Thailand

Tax residency – A company is tax resident in Thailand if it is incorporated under the law of Thailand and registered in the Ministry of Commerce.

Basis – Resident companies are subject to tax on their worldwide income. Nonresident companies pay taxes on their income derived from Thailand.

Tax rate – Corporate income tax standard rate is 20%.

SMEs with paid-in capital equal or lower than THB 5,000,000 and trading income not higher than THB 30,000,000 are subject to reduced rates of 0% for net profits lower than THB 300,000, 15% from THB 300,000 to THB 3,000,000 and 20% over THB 3,000,000.

Petroleum operations performed by companies under a concession are taxed at 50% rate.

Capital gains – Capital gains are treated as ordinary income and taxed at the standard rate.

Dividends – Dividends received are included in the corporate tax base.

Dividends received from a Thai listed company are exempt from tax. Those received from a local unlisted company may be exempted, provided that the beneficiary holds at least 25% of voting shares for a period of at least 3 months.

Dividends received may be 50% tax exempt, provided that the beneficiary has been held the shares for at least three months before and three months after the dividends were received.

Dividends received from foreign companies are taxable but may be exempted if beneficiary holds at least 25% of shares with voting rights of the payer for a period not less than 6 months and profits were subject to at least 15% tax on the source.

Interests – Interests are subject to corporate income tax.

Royalties – Royalties are taxable at ordinary rates.

Foreign-source income – Foreign-source income is taxed when is accrued.  Foreign tax paid may be creditable against the tax chargeable in Thailand

Withholding taxes – Dividends paid to resident and non-residents are subject to a 10% withholding tax.

Royalties and interests paid to non-residents are subject to a 15% withholding tax. Interests paid on loans from a financial or insurance institution may be subject to a reduced 10% withholding tax if the lender is resident in a country where Thailand has concluded a tax treaty with.

Withholding tax rates may be reduced under a tax treaty.

Losses – Losses arising from taxable income may be carried forward for 5 years. Carryback of losses is not allowed.

Inventory - Inventory may be valued at the lower of acquisition/production costs or market value. To determine costs are allowed First in first out (FIFO), Last in first out (LIFO), Highest in first out (HIFO) methods, but a change in the method may require the approval of the Revenue Department.

Anti-avoidance rules – Related-party transactions must be made on an arm’s length basis, and transfer pricing disclosure is mandatory at the time of tax filing.

Thin capitalization and controlled foreign company regulations do not apply in Thailand.

Labor taxes – Employers and employees are required to make contributions to the social security fund at 5% of the monthly salary, capped at THB 750 per month for each one.

Tax credits and incentives – Foreign tax paid on foreign-source income taxable may be creditable up to the amount of tax payable in Thailand.

The Investment Promotion Act and the Competitive Enhancement Act provides tax holidays to companies approved by the Board of Investment (BOI). Companies conducting activities in the agricultural, mining, ceramic, metals, light industry, machinery, transportation equipment, electronic industry, electrical appliances, chemical, paper, plastics, services and public utilities, targeted core technologies and enabling services and strategic based activities may benefit from several tax exemptions and incentives.

Incentives available include the exemption from import duties, exemption from corporate income tax for up to 15 years, exclusion of dividends received from promoted enterprises up to 15 years and participation on the THB 10 billion subsidies under the Competitiveness Enhancement fund.

The Investment and Promotion Act also provides tax incentives to R&D contractors, including a corporate income tax exemption up to 8 years, exemption from import duties on certain machinery and raw materials, and exclusion of dividends derived during the period.

Compliance – On average, a company in Thailand may require 21 payments and 266 hours per year to prepare, file and pay corporate income tax, value added tax, and labor taxes, including payroll taxes and social contributions.

Exchange control – Remittance of profits may not be made in THB, but may be made in any other currency. The Bank of Thailand must approve the remittance of funds exceeding the ceiling set by the bank.

Personal income tax – To be a tax-resident in Thailand an individual must spend at least 180 days in a calendar year in the country.

Tax residents are subject to personal income tax on their income derived from Thailand and their foreign-source income remitted to Thailand in the year in which it is accrued. Income earned outside Thailand remitted after 1 year is tax-exempt.

Non-residents are subject to income tax on their Thai-source income.

Personal income tax is progressive at rates up to 35% for annual income exceeding THB 5,000,000. 

Dividends and interest are subject to a final withholding tax of 10% and 15%, respectively.

Capital gains are treated as ordinary income. However, those obtained from the sale of securities listed on the Stock Exchange of Thailand or any other ASEAN stock exchange are tax exempt, certain exceptions may apply.

Other taxes – A 12.5% real property tax is levied annually on the rental value of the property. Inheritances over THB 100,000,000 are taxed at a 10% rate, reductions may apply under certain circumstances. A gift tax applies on donations of assets exceeding THB 20,000,000 (10 million in the case that recipient is not descendant, ascendant or spouse).

There are no wealth taxes in Thailand.

V.A.T. standard rate is 10% (reduced to 7% until Sept 2017).