Thailand Tax Facts 208 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 May 208.
Contents Corporate income tax - 2 Withholding tax 2 - Personal income tax 4 Value added tax (VAT) Specific business tax (SBT) 6 Stamp duty 6
Corporate income tax s Tax on profits: Taxpayer Companies or juristic partnerships SME (Note ) SME granted tax amnesty Note. SMEs are here defined as companies or juristic partnerships with paid-up capital not exceeding THB million on the last day of the accounting period, and with income from sales of goods and provision of services in any accounting period of not more than THB 0 million Tax on gross receipts: Taxpayer International transportation by a foreign carrier % Foundation or association Accounting period commencing on or after Tax base (THB) January 207 All taxable profit 20% January 207 onward -00,000 Exempt 00,00-,000,000 % Over,000,000 20% January 207-00,000 Exempt January 208 onward Over 00,000 % -00,000 Exempt 00,00-,000,000 % Over,000,000 20% Business income 2% Depreciation allowances Depreciation must be based on the historical cost of an asset acquired, using generally accepted accounting methods. For tax purposes, the depreciation period must not be less than the prescribed period applicable to each fixed asset type (see table below). Asset type Minimum depreciation period General company SME Buildings 20 years 20 years with 2% upfront on the acquisition date for factory buildings Acquisition cost of depletable natural resources 20 years Leasehold rights Lease period plus any renewable periods (but years if there is no lease agreement or the lease allows for renewal for an unlimited period) Trademarks, goodwill, licenses, patents and copyrights or other rights Computer hardware and software Cash registers used for issuing abbreviated tax invoices by retail business or other businesses Furniture, fixtures, machinery 2, equipment 2, motor vehicles and others not mentioned above Period of use (but years if the period of use is unlimited) years years with 40% upfront on the acquisition date A choice of either years, or years with 40% upfront depreciation or year years years, or years with 40% upfront depreciation for machinery and equipment SME is here defined as a company or juristic partnership with fixed assets (excluding land) of no more than THB 200 million and with no more than 200 employees. The depreciation base for passenger cars seating up to persons is capped at THB million. The excess is neither depreciable nor claimable as costs/expenses upon disposal for tax computation purposes. However, this does not apply for vehicles used for rental and qualified prototype cars. Depreciation of an asset acquired under a hire-purchase agreement must be based on the entire amount (including the interest element) payable under the agreement. The depreciation claimed for a period plus the accumulated depreciation brought forward from the previous period cannot exceed the cumulative total of the hire purchase price paid up to the end of that period. Limits on entertainment expenses For tax computation purposes, entertainment expenses must not exceed the higher of 0.% of gross annual revenue or 0.% of paid-up capital. However, the maximum deductible amount of entertainment expenses is THB million. To be tax deductible, the entertainment must relate directly to the company s business and the entertainment expenses must be supported by relevant documentary evidence of payment. In addition, costs of articles given to the entertained persons must not exceed THB 2,000 per person on each occasion. Other income, e.g. interest, dividend, rent (Income from membership fees and donations is exempted) % 2 For machinery and equipment used for technological research and development (as defined), a company or juristic partnership can claim upfront depreciation at 40% on the acquisition date. The remainder is depreciated over a period of at least years. Thailand Tax Facts 208
Corporate income tax (continued) Dividend income Dividends received from Thai resident company Dividends received from overseas company 2 Thailand Tax Facts 208 Subject to the stated conditions: An SET-listed company can exclude all dividends received from a Thai resident company from its taxable profit. An unlisted company that owns at least a 2% equity interest in another Thai resident company can exclude all dividends received from that company from its taxable profit, provided that the latter company does not own a direct or indirect equity interest in the recipient company. All other unlisted companies can exclude half (0%) of the dividends received from a Thai resident company from their taxable profits. Conditions: The above exclusions are not allowed if the dividend recipient company has held the relevant shares for less than months before receiving the dividend or if it disposes of those shares within months after receiving the dividend ( plus rule). A company that owns at least a 2% equity interest in another overseas company can exclude dividends received from the overseas company from its