1.  Basic Concept 

        The Corporate Income Tax is a direct tax levied on net profit of juristic company or partnership at the end of an accounting period. 

        The term "juristic company or partnership" means a limited company, limited partnership or registered partnership organized under the Thai law or foreign law and includes any joint venture, any trading or profit-seeking activity carried on by a foreign government or its agency or by any other juristic body organized under a foreign law and any foundation or association engaged in any revenue-producing business, but not including the foundations or associations designated to be public charitable institution or organization by the Minister of Finance. 

        An accounting period is a duration of 12 months.  However, the Director-General of Revenue Department , Ministry of Financial may grant permission to an entity described above to have an accounting period of less or more than 12 months if justified. 

        A juristic company or partnership organized under a foreign law whose employee, representative, correspondent or go-between is carrying on business, and thereby deriving income or gains, in Thailand shall be deemed to be carrying on business in Thailand.  Such a person has the duty and responsibility to file a return and pay tax in respect of the said income or gains. 

2.   Tax Base 

        The Corporate Income Tax base is as follows: 

        2.1  Net profit 
            The net profit, or commonly known as net income, is ascertained by subtracting all allowed deductible expenses from total sales in an accounting period.  The allowed deductible expenses are subjected to conditions commonly found in corporate income tax law of most countries. 

        2.2  Income in the various categories of 3.2, 3.3, 3.4, 3.5, and 3.6 specified in Personal Income Tax under "3 - Tax Base". 
            A juristic company or partnership incorporated under a foreign law and not carrying on business in Thailand which receives the aforesaid assessable income which is paid either from or in Thailand shall pay tax on the amount received through tax withholding by payers of income. 

        2.3  Profits or any sum set aside out of profits or which may be regarded as profits. 
            Any juristic company or partnership which disposes out of Thailand of the said profits shall pay the corporate income tax on the sum so disposed of. 

        2.4  Income from International Transport 
            A company or partnership incorporated under a foreign law and carrying on business of international transport is also required to pay tax on fares, fees, freight, and any other benefits before deduction of any expenses. 

        2.5  The Special Measure Deemed As a Tax Base 
            - A juristic company or partnership failing to file a return or to keep accounts, which make its net profit undeterminable, is subject to pay tax at the rate of 5 percent on the aggregate of either the gross receipts or gross sales whichever is the greater. 
            - A foundation or association engaged in any revenue - producing business shall pay on its revenue before deduction of any expenses. 

3.  Deductible Expenses 

        In computing net profit, there may be deducted any expenses incurred from performing business except those which are not allowed by Section 65 ter of the Code.  A payment for charity as well as a payment for education or sport, as recognized by the Director-General of the R.D., is deductible but on the condition that the amount deducted for each case shall not exceed 2 percent of the net profit. 

4.  Allowances 

        4.1  A company organized under the Thai law is entitled to include as revenue only one-half of the dividends received from a company organized under the Thai law, mutual fund or a financial institution organized by a specific law of Thailand for the purpose of lending money to promote agriculture, commerce or industry, or of shares of profits received from a joint venture.
 
        4.2  A following company organized under the Thai law is not required to include as revenue of the dividends received from a company organized under the Thai law, mutual fund or a financial institution organized by a specific law of Thailand, and the shared of profits received from a joint venture. 

                4.2.1  a registered company (means a company listed with the Stocks Exchange of Thailand) 

                4.2.2  a company other than 4.2.1 which hold at least 25 percent of all voting shared of a company paying the dividends and a company paying the dividends does not hold directly of indirectly the shares of a company receiving the dividends. 

                However, the foregoing shall not apply to income in the forms of dividends or share of profits, if the company that held the shared, or investment units that produced such dividends and share of profits, did so;

                4.2.2.(i) for a period less than three months from the date of acquiring such shares or investment units up to the date of obtaining such income or

                4.2.2(ii) transferred such shares or investment units less than three months from the date of obtaining such income. 

5.  Withholding Tax 

        5.1  Payers of income which are agencies in the government sector, are required to deduct the tax at the rate of 1 percent of the amounts of assessable income paid to any juristic companies or partnerships. 

        5.2  Every person (including an agency in the government sector), who pays income of the types listed in Personal Income Tax under 3 "Tax Base" categories 3.2,3.3, 3.4, 3.5, or 3.6  to a juristic company or partnership organized under a foreign law and not carrying on business in Thailand, is required to withhold Corporate Income Tax at the rate specified in the Corporate Income Tax Schedule. 

        5.3  Companies or partnerships which dispose of profits or the sums regarded as profits out of Thailand are required to withhold tax at the rate specified in the Tax Schedule. 

