A short Guide to Taxation in Thailand

  • Olivier by Olivier
  • 1 year ago
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If the land or building is left empty or unused for a period of more than three consecutive years, it will be subject to an additional rate of 0.3% every three years, but the amount will not exceed 3%.

Taxes in Thailand are governed by the Revenue Code, which follows the concept of a self-assessment system. The Revenue Department of the Ministry of Finance is responsible for administering taxes, which are imposed on regional and national levels.

Direct taxes

Corporate income tax

A company incorporated under Thai laws will be considered as a resident company and be subject to the 20 percent corporate income tax (CIT) rate.

For businesses that are classified as small or medium-sized (SMEs), the CIT rates can be seen in the following table.

Net profit Tax rates (%)
0-300,000 baht (US$9,106) Nil
300,001 baht (US$9,107) – 3,000,000 baht (US$91,021) 15
Over 3,000,000 baht (US$91,021) 20

SMEs can get a reduced tax rate if they meet the following criteria:

  • Income from the sales of goods and services not exceeding 30 million baht (US$909,844) in any accounting period; and
  • Having a paid-up share capital of not more than 5 million baht (US$151,600).

Personal income tax

To be considered a resident taxpayer, the individual must reside in Thailand for 180 days or more in any tax year.

Net income Tax rates (%)
0-150,000 baht (US$4,321) None
150,001 baht (US$4,322) – 300,000 baht (US$9,106) 5
300,001 baht (US$9,107) – 500,000 baht (US$15,154) 10
500,001 baht (US$15,155) – 750,000 baht (US$22,736) 15
750,001 baht (US$22,737) – 1,000,000 baht (US$30,315) 20
1,000,001 baht (US$30,316) – 2,000,000 (US$60,631) 25
2,000,001 baht (US$60,632) – 5,000,000 baht (US$151,632) 30
Over 5,000,000 baht (US$151,632) 35

Indirect taxes

Value-added tax

The value-added tax (VAT) rate is currently at seven percent until September 30, 2023, as part of the government’s efforts to boost the economy post-COVID-19. The normal VAT rate was 10 percent rate.

VAT is liable to every person who conducts business in Thailand, which includes manufacturers, importers, and retailers. Businesses that have an annual turnover of over 1,800,000 baht (US$54,597) must register as VAT operators.

Business activities are exempt from VAT, some of these are:

  • Taxpayers with sales with less than 1,800,000 baht (US$54,597) per year;
  • Educational services;
  • Research and technical services;
  • Religious activities and public charities;
  • Healthcare services;
  • Imported goods brought into a duty-free zone;
  • Sale of goods related to agriculture; and
  • Rent of immovable properties.

Withholding tax

The withholding tax imposed on dividends paid to another Thai company is subject to a 10 percent tax rate. This can be exempt if certain conditions are satisfied under the promotion law or Revenue Code.

Interest paid to non-resident companies is subject to a 15 percent withholding tax whereas it is only one percent for residents. Royalties are subject to a three percent withholding tax for residents and a 15 percent tax on non-residents.

Nature of income Tax rate (%)
Residents Non-residents
Dividends 10/0 10
Interest 1 15
Royalties 3 15
Fees for technical services 3 15

Specific business tax

The specific business tax (SBT) is an alternative tax levy on services. Businesses that are excluded from VAT will instead be subject to SBT.

Business type Applicable rate (%)
Commercial banking or credit financing businesses 3 (although for certain types of banking incomes the rate is 0.01 percent)
Life insurance 2.5
Pawn business 2.5
Businesses with transactions similar to commercial banking 3

Land and buildings tax

Land or buildings which the owner uses for agricultural purposes are exempt from the value of the tax base if the calculation of tax in total does not exceed THB 50 million.

If the tax calculation does not exceed THB 50 million, land or structures that the owner uses for residential purposes and have his or her name included in the household registration certificate on January 1 of the tax year are exempt from the valuation of the tax base.

The maximum tax rates for land and buildings are as follows:

Purpose of land and buildings Maximum tax rate
Agricultural use 0.15%
Residential use 0.3%
Other use 1.2%
Empty or unused 1.2%

If the building or property is vacant or unoccupied for more than three years in a row, an extra 0.3% every three years will be applied, although the total cannot exceed 3%.

In the case that the owner owns the building without owning the land and uses the building for residential purposes and his/her name is listed on the household registration certificate on 1 January of the tax year, the owner will be exempt from the value of the tax base in the calculation of tax if the amount does not exceed THB 10 million.

By Boris Sullivan

 

A short Guide to Taxation in Thailand

 

 

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