Advice and information on how Thai tax laws work

If you’re feeling confused and overwhelmed by Thai tax laws, don’t worry! We’re here to provide tax and accounting services to ensure that you never have to worry about missing deadlines or failing to provide the correct information again. This page offers some basic advice and information on how Thai tax laws work, who is required to pay income tax, how income tax reports are completed, as well as the consequences for not adhering to these laws.

Who is required to pay corporate income tax?

Companies and partnerships established under Thai laws are subject to income tax on income earned from within and outside of Thailand. Companies and partnerships required to pay income tax include, but are not limited to:

  • Limited companies.

  • Registered ordinary and limited liability partnerships.

  • Joint ventures.

  • Foundations and associations.

  • A branch of a foreign corporation earning from sources within Thailand.

How does corporate income tax work?

Corporate Income Tax is imposed on the net profits as per the generally accepted accounting principles and according to the conditions described in the Revenue Code of Thailand. The tax rate is currently 20% on taxable profits, however progressive rates up to 20% are granted to SMEs. Key rules and regulations to pay particular attention to include:

  • Every return must be accompanied by an audited financial statement and must be submitted within 150 days from the closing date of their accounting period.

  • 50% of the estimated annual income tax must be paid by the end of the eighth month.

  • Failure to pay the estimated tax will result in a fine to the amount of 20% of the deficit.

How does personal income tax work?

Thai residents and non-residents are taxed on their Thailand-sourced income. A resident is any person residing in Thailand for 180 days or more in a calendar tax year. Assessable income is subject to progressive tax rates, up to the maximum rate of 35%. The taxpayer is liable to file a personal income tax return and make a payment to the Revenue Department within the last day of March following the taxable year.

How does VAT work?

Value added tax (VAT) registration is required for all businesses that reach a sales volume of THB 1.8 million. Currently, the rate is 7%, which is reduced from the nominal rate of 10%. VAT returns must be filed and paid within 15 days of the following month.

How does withholding tax work?

Withholding tax can be a confusing subject in Thai tax laws. Essentially, it is the practice of deducting tax from payments to service suppliers, payment of dividends and payments of interest of THB 1,000 or more. To fully comply with Thai tax laws, withholding tax must be paid first by the person or company making the payment, a withholding tax certificate must then be provided when such a payment is made. This means that the service provider has part of its corporate income tax already paid. At the end of the financial year, withholding tax deducted in payments to a service provider constitutes as a tax credit of the corporate income tax of the service provider for the following year.

Thai accounting law – what are the rules?

Understanding how Thai accounting laws work is vital to running a smooth and successful business. Here we provide a brief introduction into the proper practices that must be adhered to by all companies in Thailand.

All companies in Thailand must prepare and keep accounts drafted according to the Thai Accounting Standards, formulated by the Thai Federation of Accounting Professions (FAP) and the Institute of Certified Accountants and Auditors of Thailand (CAAT). Accounting services in Thailand adhere to these accounting standards, which includes that a qualified Thai accountant must handle accounts.

Key timelines to be aware of:

  • For newly established companies or partnerships, accounts should be closed within 12 months from the date of its registration. Thereafter, the accounts should be closed every 12 months.
  • The performance record is to be filed with the Business Development Office, Ministry of Commerce, within five months of the end of the fiscal year, and with the Revenue Department, Ministry of Finance, within 150 days of the end of the fiscal year.

Companies in Thailand must provide:

  • Annual financial statement submission to the Thai government
  • Record accounting transactions
  • Supporting schedules for financial statements
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