Thailand: Business Environment
A domestic corporation is subject to tax on worldwide income, while a foreign corporation is subject to tax on income generated in Thailand.A foreign company not engaged in business within Thailand faces a final withholding tax on specific types of assessable income, including interest, dividends, royalties, rentals, and service fees, paid from or in Thailand. Typically, the tax rate is 15%, except for dividends, which are taxed at 10%. However, alternative rates may be applicable under the terms of a double tax treaty.
Branches of foreign corporations are liable for Corporate Income Tax solely on profits earned locally. Any branch profits sent back to the foreign headquarters face an extra tax at a 10% rate. However, this tax isn't solely on remittances but extends to any disposal of profits abroad. Even the crediting of profit to the head office account in the books is considered a disposal of profit abroad, regardless of whether funds are physically remitted.
Donations to specified charities or for public benefit, as well as those to education or sports associations, are deductible in the amount actually paid but not exceeding 2% of net profit.
Royalties, management service fees, and interest charges paid at arm’s length to foreign affiliates are also deductible.
Business activities promoted by the Board of Investment (BOI) can enjoy tax holidays ranging from three to eight years. Additional tax exemption periods might be granted for specific investment zones.
International Business Centers (IBCs) generating income from qualifying services (like management, technical support, and financial management) and qualifying royalty income (stemming from research and development and technological innovation within Thailand) from related enterprises may qualify for reduced corporate income tax rates. These rates vary: 8% if annual operating expenditure paid to Thai recipients is at least THB 60 million, 5% if expenditure hits THB 300 million, and 3% if expenditure reaches THB 600 million. IBCs also receive exemptions from corporate income tax on dividend income from associated enterprises and from specific business tax (SBT) on treasury services income to associated enterprises.
From 2020, a Land and Construction Tax Act replaced the house and land tax and the local development tax. The maximum tax rate depends on the type of land/building and the appraisal value, as follows:
- for land used for agricultural purposes, the progressive tax rates range from 0.01% on land valued up to THB 75 million to 0.1% on land valued above THB 1 billion
- for land used for residential purposes, the progressive tax rates range from 0.02% on land valued up to THB 50 million to 0.1% on land valued above THB 100 million
- for land used for commercial purposes, the progressive tax rates range from 0.3% on land valued up to THB 50 million to 0.7% on land valued above THB 5 billion
- for land that is left unattended or that is not being utilized to the extent appropriate for its nature, the progressive tax rates range from 0.3% to 3% (the tax rate will increase by 0.3% annually if the land is not used).
Stamp duty is applicable to specific instruments as outlined in the Revenue Code, with rates varying according to the instrument type; for instance, leases, hire of work agreements, transfers of shares/debentures, and loans incur a 0.1% duty, while loan agreements are charged at 0.05% (with a cap of THB 10,000), among others.
Capital duty does not officially exist in Thailand; however, there is a one-time fee when registering a company.
Employers are required to contribute 5% of the employee's remuneration to the Social Security Fund (capped at a contribution of THB 750/month).
Thailand | East Asia & Pacific | United States | Germany | |
Number of Payments of Taxes per Year | 21.0 | 23.4 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 229.0 | 195.1 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 29.5 | 33.8 | 36.6 | 48.8 |
Source: Doing Business, Latest available data.
Individual income tax | Progressive rate from 0 to 35% |
From THB 0 to 150,000 | exempt |
From THB 150,000 to 300,000 | 5% |
From THB 300,001 to 500,000 | 10% |
From THB 500,001 to 750,000 | 15% |
From THB 750,001 to 1,000,000 | 20% |
From THB 1,000,001 to 2,000,000 | 25% |
From THB 2,000,001 to 5,000,000 | 30% |
Over 5,000,000 | 35% |
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Latest Update: November 2024