Thailand Tax Facts 2018 - Thai Taxes Practical Notes - EY
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Thailand Tax Facts
2018
Thai Taxes Practical Notes
This publication is prepared by EY Corporate Services Limited to make our clients aware of significant tax issues. Since taxes are complicated, this
publication should not be regarded as offering a complete explanation, and should not in itself be used for decision-making without more detailed study.
If you require any further information, please contact our Tax Services.
Information herein is current as of 3 May 2018.Contents
Corporate income tax 1 - 2
Withholding tax 2 - 3
Personal income tax 4
Value added tax (VAT) 5
Specific business tax (SBT) 6
Stamp duty 6Corporate income tax
• Tax rates • Depreciation allowances The depreciation base for passenger cars seating up to 10 persons
is capped at THB 1 million. The excess is neither depreciable nor
claimable as costs/expenses upon disposal for tax computation
Tax on profits: Depreciation must be based on the historical cost of an asset
purposes. However, this does not apply for vehicles used for rental
acquired, using generally accepted accounting methods. For
Accounting and qualified prototype cars.
period Tax base tax purposes, the depreciation period must not be less than the
Taxpayer Tax rate prescribed period applicable to each fixed asset type (see table Depreciation of an asset acquired under a hire-purchase agreement
commencing on (THB)
or after below). must be based on the entire amount (including the interest
element) payable under the agreement. The depreciation claimed
Companies or 1 January 2017 All taxable profit 20%
juristic partnerships Minimum depreciation period for a period plus the accumulated depreciation brought forward
Asset type from the previous period cannot exceed the cumulative total of the
SME 1 January 2017 1-300,000 Exempt General company SME 1 hire purchase price paid up to the end of that period.
(Note 1) onward
300,001-3,000,000 15% ► Buildings 20 years 20 years with 25%
upfront on the
acquisition date for • Limits on entertainment expenses
Over 3,000,000 20% factory buildings
Acquisition cost of For tax computation purposes, entertainment expenses must
SME granted tax 1 January 2017 1-300,000 Exempt ► 20 years
amnesty depletable natural not exceed the higher of 0.3% of gross annual revenue or 0.3%
Over 300,000 10%
resources of paid-up capital. However, the maximum deductible amount of
► Leasehold rights Lease period plus any renewable periods entertainment expenses is THB 10 million.
1 January 2018 1-300,000 Exempt (but 10 years if there is no lease
onward agreement or the lease allows for renewal To be tax deductible, the entertainment must relate directly to
300,001-3,000,000 15%
for an unlimited period) the company’s business and the entertainment expenses must
► Trademarks, goodwill, Period of use (but 10 years if the period of be supported by relevant documentary evidence of payment. In
licenses, patents and use is unlimited) addition, costs of articles given to the entertained persons must not
Over 3,000,000 20%
copyrights or other rights
exceed THB 2,000 per person on each occasion.
Note 1. SMEs are here defined as companies or juristic partnerships with paid-up capital ► Computer hardware and 3 years 3 years with 40%
not exceeding THB 5 million on the last day of the accounting period, and with software upfront on the
income from sales of goods and provision of services in any accounting period of acquisition date
not more than THB 30 million
► Cash registers used for A choice of either 5 years, or 5 years with
issuing abbreviated tax 40% upfront depreciation or 1 year
Tax on gross receipts: invoices by retail business
or other businesses
► Furniture, fixtures, 5 years 5 years, or 5 years
Taxpayer Tax rate machinery2, equipment2, with 40% upfront
motor vehicles and others depreciation for
International transportation by a foreign carrier 3% not mentioned above machinery and
equipment
Foundation or association
1 SME is here defined as a company or juristic partnership with fixed assets (excluding
► Business income 2% land) of no more than THB 200 million and with no more than 200 employees.
