or other type of Thai company involved in such ventures must carefully consider the depreciation of assets and how it impacts their financial statements.

Thailand requires two returns annually for businesses.

The annual tax return (Form PND 50) is due 150 days after the end of the fiscal year or accounting period. 

The half-year tax return (Form PND 51) is required for companies generating revenue in Thailand. 

It's important to note that a company's tax accounting period or tax year may not align with the calendar year. Thai tax regulations allow businesses to establish their own accounting period if it is their first year of operation.