        5.4  Withholding tax at the rate of 1 percent of income from sale of immovable properties. 

            The payers are required to remit to the local district office the tax so deducted under 5.1 and 5.3 within 7 days from the date of paying income or disposing of profits.  In the case of withholding under 5.2 the time limit is 7 days from the last date of the month in which the income is paid.  In the case of withholding under 5.4 the payers are required to remit such tax to the competent official entrusted with the duty of recording registration of rights and juristic acts at the time of recording. 

6.  Corporate Income Tax Schedule 

        6.1  Broadly speaking, the Corporate Income Tax rate in Thailand is 30 percent on net profit. However, reduced rates are applied depending on the type of taxpayers (details are shown in Table 1). 

        6.2  Profits disposed out of Thailand: 10 percent 
             Profit that is disposed out of Thailand is subject to a withholding tax rate of 10 percent. 

        6.3  Income paid to non-resident companies or partnerships: 15 percent 
                Any forms of payment from employment or service rendered, goodwill or copyright, gains derived from a juristic company or partnership, rents and income from liberal professions paid to a juristic company or partnership organized under a foreign law and not carrying on business in Thailand is subject to a withholding tax rate of 15 percent. 

        6.4  Interest paid out of Thailand: 15 percent 
                Interest paid to a juristic company or partnership organized under a foreign law not carrying business in Thailand is subject to a withholding tax rate of 15 percent.  If the said company or partnership is a financial institution in a country which has the double tax treaty with Thailand the withholding tax rate is reduced to be 10 percent. 

                However, the interest shall be exempted from tax if if is in the following conditions: 
                i) If paid to a foreign financial institution is owned by its government and organized by a specific law. 
                ii) If paid by the Thai Government, The Bank of Thailand, a public enterprise, or financial institution organized by a specific 

        6.5  Dividends paid out of Thailand: 10 percent 

        6.6  Income from international transportation: 3 percent 

                (1) 3 percent on fares, fees and any other benefits collectible in Thailand for carriage of passengers before deduction of any expenses. 
                (2) 3 percent on freight, fees and any other benefits collectible in Thailand or elsewhere for transport of goods from Thailand before deduction of any expenses. 

        6.7  Tax on revenue of foundations and associations: 10 percent. 
                (a) Income before deduction of any expenses of foundation or association engage in business, agriculture, industry, transportion or others producing revenues is subject to a withholding tax rate of 2 percent. 
                (b) Other income excluding (a) is subject to a withholding tax rate of 10 percent.

Table 1 Corporate Income Tax Rates

7. Petroleum Income Tax
               In Thailand, companies producing or exploring crude oil are singled out for special treatment with respect to income taxation. The tax under which these companies pay their income taxes is called the Petroleum Income Tax.

              7.1 Taxpayer
              Under the petroleum Income Tax Act B.E. 2532 (1989) companies liable to such tax are;
              1) A company with a drilling concession
              2) A company with a shared interest in a drilling concession
              3) A company that exports all crude oil purchased from a company with a drilling concession.
              
              7.2 Tax Base
              In general, all income obtained in conjunction with crude oil transactions are included i.e.,
              1) Income from sale of petroleum
              2) Value of crude oil shipped to oil refinery
              3) Value of crude oil paid to the government as royalty
              4) Income obtained through transfer of assets and rights to petroleum concessions and businesses, and
              5) All other incomes obtained in connection with petroleum transactions.

              7.3 Taxable Income
              Taxable income is defined as the company’s net profit, which is determined by subtracting the deductions
permissible, by the relevant tax law from its total income.

              7.4 Tax Rate
              The net profit derived from the company’s petroleum transactions are taxed at 50 percent.

              8. Double Taxation Convention
              With respect to the Corporate Income Tax, the Royal Thai Government has signed the double taxation agreements with 45 countries, namely, Norway, Denmark, Germany, France, Singapore, the Netherlands, Korea, Italy, Belgium, Pakistan, the United Kingdom, Indonesia, Malaysia, Mauritius, the Philippines, Poland, Canada, Finland, India, Austria, China, Sweden, Hungary, Australia, Sri Lanka, Japan, Vietnam, the Czech Republic, Switzerland, Israel, South Africa, Romania, Laos, the United States of America, Bangladesh, Nepal, Spain, New Zealand, the United Arab Emirates, Uzbekistan, Armenia, Bulgaria, Cyprus, Luxembourg and Bahrain.

Note:  For more information, please contact The Revenue Department at Tel. (662) 246-1585-9
Source:Tax Policy Division, Fiscal Policy Office, Ministry of Finance, Thailand 
 
  ***This page is maintained by the Office of Economic and Financial Affairs, Washington, DC who can be reached at econ-fin@ari.net. *** 

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