2 For machinery and equipment used for technological research and development (as
► Other income, e.g. interest, dividend, rent 10%
defined), a company or juristic partnership can claim upfront depreciation at 40% on
(Income from membership the acquisition date. The remainder is depreciated over a period of at least 5 years.
fees and donations is exempted)
1 | Thailand Tax Facts 2018Corporate income tax Withholding tax on
(continued) overseas payments
Rate
• Dividend income • Tax losses • Profit remittance tax 10%
Tax losses can be carried forward to deduct against future profits
(applicable to a branch’s profit remittance)
• Dividends Subject to the stated conditions:
received from for a period of 5 years. There is no claw-back provision.
• An SET-listed company can exclude all
Thai resident dividends received from a Thai resident • Withholding tax
company company from its taxable profit. • Tax filings • Dividend 10%
• An unlisted company that owns at least • Half-year (interim) tax filing • Profit on sale of shares 15%
a 25% equity interest in another Thai
• Interest 15%
resident company can exclude all dividends A half-year tax return must be filed, with related tax paid, within 2
received from that company from its • Royalties 15%
months after the end of a half-year period. No filing is required for
taxable profit, provided that the latter the first and the last accounting period, if they are shorter than 12 • Service fees 15%
company does not own a direct or indirect months. • Professional service fees 15%
equity interest in the recipient company. • Rent 15%
If a company changes its year-end date, no interim tax return filing
• All other unlisted companies can exclude
is required for the first accounting period after the change if that Note:.If the recipient is in a country having a double taxation
half (50%) of the dividends received from
a Thai resident company from their taxable period is less than 6 months. agreement (DTA) with Thailand, reference should be made to the DTA
as to reduced tax rates and possible tax exemptions.
profits. For listed companies, financial institutions and other companies
specifically approved by the Director-General, interim tax can be
Conditions:
The above exclusions are not allowed if the
based on the actual profit for the first half-year, as substantiated by
the audited or reviewed financial statements.
• List of countries having a DTA with
dividend recipient company has held the relevant
shares for less than 3 months before receiving
Thailand
For other companies, interim tax is submitted based on half of the
the dividend or if it disposes of those shares
estimated annual profit but no audited financial statements need Armenia Hong Kong Poland
within 3 months after receiving the dividend (“3
plus 3” rule). to be submitted. However, the permitted range of underestimation Australia Hungary Romania
of net profit for the interim tax is 25% of the actual profit. If the Austria India Russian Federation
difference between the estimated profit and actual annual profit Bahrain Indonesia Seychelles
• Dividends A company that owns at least a 25% equity is larger than 25% without justifiable reason, the company will be Bangladesh Ireland Singapore
interest in another overseas company can subject to a surcharge at the rate of 20% of the tax shortfall. Belarus Israel Slovenia
received from
exclude dividends received from the overseas Belgium Italy South Africa
overseas
company from its taxable profit provided • Annual tax filing Bulgaria Japan South Korea
company that it has held the investment for at least 6 Cambodia Kuwait Spain
months before receiving such dividends, and An annual tax return must be filed, with related tax paid, with the Canada Laos Sri Lanka
that the profit out of which the dividends are Revenue Office within 150 days after the company’s fiscal year- Chile Luxembourg Sweden
distributed is subject to income tax in the end date. The audited financial statements must accompany the China Malaysia Switzerland
overseas country at a standard rate of not tax return. Chinese Taipei Mauritius Tajikistan
less than 15%. Cyprus Myanmar Turkey
If a company electronically submits its tax returns, the
Czech Republic Nepal Ukraine
submission process will be complete only when the audited Denmark Netherlands United Arab Emirates
financial statements have been electronically submitted via the Estonia New Zealand United Kingdom
Department of Business Development’s Website (www.dbd.go.th). Finland Norway United States
France Oman Uzbekistan
Germany Pakistan Vietnam
2 | Thailand Tax Facts 2018 PhilippinesWithholding tax on payments to Thai residents
(Pursuant to the Revenue Department’s Notification No. Taw Paw. 4/2528 as amended)
When making payments to Thai resident entities or individuals, tax is required to be withheld at various rates depending on the type of income and payee. For practical
purposes, the withholding rates are summarised in the table below.
