The Revenue Code outlines regulations for the imposition of taxes on income, with income tax divided into three categories: Corporate income tax, Value-added taxes (or specific business taxes), and Personal income tax.
All companies registered under Thai law are subject to taxation as stipulated in the Revenue Code and are subject to income tax on income earned from sources within and outside of Thailand. Foreign companies not registered or not residing in Thailand are subject to tax only on income derived from sources within Thailand.
Normal business expenses and depreciation allowances, at rates ranging from five to 100 percent, depending on the item, or at rates under any other acceptable depreciation method, are allowed as deductions from gross income. Inventory must be valued at cost or at market price, whichever is lower.
Net losses can be carried forward for up to five consecutive years. Interest payments on some foreign loans may be exempt from a firm’s income tax.
For more information about Corporate Tax, consult the startup specialists or please refer to the Tax section by downloading the Business Guide.
Value Added Tax
The Value-Added Tax (VAT) system, which came into effect on 1 January 1992, largely replaced the old business tax system, which critics claimed caused inefficient redundancies and facilitated tax evasion.
Under the new tax regime, value added at every stage of the production process is subject to a seven percent tax rate. Those who are affected by this tax are producers, providers of services, wholesalers, retailers, exporters, and importers. VAT must be paid on a monthly basis, calculated as:
Output Tax – Input Tax = Tax Paid
where Output Tax is the VAT which the operator collects from the purchaser when a sale is made, and Input Tax is the VAT which an operator pays to the seller of goods or service which is then used in the operator’s business.
If the result of this calculation is a positive figure, the operator must submit the remaining tax to the Revenue Department not later than 15 days after the end of each month. However, for a negative balance, the operator is entitled to a refund in the form of cash or tax credit, which must be paid in the following month.
For more information about Value Added Tax, consult the startup specialists or please refer to the Tax section by downloading the Business Guide
Personal Income Tax
Every person, resident or non-resident, who derives assessable income from employment or business in Thailand, or has assets located in Thailand, is subject to personal income tax, whether such income is paid in or outside of Thailand. Exemptions are granted to certain persons, like those working for the United Nations, officers, diplomats, and certain visiting experts, who come under the terms of international and bilateral agreements.
Individuals residing for 180 days or more in Thailand for any calendar year are also subject to income tax on income from foreign sources if that income is brought into Thailand during the same taxable year that they are a resident.
A standard deduction of 40 percent, but not in excess of 60,000 baht, is permitted against income from employment or services rendered or income from copyrights.
For more information about Personal Income Tax, consult the startup specialists or please refer to the tax section by downloading this Business Guide.