taxable profit provided that it has held the investment for at least 6 months before receiving such dividends, and that the profit out of which the dividends are distributed is subject to income tax in the overseas country at a standard rate of not less than %. Tax losses Tax losses can be carried forward to deduct against future profits for a period of years. There is no claw-back provision. Tax filings Half-year (interim) tax filing A half-year tax return must be filed, with related tax paid, within 2 months after the end of a half-year period. No filing is required for the first and the last accounting period, if they are shorter than 2 months. If a company changes its year-end date, no interim tax return filing is required for the first accounting period after the change if that period is less than 6 months. For listed companies, financial institutions and other companies specifically approved by the Director-General, interim tax can be based on the actual profit for the first half-year, as substantiated by the audited or reviewed financial statements. For other companies, interim tax is submitted based on half of the estimated annual profit but no audited financial statements need to be submitted. However, the permitted range of underestimation of net profit for the interim tax is 2% of the actual profit. If the difference between the estimated profit and actual annual profit is larger than 2% without justifiable reason, the company will be subject to a surcharge at the rate of 20% of the tax shortfall. Annual tax filing An annual tax return must be filed, with related tax paid, with the Revenue Office within 0 days after the company s fiscal yearend date. The audited financial statements must accompany the tax return. If a company electronically submits its tax returns, the submission process will be complete only when the audited financial statements have been electronically submitted via the Department of Business Development s Website (www.dbd.go.th). Withholding tax on overseas payments Profit remittance tax (applicable to a branch s profit remittance) Withholding tax Dividend Profit on sale of shares Interest Royalties Service fees Professional service fees Rent Rate % % % % % % % % Note:.If the recipient is in a country having a double taxation agreement (DTA) with Thailand, reference should be made to the DTA as to reduced tax rates and possible tax exemptions. List of countries having a DTA with Thailand Armenia Australia Austria Bahrain Bangladesh Belarus Belgium Bulgaria Cambodia Canada Chile China Chinese Taipei Cyprus Czech Republic Denmark Estonia Finland France Germany Hong Kong Hungary India Indonesia Ireland Israel Italy Japan Kuwait Laos Luxembourg Malaysia Mauritius Myanmar Nepal Netherlands New Zealand Norway Oman Pakistan Philippines Poland Romania Russian Federation Seychelles Singapore Slovenia South Africa South Korea Spain Sri Lanka Sweden Switzerland Tajikistan Turkey Ukraine United Arab Emirates United Kingdom United States Uzbekistan Vietnam
Withholding tax on payments to Thai residents (Pursuant to the Revenue Department s Notification No. Taw Paw. 4/228 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. Type of income Payee Rate (%). Commission and brokerage fees 2. Income from goodwill, copyrights, patents, trademarks, know-how or similar rights. Interest paid by commercial banks, finance, securities, credit foncier companies and asset management companies Deposits Bonds Debentures Bills Loans Difference between the redemption value and the selling price of a bill or a debt instrument that was initially sold at a price below its redemption value Income similar in nature to interest 4. Interest paid by companies /registered partnerships other than commercial banks, finance, securities, credit foncier companies and asset management companies Bonds Debentures Thailand Tax Facts 208 (excluding commercial banks, finance, securities, credit foncier and asset management companies) Commercial banks, finance, securities and credit foncier and asset management companies Type of income Payee Rate (%). Interest paid by companies /registered partnerships other than commercial banks, finance, securities, credit foncier companies and asset management companies Bonds Debentures Bills Loans Difference between the redemption value and the selling price of a bill or a debt instrument that was initially sold at a price below its redemption value 6. Dividend/Share of profit (excluding commercial banks, finance, securities, credit foncier and asset management companies) Non-listed company 2 /Registered partnership Listed company Foreign corporate entity carrying on business in Thailand 7. Rent 8. Professional service fees (Income from the practice of law, medicine, engineering, architecture or accounting) 9. Income from contracting businesses Permanent branch of foreign corporation Non-permanent branch of foreign corporation Exempt Type of income Payee Rate (%). Advertising income. Awards from contests, competitions, or the like 2. Awards, discounts, or other benefits given for sales promotion purposes (excluding those provided directly to endusers/consumers). Income from public entertainment 4. Non-life insurance premium. Transportation (excluding passenger fares from public transport) 6. Service income from all other businesses than those stated above (excluding income from hotel and restaurant businesses and life insurance premiums) 7. Sales of certain prescribed agricultural produce to manufacturers or exporters Unless expressly excluded, also includes commercial banks, and finance, securities and credit foncier companies and asset management companies. 