Rate Rate Rate
Type of income Payee 1 Type of income Payee 1 Type of income Payee 1
(%) (%) (%)
1. Commission and Company/Registered partnership 3 5. Interest paid by Company/Registered partnership 1 10. Advertising income Company/Registered partnership 2
brokerage fees companies /registered (excluding commercial banks,
Taxable foundation/association 10 Individual/Unregistered partnership 2
partnerships other finance, securities, credit foncier and
than commercial asset management companies) Taxable foundation/association 2
2. Income from Company/Registered partnership 3
banks, finance,
goodwill, copyrights, securities, credit Taxable foundation/association 10
Taxable foundation/association 10
11. Awards from contests, Company/Registered partnership 5
patents, trademarks,
foncier companies and competitions, or the
know-how or similar asset management Individual/Unregistered partnership 5
like
rights companies Taxable foundation/association 5
3. Interest paid by Bonds
Company/Registered partnership 1 12. Awards, discounts, or Company/Registered partnership 3
commercial banks, Debentures
(excluding commercial banks, other benefits given
finance, securities, Bills Individual/Unregistered partnership 3
finance, securities, credit foncier and for sales promotion
credit foncier Loans
companies and asset
asset management companies) purposes (excluding
Difference
management Taxable foundation/association 10 those provided
between the
companies directly to end-
redemption value
Deposits users/consumers)
and the selling
Bonds price of a bill or a 13. Income from public Public entertainer (resident) 5
Debentures debt instrument entertainment
Bills Public entertainer (non-resident) 4 5 to 35
that was initially
Loans sold at a price 14. Non-life insurance Insurance companies 1
Difference below its premium
between the redemption value
redemption 15. Transportation Company/Registered partnership 1
value and the 6. Dividend/Share of Non-listed company 2/Registered 10 (excluding passenger
selling price of a profit partnership Individual/Unregistered partnership 1
fares from public
bill or a debt transport)
Listed company Exempt
instrument that
was initially sold Taxable foundation/association 10 16. Service income from Company/Registered partnership 3
at a price below all other businesses
Foreign corporate entity carrying on 10 Individual/Unregistered partnership 3
its redemption
than those stated
business in Thailand above (excluding
value
income from hotel
Income similar in 7. Rent 3 Company/Registered partnership 5 and restaurant
nature to
Individual/Unregistered partnership 5 businesses and life
interest
insurance premiums)
4. Interest paid by Taxable foundation/association 10
Commercial banks, finance, 1 17. Sales of certain Company/Registered partnership 0.75
companies /registered 8. Professional service Company/Registered partnership 3
securities and credit foncier and prescribed
partnerships other fees (Income from Taxable foundation/association 0.75
asset management companies agricultural produce
than commercial Individual/Unregistered partnership 3
the practice of law, to manufacturers or
banks, finance,
medicine, Taxable foundation/association 10 exporters
securities, credit
engineering,
foncier companies and
asset management architecture or 1 Unless expressly excluded, “Company/Registered partnership” also includes
companies accounting)
commercial banks, and finance, securities and credit foncier companies and
Bonds 9. Income from Company/Registered partnership 3 asset management companies.
Debentures contracting 2 No withholding is required if the recipient holds 25% or more of the payer’s equity
Individual/Unregistered partnership 3
businesses and there is no crossholding between them.
“Permanent” branch of foreign 3
corporation 3 “Rent” includes payments under finance lease agreements.
