Thailand Corporate Income Tax

8/10/2019 Thailand Corporate Income Tax

1/31

Income Tax onCorporations in

ThailandReported by

Princess Joy G. Florentin

on

January 10, 2015


2/31

Corporate Income Tax (CIT)

A direct tax levied on a juristic

company or partnership carrying on

business in ThailandOR not carryingon business in Thailand but deriving

certain types of income from

Thailand.


3/31

Taxable Entities

1. Juristic companies and partnerships

incorporated under Thai law;

a) Limited company

b) Public company limited

c) Limited partnership

d) Registered partnership


4/31

Taxable Entities

2. A company or juristic partnership

incorporated under foreign laws:

a) and carrying on business in

Thailandb) and carrying on business in other

places including Thailand

c) and carrying on business in other

places including Thailand, in case

of carriage of goods or carriage of

passengers


5/31

Taxable Entities

d) which has an employee, an agent

or a go-between for carrying on

business in Thailand and as a

result receives income or profitsin Thailand

e) and not carrying on business in

Thailand but receiving assessable

income under Section 40(2)(3)(4)(5) or (6) which is paid

from or in Thailand.


6/31


7/31

Taxable Entities

5. A foundation or associationcarrying on revenue generatingbusiness, but does not include

those as prescribed by the Ministerin accordance with Section 47(7)(b) under the Revenue Code.

6. Other juristic entities as announcedby the Director-General of theRevenue Department with theapproval of the Minister of Finance.


8/31

Accounting Period

Shall be 12 months exceptin the following

cases :

1. A newly incorporated company or juristic

partnership may elect to use the period

from its incorporation date to any onedate as the first accounting period.

2. A company or juristic partnership may file

a request to the Director-General to

change the last day of an accountingperiod. In such a case, the DG shall have

the power to grant approval as he deems


9/31

Accounting Period

appropriate. Such an order shall be

notified to the company or juristic

partnership who files the request

within a reasonable period of timeand in the case where the DG

grants the permission, the company

or juristic partnership shall comply

to the accounting period asprescribed by the DG.


10/31

Taxable Income

In the calculation of CIT of a companycarrying on business in Thailand, it is

calculated from the company's net profit on

the accrual basis.

A company shall take into account allrevenue arising from or in consequence of

the business carried on in an accounting

period and deducting therefrom all expenses

in accordance with the condition prescribed

by the Revenue Code.


11/31

Taxable Income

As for dividend income, one-half of thedividends received by Thai companies fromany other Thai companies may be excludedfrom the taxable income. However, the fullamount may be excluded from taxableincome if the recipient is a company listed inthe Stock Exchange of Thailand or therecipient owns at least 25% of thedistributing company's capital interest,

provided that the distributing company doesnot own a direct or indirect capital interest inthe recipient company.


12/31

Taxable Income

The exclusion of dividends is applied only ifthe shares are acquired not less than 3months before receiving the dividends andare not disposed of within 3 months afterreceiving the dividends.


13/31

Taxable Income

carrying on business in Thailand Includes the presence of an

employee, representative or go-between that results in the foreigncompany deriving income or gainsin Thailand.


14/31

Deductible Expenses

1. Ordinary and necessary expenses.However, the deductible amount of the

following expenses is allowed at a special

rate:

200% deduction of R&D expense,

200% deduction of job training

expense,

200% deduction of expenditure on the

provision of equipment for thedisabled;

2. Interest, except interest on capital reserves

or funds of the company;


15/31

Deductible Expenses

3. Taxes except for CIT and VAT paid to Thaigovernment;

4. Net losses carried forward from the last 5

accounting periods

5. Bad debts;6. Wear and tear;

7. Donations up to 2% of net profits;

8. Provident fund contributions;

9. Entertainment expenses up to 0.3% of grossreceipt but not exceeding 10M Baht.


16/31

Deductible Expenses

10. Further tax deduction for donations made to

public education institutions, and also for any

expenses used for the maintenance of public

parks, public playgrounds, and/or sports

grounds;

11. Depreciation: Provided that in no case shallthe deduction exceed the following % of cost

as shown below. However, if a company

adopts an accounting method, which the

depreciation rates vary from year to year, the

company is allowed to do so provided that the

number of years over which an asset

depreciated shall not be less than 100 divided

by the percentage prescribed below.


