Thai limited companies, representative offices and branch offices of foreign companies in Thailand need to submit a mid-year (or interim) corporate income tax return (Form PND 51) to the Revenue Department within 2 months after the end of the first 6 months of their accounting year. Most of such juristic persons use 31 December as the fiscal year-end, so the deadline to file their interim corporate tax return is 31 August of each year. If your accounting year-end is 30 June, then you need to file PND 51 within the end of February.
If you file PND 51 later than the deadline, you need to pay Baht 1,000 – 2,000 late submission fine (Baht 1,000 if not later than 7 days). Plus you will have to pay 20% on top of the amount of tax owed.
How to calculate mid-year tax for most companies:
In theory, the Thai Revenue Department wants you to prepay your tax at mid year using the best estimates of total revenues and expenses to derive your estimated profit for the year and divide it by two to get half year’s profit. From there, you calculate your corporate tax using the current tax rate. Most companies use the actual operating results from their 6 months’ income statement and forecast the second half of the year’s operating result in order to get the year’s estimated incomes and expenses. However, during the second half of the year sometimes your actual profit turns out to be much higher or lower than what you estimated and reported in the PND 51.
What happens if you under-estimate your mid-year tax?
You may have to pay for some penalties if you underpaid your interim tax. If at the end of the year, your actual profit is more than 125% of your estimated profit that you filed on your mid-year corporate tax return, then you will have to pay 20% fine on the underpaid tax. There are very few exceptions. The one and only that will apply to most cases is that if at mid-year the tax you paid is more than 50% of your last year’s tax, then you will not have to pay for the fine.
Suppose you estimated a mid year tax of THB 70 (or 140 for the year from an estimated profit of THB 700), but at the end of the year, you happen to make a profit of THB 1,000, thus you have a tax of THB 200 for the year. That means at mid year, you should have submitted the tax for the half year of THB 100. So you will have to pay a fine of 20% on THB 30 underpaid tax (100 – 70). However, if last year, your income tax was THB 130, fifty per cent of which is 65, then even though this year’s actual tax is much more than the mid-year tax you paid, you will not have to pay for the fine because your mid-year tax was THB 70 and higher than 50% of last year’s tax.
Now what happens if you over-estimated your mid-year tax? Suppose you thought you would make a profit of THB 1,000 for the year (or THB 500 for half year), so you paid tax of THB 100 (tax rate is 20%) on half year’s profit. At the end of the year it turns out you have a loss. You may seek to get a refund on the tax you paid at mid year. However, asking for a tax refund is essentially inviting the Revenue Department to audit your company. So most companies are willing to let go of their overpaid tax. Therefore, planning your mid-year tax is very important.
The best technique to fill out the mid-year corporate income tax return:
Normally the estimates should be done in a way that the tax to be paid at midyear will be a little over 50% of last year’s tax. This is so that if at year-end you end up having so much profit, there will be no fines for under-estimating your mid-year tax. If your last year’s tax was zero due to the year’s operating loss, you can just estimate your profit of this year using any figures. Let’s use ones that will result in a very little tax to pay at mid-year. This way, whatever real profit you have at year end will not result in a penalty and if you have a loss, you can forego the prepaid tax easily.
Consult MSNA for all your accounting and tax needs in Thailand.