“Non-permanent” branch of foreign 5 4 For non-resident actors hired by a non-resident company shooting a film authorised
3 | Thailand Tax Facts 2018 corporation by the Film Board of Thailand, a flat rate of 10% applies.Personal income tax
• Principal tax-exempted incomes • Allowances and reliefs • Income tax rates
• Relocation expenses reimbursed by employer
Expense allowance 50% but not over THB 100,000 Tax on certain level of income
• Medical expenses reimbursed by employer
Income Tax rate Accumulated Accumulated
Personal allowance THB 60,000
• Travelling expenses spent by employee exclusively and wholly in (THB) % income tax payable
performance of duties and reimbursed by employer at actual cost Spouse allowance THB 60,000 (THB) (THB)
• Travelling per diem paid in lump sum and not exceeding THB Parent allowance THB 30,000/parent 0 - 150,000 0 150,000 -
270 per day for trips within Thailand and THB 3,100 per day for 150,001 - 300,000 5 300,000 7,500
overseas trips Child allowance THB 30,000/child
300,001 - 500,000 10 500,000 27,500
• Portion of employee’s contribution to an approved provident Life insurance and health Aggregate actual amount of life and health 500,001 - 750,000 15 750,000 65,000
fund in excess of THB 10,000 but not exceeding THB 500,000 insurance allowances insurance premiums but not over THB 100,000
(only local insurance 750,001 - 1,000,000 20 1,000,000 115,000
(i.e. up to THB 490,000 per year)
policies with minimum
period of 10 years) 1,000,001 - 2,000,000 25 2,000,000 365,000
• Amount invested in a Retirement Mutual Fund (RMF) to the
2,000,001 - 5,000,000 30 5,000,000 1,265,000
extent that such amount plus any contributions to an approved
Provident fund allowance Actual contribution but not exceeding THB 10,000
provident fund do not exceed either 15% of taxable income or (Note: Up to THB 490,000 of any excess is also 5,000,001 and over 35
THB 500,000 (minimum holding periods apply) deductible by way of income exemption)
• Amount invested in a Long Term Equity Fund (LTF) to the extent Interest allowance Actual interest paid but not over THB 100,000
that such amount does not exceed either 15% of taxable income (housing loans)
or THB 500,000 (minimum holding periods apply)
Contributions to Thai Actual contribution (normally 5% of base salary
• Severance pay of up to 300 days’ wages under Thai labour law, Social Security Fund with a cap of THB 750 per month)
with a maximum of THB 300,000
Educational donation 2 times actual payment but not over 10% of
• Income of up to THB 190,000 earned by Thai tax residents aged allowance taxable income after deductions of other
allowances
65 years and over
• Group medical insurance premiums paid by employer (under Donation allowance Actual donation but not over 10% of assessable
income
policies with terms not exceeding 1 year)
Health Insurance Actual premium paid but not over THB 15,000
premiums paid for
parents
Premium paid for pension Actual premium but not exceeding 15% of taxable
insurance contract income or capped at THB 200,000, and not
exceeding THB 500,000 in aggregate when
including provident fund contributions and/or RMF
investment
4 | Thailand Tax Facts 2018Value added tax (VAT)
• Taxable persons • VAT rate • VAT return filing
• Sellers of goods in the course of their business or profession in Currently there are two VAT rates: • A Phor Phor 30 form is to be filed and any tax paid within 15 days
Thailand of month end. The filing must be made by each place of business.
0% • Exports of goods Combined (joint) filing is possible if consented to by the Director-
• Providers of services in the course of their business or
profession in Thailand • Provisions of services that are used abroad General.
• Importers of goods and services • Sales of goods or services to the United • For imported services, a Phor Phor 36 form is to be filed within 7
Nations (UN), UN specialised agencies, days of the end of the month in which the fee is remitted. However,
• Persons deemed by the law to be traders, e.g. a local agent of
embassies and consulates the VAT trader can claim back the VAT cost as input tax.
an overseas corporation selling goods or providing services in
Thailand • For imported goods, an import entry form (regarded as VAT return)
• Sales of goods or provision of services to
government agencies or state enterprises is to be filed with Customs before goods clearance. The VAT so paid
• Exemptions under projects funded by a foreign loan or aid is regarded as input tax.
