One of the questions our clients ask us the most is how much tax rate to use when calculating Corporate Income Tax in Thailand.
The corporate income tax rates depends on the amount of capital and its net income during the year. To explain it further:
1. If the company has less than THB 5 million capital and has less than THB 30 million income, the tax rates to be used are as follows:-
Tax Rate
First THB 300,000 = 0%
300,001 – 3,000,000 = 15%
Over 3,000,000 = 20%
2. If the company has more than THB 5 million capital and even if they decrease it later, it is fixed to 20% every year as long as the company is existing.
3. If the company has more than THB 30 million income and if the income decreases next year, it is also fixed to 20% as long as the company is existing.
Make sure your accounting and taxes are done properly and be mindful of the deadline for submission of corporate income tax and audited financial statements. Contact MSNA for consultation on Thai taxes and filing of requirements for your company in Thailand.
One of our accounting and tax clients wants some clarification regarding how withholding taxes in Thailand work particularly the withholding taxes on software license transactions.
Question:
Could you kindly confirm whether the 3% withholding tax rate applies universally to all software license orders? And in the event that we are required to pay the withholding tax at 3% rate for any type of software, are there any provisions or exceptions that would allow us to reduce the withholding tax rate to 1%?
Answer:
The 3% withholding tax rate is standard across all software licenses bought or paid for usage in Thailand. When you buy a software from overseas, you will need to submit the withholding tax (rates depending on the country) and 7% VAT on behalf of the overseas vendor(s) too.
Additionally, the Thai tax laws require buyers or users of software to withhold 3% tax. In your case, you should withhold it from the payment when you pay your vendors. You should not pay the withholding tax from your pocket. Anyway, you can check with us before making any payment to your new vendors to make sure you withhold the right amount accordingly.
MSNA can provide consultation on Thai taxes and accounting. And if you use our monthly services, our fees include consultation with our directors on tax and accounting issues. For instance, some vendors do not want you to withhold tax, we can discuss with you on what to do for withholding taxes from vendors in Thailand.
In Thailand, businesses are required to submit its audited financial statements annually with the Department of Business Development and the Revenue Department.
For the Revenue Department, the audited financial statements must be submitted with the Corporate Income Tax Return (PND. 50) within 150 days since the end date of accounting period.
For the Department of Business Development, the audited financial statements must be submitted within 1 month since the date of the company’s Annual General Meeting (AGM) or within 5 months since the end of accounting period. Aside from the audited financial statements, updated Shareholders List (BOJ. 5) and Form for submitting Financial Statements (Sor Bor Chor 3) must be submitted altogether.
Failure to submit on time, the company will have to pay penalty to the Department of Business Development and Revenue Department.
Contact MSNA for your business needs particularly on accounting, tax and audit to ensure that you file your taxes and audited financial statements on time.
Thai and foreign companies doing business in Thailand are required to file their Corporate Income Tax returns (Form PND 50) within 150 days from the closing date of their accounting period. Tax payment must be submitted together with the tax returns. The deadline for payment is extended for a few more days if the company is registered with the Revenue Department’s online tax filing system.
In addition to the annual tax filing, any company subject to corporate income tax on net profits is also required to file its Interim Corporate Income Tax Return or Half-Year Income Tax (PND 51). A company is obliged to estimate its annual net profit as well as its tax liability and pay half of the estimated tax amount within 2 months after the end of the first 6 months of its accounting period. The prepaid tax is creditable against its annual tax liability. For example, if the accounting period of the company is on December 31, PND 51 has to be submitted within August of the following year.
MSNA has a team of experienced and knowledgeable accountants who can prepare your accounts and file your taxes efficiently. If you need accounting and tax services, you come to the right place. Contact us now for an initial consultation.
A company must close its accounting period every year. An accounting period shall be 12 months except in the following cases where it may be less than 12 months:
A newly setup company or juristic partnership may choose to use the period from its registration date to any date as its first accounting period.
A company or juristic partnership may file a request with the Director-General to change the last day of an accounting period. In such case, the Director-General shall have the authority to approve as he deems appropriate. Such an order shall be notified to the company or juristic partnership who files the request within a reasonable period of time and in the case where the Director-General grants the permission, the company or juristic partnership shall comply with the accounting period as prescribed by the Director-General.
In the case of a merger between a company or a juristic partnership, the company or juristic partnership must terminate the merger contract and use the date of official termination of the contract provided by government officials as the last day of its accounting period.
In the case whereas a company or juristic partnership’s files for dissolution, the company or juristic partnership shall use the date of official termination of incorporation provided by the government officials as the last day of its accounting period.
On the other hand, an accounting period of more than 12 months may be possible in the case of a company or juristic partnership closing down and being unable to pay the tax within 150 days; counting from the last day of the accounting period, the company or juristic partnership can send a petition within 30 days from the date of official termination of the contract provided by the government officials. The Director-General of the Revenue Department may grant an extended accounting periods which can be more than 12 months.
