The major taxes imposed in Thailand are: Corporate income tax: Thai incorporated entities are generally subject to tax on their worldwide income, while foreign incorporated companies are subject to tax on income derived from carrying on business in Thailand or on certain categories of income paid from Thailand. The standard corporate tax rate is 20%. Petroleum income tax: Petroleum, including natural gas, operations are subject to a petroleum income tax. Personal income tax: Individuals are subject to tax on their Thai-sourced income. Tax residents of Thailand are also subject to tax on foreign-sourced income which is remitted to Thailand in the same year it is received. Personal tax rates range from 5% to 35%.
VAT
This levy is imposed on certain goods sold in Thailand and on certain services performed in Thailand which are used in the country.
Specified goods imported into Thailand are also subject to VAT, as are services performed outside of Thailand that are used in the country.
The VAT rate is 7%. Specific business tax: This tax is imposed on the gross receipts of certain businesses that are exempt from VAT, and include the following:
• Banking and similar businesses;
• Finance, securities and credit foncier;
• Life insurance;
• Pawnbroking;
• Sale of immoveable properties in a commercial manner or for profit; and
• Factoring. Stamp duty: It is imposed on certain documents executed in Thailand or brought into Thailand. Customs duty: This levy is imposed on some imports and exports that include rawhide and wood materials. Excise tax: This is imposed on specified products, such as alcohol, passenger cars and certain services.
Tax Incentives
The Board of Investment is empowered to grant a wide range of fiscal and non-fiscal incentives and guarantees to qualifying investment projects. The tax incentives can include:
• Exemption from corporate income tax and an additional 50% reduction of corporate income tax for five years after the tax holiday period;
• Exemption from tax on dividends paid out of promoted profits during the period of the income tax holiday; and
• Exemption or reduction of import duties on imported machinery or raw materials and components. Companies that establish their regional operating headquarters, international headquarters or an international trade centre in Thailand will receive a number of tax concessions on qualifying income and remittances offshore. Concessionary tax treatment is also granted to their expatriate employees.
Tax Losses
Company tax losses can be carried forward for five years for corporate income tax purposes and 10 years for petroleum income tax purposes. Tax losses cannot be transferred to related companies.
Withholding Taxes
Thailand has an extensive withholding tax system that requires withholding tax to be deducted from specified domestic and international payments, such as dividends, interest, rents and royalty payments.
Tax Treaty Network
Thailand also has an extensive tax treaty network. As of March 2017, Thailand had a total of 60 tax treaties in force.
Foreign Tax Credits
Thai-incorporated companies are entitled to claim a foreign tax credit for tax paid in a foreign country on income which is also subject to Thai corporate income tax. The foreign tax credit cannot exceed the amount of Thai corporate income tax payable on the income.
Transfer Pricing
Transfer pricing guidelines are currently based on the arm’s-length principle. This method supplements the current requirement under Thai tax law for market-rate pricing for both related and unrelated party dealings.
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