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Andi Refandi
Andi serves as a Senior Account Executive on Emerhub’s global team.
Understanding your tax obligations in Thailand is crucial to running your business. Being aware of the tax laws in Thailand allows you to make informed decisions, optimize your tax liabilities, and foster trust with your stakeholders.
In this article, we will give you a comprehensive look at the tax landscape in Thailand. We will cover important topics such as corporate income tax (CIT), value-added tax (VAT), withholding tax (WHT), and other essential regulations that are important to your business’ tax compliance.
Tax Obligations for Companies in Thailand
Corporate Income Tax (CIT)
Thailand sets Corporate Income Tax at a flat rate of 20% on net taxable profits for companies, with a few exceptions. CIT applies to various forms of income, including business income, passive income, and capital gains.
Small and Medium Enterprises (SMEs) with paid-up capital not exceeding THB 5 million (~USD 150,000) and annual revenue not exceeding THB 30 million (~USD 900,000), have progressive tax rates depending on the paid-up capital:
| Income bracket | Corporate Income Tax Rate |
| 0 to THB 300,000 | 0% |
| THB 300,001 to 3 million | 15% |
| > THB 3 million | 20% |
Foreign entities generally receive the same income tax rate as any other legal entity in Thailand with a few exceptions:
- International Transportation Companies are taxed at 3% on gross receipts.
- Foreign companies not operating in Thailand that are receiving dividends are taxed at 10% and 15% for any other type of income.
Value Added Tax (VAT)
Under the Revenue Code of Thailand, businesses with an annual turnover exceeding THB 1.8 million (~USD 54,600) must register for VAT. You are required to register for VAT before commencing operations or within 30 days of surpassing the annual turnover threshold.
Per current Thai regulations, the VAT rate is set at 7% until September 30, 2025 (although this may be subject to change by the government). However, to encourage exports and enhance local competitiveness, the Thai government also endorsed VAT exemptions and Zero-rated VAT (transactions that are subject to VAT but are taxed at 0%).
| Zero-rated VAT | VAT Exemptions |
| – Exports of goods – Services rendered in Thailand but consumed overseas – International transport services – Sales within customs-free zones | – Basic groceries – Educational services – Healthcare services – Rental Properties – Religious and charitable services |
Withholding Tax (WHT)
Withholding tax rates vary depending on the type of income and your corporate residency status. It applies to various types of payment such as the following:
| Type | Tax Resident | Non-tax Resident |
| Interest | 1% | 15% |
| Rent | 5% | 15% |
| Royalties | 3% | 15% |
| Professional fees | 3% | 15% |
| Dividends | 10% | 15% |
Tax authorities calculate withholding tax based on the net payment amount, excluding VAT. For example, if a company pays THB 100,000 for services, it would withhold THB 3,000 if the applicable rate is 3%.
Other Tax Regulations for Businesses in Thailand
Transfer Pricing Regulations in Thailand
To ensure transactions between two parties remain consistent, the Thai government has implemented an Arm’s Length Principle to reflect prices in similar circumstances. This is mostly enforced to prevent multinational corporations from shifting profits to low-tax jurisdictions through manipulated pricing.
If your company has an annual revenue exceeding THB 200 million (~USD 5.7 million) you are required to prepare and maintain transfer pricing documentation. This includes a local file detailing domestic and cross-border transactions, benchmarking studies, and supporting evidence to substantiate the arm’s length nature of these transactions.
Emerhub’s tax & accounting experts can help you determine which documents you should include with your corporate income tax return, and the details of related parties and transactions.
Corporate Tax Audits and Assessments
Corporate tax audits and assessments in Thailand are essential components of the tax compliance framework. Thailand operates a self-assessment tax system, meaning companies are responsible for preparing and filing their tax returns.
The Thai Revenue Department classifies tax audits into three different types:
- Business Operation Visit (BOV) Audits – involve on-site visits to assess whether your business has correctly reported its income and reported the appropriate taxes.
- Tax Refund Audits – Focused on verifying claims for tax refunds, ensuring that any refunds issued are justified based on submitted documentation.
- Formal Tax Audits – Involves issuing summons and assessment letters if discrepancies are found during informal investigations or if there are concerns regarding the accuracy of reported income.
The Revenue Department can identify discrepancies during an audit, adjust reported income, impose penalties, and require additional payments based on revised assessments. Companies may face fines for failing to comply with audit requests or for inaccuracies in their filing.
Tax Exemptions in Thailand
To optimize fiscal planning, you can also apply for tax exemptions in Thailand through various programs. These exemptions are designed to encourage investment, promote economic growth, and attract foreign businesses. Here are a couple of ways you can enjoy tax exemptions in Thailand:
- Board of Investment (BOI) Registration – The BOI promotes investment in Thailand through incentives such as corporate tax exemptions, import duty waivers, and reduced tax rates. Qualifying projects may receive corporate income tax (CIT) exemptions for up to eight years, with potential extensions up to 13 years for significant investments. You can also benefit from reduced CIT rates after the tax holiday and import duty exemptions on machinery and raw materials.
- Free-trade Zones (FTZs) Company – offers incentives to export-oriented businesses, including exemptions from corporate income tax on profits earned within the zone. You can enjoy reduced or eliminated import duties on goods used for manufacturing or processing before export. Additionally, FTZs simplify customs procedures, facilitating smoother import and export operations.
- Tax Treaties in Thailand – Thailand has established a network of double tax treaties (DTTs) with over 60 countries to prevent double taxation and promote international trade and investment. These treaties typically provide reduced withholding tax rates on income types such as dividends, interest, and royalties, while also clarifying definitions of permanent establishment and facilitating the exchange of information between tax authorities. To benefit from these treaties, you must meet specific residency requirements and demonstrate beneficial ownership of the income.
Maintain corporate tax compliance in Thailand with Emerhub’s tax and accounting services. Fill in the form below and get in touch with our local experts!
FAQs about Corporate Tax Compliance in Thailand
The Revenue Department imposes significant penalties for late filing of corporate tax returns. Companies that fail to submit their Corporate Income Tax return by the due date may face a fine ranging from THB1,000 to THB2,000 for each month of delay, with a maximum penalty cap of 20,000 THB. Additionally, a monthly surcharge of 1.5% on any unpaid taxes is applied until the tax is fully settled.
In severe cases, penalties can escalate to double the amount of tax due. Moreover, if a taxpayer underestimates their profits by more than 25%, they may incur a surcharge of up to 20% on the first half-year installment of tax due.
The key differences between CIT and VAT revolve around their nature, application, and rates. Corporate income tax is a direct tax imposed on a company’s net profits, with a standard rate of 20% for most businesses while VAT is an indirect tax levied on the sale of goods and services, currently set at 7%.
Another difference is how they are collected and reported to the Thai Revenue Board. CIT is filed annually while VAT is collected at each stage of the supply chain and businesses must file monthly. Additionally, VAT allows for input tax credits on purchases, enabling businesses to offset their VAT liabilities, whereas CIT does not provide such mechanisms for expenses incurred.
One of the best ways to ensure corporate tax compliance with the Thai Revenue Board is to engage with local experts in the country such as Emerhub. We can assist you with your ongoing tax and accounting support according to local regulatory requirements.
During the early stages of your company’s incorporation, we can help you secure a Tax Identification Number (TIN) and help you navigate through Thailand’s complex tax regulations. Overall, Emerhub enables you to focus on your company’s growth while ensuring you meet all tax compliance requirements in Thailand.