MSNA group of companies provide accounting, audit and related services for closing your accounting period. We can also help if you want to change your accounting period.
For Thai personal income tax computation, taxpayers may exclude interest and dividends before filing it with the Thai Revenue Department.
The following forms of interest income may be excluded from the computation of Thai personal income tax provided that a 15% tax is withheld at source:
Interest on bonds or debentures issued by a government organization;
Interest on saving deposits in commercial banks if the aggregate amount of interest received is not more than THB 20,000 during the taxable year;
Interest on loans paid by a finance company;
Interest received from any financial institution organized by a specific law of Thailand for the purpose of lending money to promote agriculture, commerce or industry.
Moreover, taxpayers who reside in Thailand and receive dividends or shares of profits from a registered company or a mutual fund which tax has been withheld at source at the rate of 10% may choose to exclude such dividend from the assessable income when calculating Thai personal income tax. However, with this option, the taxpayer will not be able to claim any tax refund or credit.
The tax filing period for Thai personal income tax returns of 2024 is from January until March 2025. We highly recommend you to consult with tax experts like MSNA to compute and submit your taxes accordingly.
For filing of Thai personal income tax returns with the Thai Revenue Department, these are the cases where foreign-based income is not subject to Thai taxes.
If foreign-sourced income derived before 1st January 2024 and remitted into Thailand in a later tax year
Foreign-sourced income is derived by a foreigner who is NOT a Thailand tax resident but later remitted such income into Thailand
A foreigner is considered a tax resident of Thailand if he/she has stayed in Thailand for at least 180 days during the calendar year and has derived income either within Thailand or outside Thailand.
Moreover, foreigners must include both income sourced within and outside Thailand in the filing of his/her Thai personal income tax return. Taxable income shall be an aggregate amount of Thai-sourced income earned during the tax year and foreign-sourced income remitted to Thailand during the tax year. Hence, if foreign-sourced income is remitted partially, the taxable amount shall be apportioned accordingly.
MSNA can help Thai tax residents compute and submit their personal income tax returns. Contact us now for getting tax ID card, filing the tax returns and obtaining Tax Residence Certificate or Income Tax Payment Certificates.
When a foreigner who is a tax resident of Thailand pays tax on his income abroad, the amount of paid tax can be credited against the tax payable in Thailand. This is applicable only if the country has a Double Tax Agreement (DTA) with Thailand. In this case, there will be no double taxation for tax residents of Thailand.
The amount of tax that can be credited should not be higher than the amount of Thailand’s tax liable to the foreign-sourced income.
To use this foreign tax relief, the Revenue Department may require documents and evidence to prove sources of income and to claim foreign tax credit under DTA. Such documents must be in English or Thai. For the supporting documents to claim foreign tax credit, Tax Payment Certificate issued by the foreign tax authority is recommended.
Contact MSNA for personal income tax computation, filing of tax returns and getting Income Tax Payment Certificate or Tax Residence Certificate in Thailand.
There is a Double Tax Agreement (DTA) between Thailand and Myanmar. Currently, Thailand has concluded tax treaty agreements with 61 countries, including Myanmar. The other countries are:
Armenia, Australia, Austria
Bahrain, Bangladesh, Belarus, Belgium, Bulgaria
Canada, Cambodia, Chile, China Peoples Republic, Cyprus, Czech Republic
Denmark
Estonia
Finland, France
Germany, Great Britain and Northern Ireland
Hong Kong, Hungary
India, Indonesia, Ireland, Israel, Italy
Japan
Korea, Kuwait
Laos, Luxembourg
Malaysia, Mauritius
Nepal, the Netherlands, New Zealand, Norway
Oman
Pakistan, the Philippines, Poland
Romania, Russia
Seychelles, Singapore, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland
Taiwan, Tajikistan, Turkey
Ukraine, United Arab Emirates, United States of America, Uzbekistan
Vietnam
MSNA provides consultation on Thai taxation and tax filing services. We also assist individual taxpayers prepare and submit their Thai personal income tax returns and obtain a Tax Residence Certificate, if needed.
One of our clients that is engaged in trading business has recently registered its branch into the VAT system with the Revenue Department. Now, they have 2 VAT registration certificates, one for the main office and another one for its branch. Today, they asked us which one to use and when it should be used.
Our reply:
When you buy things for the head office, you need to tell the supplier to issue their tax invoice to your head office. And when you buy things for your branch, then the supplier should issue their tax invoice for the branch.
The tax invoice issuer should put the word “head office” or “Branch No.1” on the tax invoice for you.
Contact MSNA for accounting and tax filing needs. Thai Lawyers can help you register your company and your branches into the VAT system.