• International air or sea transportation services If input tax exceeds output tax, a VAT trader may either claim a tax
VAT-exempted businesses include the following:
refund or opt to set off the excess input tax with the tax payable in the
7% • Imports of goods or sales of goods or provision following month, indicating the preferred method in the tax return.
• Sales of agricultural produce, animals and animal products of services not subject to 0% rate or exempt
(except canned foods)
• Sales of fertilizers, drugs or chemicals for the care of plants or
animals, and insecticides or pesticides for plants or animals
• Chargeable event • Unclaimable input tax
• Sales of ground fishmeal and animal feeds Sale of goods: On delivery of goods, receipt of payment Unclaimable input tax includes the following:
transfer of ownership or issuance of tax
• Sales of newspapers, periodicals, textbooks and e-books invoice; whichever first occurs • Input tax on entertainment
• Rendering of services in the fields of modern medicine, auditing Import/export of On payment of import/export duty or • Input tax on passenger cars seating up to 10 persons (except for
and litigation goods: placing of guarantee, or on issuance of car sale/rental/insurance business) and related goods and services
• Hospital services customs entry form if the goods e.g. gasoline and repairs
are duty-free
• Domestic transport of all types and international transportation • Input tax under abbreviated tax invoices
by land Consignment On delivery of the consigned goods to the
sale: buyer, receipt of payment, or issuance of • Input tax on construction of buildings sold or used for non-VAT
• Leasing of immovable property tax invoice; whichever first occurs. To business within 3 years of completion
qualify as a consignment sale, there must • Input tax under tax invoices which bear signs of correction/
• Businesses subject to specific business tax (SBT)
be a written agency agreement between alteration of particulars required by law
the trader and the agent; otherwise, delivery
• VAT registration
of goods to the agent will be regarded as a
normal sale and subject to VAT immediately
• Input tax arising from types of business activity which are not
subject to VAT
VAT registration must be made within 30 days after revenue Provision of On receipt of service fee or issuance of tax • Input tax not substantiated by a tax invoice
exceeds THB 1.8 million, but it is advisable to register before service: invoice; whichever first occurs
commencing business. • Input tax recorded in incomplete tax invoices
Imported service: On remittance of service fee
• Input tax under a tax invoice issued by a person not authorised to
Hire purchase/ When instalment is due, on receipt of do so
installment sale: payment or issuance of tax invoice;
whichever first occurs
5 | Thailand Tax Facts 2018Specific business tax (SBT) and Stamp duty
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Banking and quasi- Interest, discounts, fees,
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Same as banking 3.3% 1 Lease agreement for immovable 0.1% of total rental or any other
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Factoring Interest, discounts, fees our clients and for our communities.
3.3% Share transfer instrument 0.1% of paid-up value of shares, or
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Hire-purchase agreement 0.1% of total hire-purchase price
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Loan agreement 0.05% of total amount of loan
Sale of securities on 0.1% (capped at THB 10,000)
the SET Gross receipts
(currently exempt) © 2018 EY Corporate Services Limited.
• An instrument which is executed outside Thailand is subject to All Rights Reserved.
Additional types of transaction specified in Royal Decrees may also give rise to SBT stamp duty if it is brought into Thailand at a later date. The first
obligations, such as transactions under repurchase agreements (repos).
holder of the instrument in Thailand is liable for the full duty APAC no. 15000540
1
The rate of 3.3% is reduced to 0.011% for certain banking, quasi- banking, within 30 days from the date the instrument is received. ED None
finance, securities and credit foncier business transactions.
• Payment of stamp duty for a lease agreement for immovable
property or a hire-of-work agreement with a value of THB This publication contains information in summary form and is
1,000,000 and over (THB 200,000 and over for work done
therefore intended for general guidance only. It is not intended
for most government agencies) must be made in cash to the
Revenue Department within 15 days after the execution date. to be a substitute for detailed research or the exercise of
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