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Corporate Taxation in ThailandTax Tax has been long considered as the lifeblood of the government, hence, each governmental body has been granted innate power to tax. Taxation has been long considered as one of the fundamental powers of the state. The revenues that will be collected will be used by the government for its sustenance and further development of the country.

Corporations Corporations on the other hand, consist of juridical entities that may have been formed for profit or non-profit. Forming corporations is a recognized tool in the business arena to enable investors to engage in business having any personal liability. The Thai government, recognizing the benefits of having corporations in the country, has balanced both the need to collect tax and the need by corporations to profit. It has formulated a very viable and balanced tax system for corporations.

Corporate Income Tax It is essential to know what entities are being subject to corporate income tax in Thailand. Provided is the list of some of the entities given by the Revenue code of Thailand.

A company or juristic partnership incorporated under Thai lawsThe net profits of these corporation or partnership will be taxable on incomes derived both within and without Thailand.A company or juristic partnership incorporated under foreign laws and not carrying on business in Thailand but receiving assessable income.

The income derived within Thailand by this corporation or partnership is taxable.A company or juristic partnership, under Section 39(4) of the Revenue code, is defined as a company or juristic partnership established under a Thai or foreign law, and shall include:

A business operating in a commercial or profitable manner by a foreign government, organization of a foreign government or any other juristic person established under a foreign law; A joint venture, operating in a commercial or profitable manner, between a company or juristic partnership on one hand and companies, juristic partnerships, individuals, non-juristic body of persons, ordinary partnerships on the other hand; A foundation or association carrying on revenue generating business, but does not include the foundation or association as prescribed by the Minister; Any Juristic person as prescribed by the Director-General with the approval of the Minister and published in the government Gazette.

Tax RatesThe tax base that will be subject to tax is generally the net profit (income less expenses for the accounting period). The accounting period is usually 12 months. To help with the calculation of the tax payable, provided are the tax rates:

a. tax on profits of a company or juristic partnership 30% b. tax on profits of company or juristic partnership incorporated under foreign laws but receiving assessable income which is paid on or from Thailand* 15% c. small company (the most common type of Thai company registration) – Net profit not exceeding 1 million baht= 15% – Net profit over 1 million baht but not exceeding 3 million baht = 25% – Net profit exceeding 3 million baht = 30% Small company is defined as any company with paid up capital of less than 5 million baht at the end of the accounting period.

*With regard to dividends, share of profits or another gain derived from a company or juristic partnership, a mutual fund or financial institution established under a specific law in Thailand for the purpose of providing a loan for the promotion of agriculture, commerce or industry, the tax rate is 10%. The above tax rates are those usually applicable, but rates may still vary depending on the nature of the taxpayer.

Siam Legal International provides corporate legal services in Thailand. Foreign investors interested who wish to incorporate a Thai limited company, Thai partnership or Representative office in Thailand can contact our international law firm in Bangkok for a consultation.