17/31


18/31


19/31

Non-Deductible Expenses

The following items shall not be allowed asexpenses in the calculation of net profits:

1. Additions to provisions or reserves

2. Fund except a registered*provident fund

3. Expense for personal, gift, or charitable

purpose except expense for public charity, orfor public benefit

4. Entertainment or service fees

5. Capital expense or expense for the addition,

change, expansion or improvement of an assetbut not for repair in order to maintain its

present condition.

6. Fine and/or surcharge, criminal fine, income

tax of a company or juristic partnership.


20/31


7. The withdrawal of money without remuneration ofa partner in a juristic partnership

8. The part of salary of a shareholder or partner

which is paid in excess of appropriate amount.

9. Expense which is not actually incurred or

expense which should have been paid in anotheraccounting period except in the case where it

cannot be entered in any accounting period, then

it may be entered in the following accounting

period.

10.Remuneration for assets which a company or

juristic partnership owns and uses.


21/31


22/31


15. Cost of purchase of asset and expense related to

the purchase or sale of asset, but only theamount in excess of normal cost and expensewithout reasonable cause.

16. Value of lost or depleted natural resources dueto the carrying on of business.

17. Value of assets apart from devalued assetssubject to Section 65 Bis.

18. Expense which a payer cannot identify therecipient.

19. Any expense payable from profits received afterthe end of an accounting period.

20. Expense similar to those specified in (1) to (19) aswill be prescribed by a Royal Decree.


23/31

Tax Rates

The corporate income tax rate in Thailand is20 % on net profit (accounting periods 2013-2014) . However, the rates vary depending ontypes of taxpayers


24/31


25/31

Filing and Payment

Thai and foreign companies carrying on

business in Thailand are required to file their

tax returns (Form CIT 50) within 150 days

from the closing date of their accounting

periods.

Tax payment must be submitted together

with the tax returns.

Any company disposing funds representing

profits out of Thailand is also required to paytax on the sum so disposedwithin 7days

from the disposal date(Form CIT 54).


26/31

Filing and Payment

In addition to the annual tax payment, any

company subject to CIT on net profits is also

required to make tax prepayment (Form CIT

51).

A company is obliged to estimate its annual

net profit as well as its tax liability and pay

halfof the estimated tax amount within 2

months after the end of the first 6 months

of its accounting period. The prepaid tax iscreditable against its annual tax liability.


27/31

Filing and Payment

As regards to income paid to foreign

company not carrying on business in

Thailand, the foreign company is subject to

tax at a flat rate in which the payer shall

withhold tax at source at the time ofpayment.The payer must file the return

(Form CIT 54) and make the payment to the

Revenue Department within 7 days of the

following month in which the payment ismade.

Withh ldi T


28/31

Withholding Tax


29/31

Small and Medium Enterprises (SMEs)

The CIT rates for SMEs are as follows:


30/31

CIT Rates for SMEs

To be eligible for the tax rates, the SME mustmeet the following conditions:

1. Paid-up capital on the last day of any

accounting period must not exceed 5 MillionBaht, and

2. Income from the sale of goods and

provisions of services must not exceed 3

Million Baht in any accounting period.


31/31

http://www.rd.go.th/publish/38686.0.html

http://www.pwc.com/th/en/publications/2014/20

14-thai-tax-booklet-web.pdf

http://www.thailandlawonline.com/revenue-

code/corporate-income-tax-law-in-the-

revenue-code

Thailand Corporate Income Tax

Documents

Transcript of Thailand Corporate Income Tax