2 No withholding is required if the recipient holds 2% or more of the payer s equity and there is no crossholding between them. Rent includes payments under finance lease agreements. 4 For non-resident actors hired by a non-resident company shooting a film authorised by the Film Board of Thailand, a flat rate of % applies. 2 2 2 Public entertainer (resident) Public entertainer (non-resident) 4 to Insurance companies 0.7 0.7
Personal income tax Principal tax-exempted incomes Relocation expenses reimbursed by employer Medical expenses reimbursed by employer Travelling expenses spent by employee exclusively and wholly in performance of duties and reimbursed by employer at actual cost Travelling per diem paid in lump sum and not exceeding THB 270 per day for trips within Thailand and THB,0 per day for overseas trips Portion of employee s contribution to an approved provident fund in excess of THB,000 but not exceeding THB 00,000 (i.e. up to THB 490,000 per year) Amount invested in a Retirement Mutual Fund (RMF) to the extent that such amount plus any contributions to an approved provident fund do not exceed either % of taxable income or THB 00,000 (minimum holding periods apply) Allowances and reliefs Expense allowance 0% but not over THB 0,000 Personal allowance THB 60,000 Spouse allowance THB 60,000 Parent allowance Child allowance Life insurance and health insurance allowances (only local insurance policies with minimum period of years) THB 0,000/parent THB 0,000/child Aggregate actual amount of life and health insurance premiums but not over THB 0,000 Provident fund allowance Actual contribution but not exceeding THB,000 (Note: Up to THB 490,000 of any excess is also deductible by way of income exemption) Income tax rates Income (THB) % Tax on certain level of income Accumulated income (THB) Accumulated tax payable (THB) 0-0,000 0 0,000-0,00-00,000 00,000 7,00 00,00-00,000 00,000 27,00 00,00-70,000 70,000 6,000 70,00 -,000,000 20,000,000,000,000,00-2,000,000 2 2,000,000 6,000 2,000,00 -,000,000 0,000,000,26,000,000,00 and over Amount invested in a Long Term Equity Fund (LTF) to the extent that such amount does not exceed either % of taxable income or THB 00,000 (minimum holding periods apply) Severance pay of up to 00 days wages under Thai labour law, with a maximum of THB 00,000 Income of up to THB 90,000 earned by Thai tax residents aged 6 years and over Group medical insurance premiums paid by employer (under policies with terms not exceeding year) Interest allowance (housing loans) Contributions to Thai Social Security Fund Educational donation allowance Donation allowance Health Insurance premiums paid for parents Premium paid for pension insurance contract Actual interest paid but not over THB 0,000 Actual contribution (normally % of base salary with a cap of THB 70 per month) 2 times actual payment but not over % of taxable income after deductions of other allowances Actual donation but not over % of assessable income Actual premium paid but not over THB,000 Actual premium but not exceeding % of taxable income or capped at THB 200,000, and not exceeding THB 00,000 in aggregate when including provident fund contributions and/or RMF investment 4 Thailand Tax Facts 208
Value added tax (VAT) Taxable persons Sellers of goods in the course of their business or profession in Thailand Providers of services in the course of their business or profession in Thailand Importers of goods and services Persons deemed by the law to be traders, e.g. a local agent of an overseas corporation selling goods or providing services in Thailand Exemptions VAT-exempted businesses include the following: Sales of agricultural produce, animals and animal products (except canned foods) Sales of fertilizers, drugs or chemicals for the care of plants or animals, and insecticides or pesticides for plants or animals Sales of ground fishmeal and animal feeds Sales of newspapers, periodicals, textbooks and e-books Rendering of services in the fields of modern medicine, auditing and litigation Hospital services Domestic transport of all types and international transportation by land Leasing of immovable property Businesses subject to specific business tax (SBT) VAT registration VAT registration must be made within 0 days after revenue exceeds THB.8 million, but it is advisable to register before commencing business. Thailand Tax Facts 208 VAT rate Currently there are two VAT rates: 0% 7% Exports of goods Chargeable event Sale of goods: Import/export of goods: Consignment sale: Provision of service: Imported service: Hire purchase/ installment sale: Provisions of services that are used abroad Sales of goods or services to the United Nations (UN), UN specialised agencies, embassies and consulates Sales of goods or provision of services to government agencies or state enterprises under projects funded by a foreign loan or aid International air or sea transportation services Imports of goods or sales of goods or provision of services not subject to 0% rate or exempt On delivery of goods, receipt of payment transfer of ownership or issuance of tax invoice; whichever first occurs On payment of import/export duty or placing of guarantee, or on issuance of customs entry form if the goods are duty-free On delivery of the consigned goods to the buyer, receipt of payment, or issuance of tax invoice; whichever first occurs. To qualify as a consignment sale, there must be a written agency agreement between the trader and the agent; otherwise, delivery of goods to the agent will be regarded as a normal sale and subject to VAT immediately On receipt of service fee or issuance of tax invoice; whichever first occurs On remittance of service fee When instalment is due, on receipt of payment or issuance of tax invoice; whichever first occurs VAT return filing A Phor Phor 0 form is to be filed and any tax paid within days of month end. The filing must be made by each place of business. Combined (joint) filing is possible if consented to by the Director- General. For imported services, a Phor Phor 6 form is to be filed within 7 days of the end of the month in which the fee is remitted. However, the VAT trader can claim back the VAT cost as input tax. For imported goods, an import entry form (regarded as VAT return) is to be filed with Customs before goods clearance. The VAT so paid is regarded as input tax. If input tax exceeds output tax, a VAT trader may either claim a tax refund or opt to set off the excess input tax with the tax payable in the following month, indicating the preferred method in the tax return. Unclaimable input tax Unclaimable input tax includes the following: Input tax on entertainment Input tax on passenger cars seating up to persons (except for car sale/rental/insurance business) and related goods and services e.g. gasoline and repairs Input tax under abbreviated tax invoices Input tax on construction of buildings sold or used for non-vat business within years of completion Input tax under tax invoices which bear signs of correction/ alteration of particulars required by law Input tax arising from types of business activity which are not subject to VAT Input tax not substantiated by a tax invoice Input tax recorded in incomplete tax invoices Input tax under a tax invoice issued by a person not authorised to do so
Specific business tax (SBT) and Stamp duty Specific business tax (SBT) Additional types of transaction specified in Royal Decrees may also give rise to SBT obligations, such as transactions under repurchase agreements (repos). Type of business Banking and quasibanking Finance, securities and credit foncier Factoring Life insurance Pawnbroking Trading in immovable properties Sale of securities on the SET Tax base Interest, discounts, fees, FOREX revenue, etc. (including municipal tax).% Same as banking.% Interest, discounts, fees and service charges Interest, fees and service charges Interest, fees and sales of pawned items.% 2.7 % 2.7% Gross receipts.% Gross receipts 0.% (currently exempt) The rate of.% is reduced to 0.0% for certain banking, quasi- banking, finance, securities and credit foncier business transactions. Stamp duty Stamp duty is imposed at varying rates on certain legal instruments, such as the examples in the table below. Type of instrument Lease agreement for immovable property Share transfer instrument Hire-purchase agreement Hire-of-work agreement Loan agreement 0.% of total rental or any other payment under the agreement 0.% of paid-up value of shares, or nominal value of the instrument, whichever is greater 0.% of total hire-purchase price 0.% of total service fee 0.0% of total amount of loan (capped at THB,000) An instrument which is executed outside Thailand is subject to stamp duty if it is brought into Thailand at a later date. The first holder of the instrument in Thailand is liable for the full duty within 0 days from the date the instrument is received. Payment of stamp duty for a lease agreement for immovable property or a hire-of-work agreement with a value of THB,000,000 and over (THB 200,000 and over for work done for most government agencies) must be made in cash to the Revenue Department within days after the execution date. EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. 208 EY Corporate Services Limited. All Rights Reserved. APAC no. 00040 ED None This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgement. Neither EY Corporate Services Limited nor any other member of the global EY organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. ey.com 6 Thailand Tax Facts 208