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.

Corporate Income Tax is a direct tax imposed juristic companies or partnerships doing business in Thailand or those that do not do business in Thailand but getting certain types of income from Thailand.

Who are liable for Corporate Income Tax?

The taxable person are as follow:-

1. A company or juristic partnership incorporated under Thai law:
   • Limited company
   • Public company limited
   • Limited partnership
   • Registered partnership
2. A company or juristic partnership incorporated under foreign laws:
   • a company or juristic partnership incorporated under foreign laws and carrying on business in Thailand
   • a company or juristic partnership incorporated under foreign laws and carrying on business in other places including Thailand
   • a company or juristic partnership incorporated under foreign laws and carrying on business in other places including Thailand, in case of carriage of goods or passengers
   • a company or juristic partnership incorporated under foreign laws which has an employee, an agent or a go-between for carrying on business in Thailand and as a result receives income or profits in Thailand
   • a company or juristic partnership incorporated under foreign laws and not carrying on business in Thailand but receiving assessable income under Section 40(2)(3)(4)(5) or (6) which is paid from or in Thailand
3. A business operating in a commercial or profitable manner by a foreign government, organization of a foreign government or any other juristic person established under a foreign law.
4. Joint venture
5. A foundation or association carrying on revenue generating business, but does not include the foundation or association as prescribed by the Minister in accordance with Section 47 (7) (b) under Revenue Code

MSNA group of companies can assist in accounting & tax, audit and filing of the audited financial statements and corporate income tax returns with the Department of Business Development and Revenue Department. We can also help in registering the company with online tax filing system.

Section 3 of the Revenue Code states that a taxpayer in Thailand shall obtain and use a taxpayer identification number (TIN).

Currently, a taxpayer identification number is issued but the Revenue Department and comprises of 13 digits. For Thai nationals, they can use their Thai ID card number as same as their TIN.

In Thailand, the following persons need to apply for TIN:

1. A person who has the duty to submit personal income tax
2. An individual who wishes to become a Value Added Tax (VAT) or Specific Business Tax (SBT) registrant
3. A juristic person that has the duty to submit corporate income tax such as branch office and branch office. Limited companies can use their company registration number as their tax identification number
4. A payer of income liable to withhold tax

You can apply for a taxpayer identification number at the nearest office of Revenue Department in your area. MSNA can also assist in getting tax ID cards, preparing and filing personal or corporate income tax returns for foreigners and companies in Thailand.

As a taxpayer in Thailand, there are certain duties to be complied as follows:-

1. To register for tax identification number (in case of a foreigner) and must also inform the Revenue Department officers of any changes in his personal details. For Thai nationals, their Thai identification number serves as their tax identification number
2. Submit the tax returns and pay proper tax to the Revenue Department
3. Provide relevant documents and accounts as the law requires. This includes receipt, profit and loss statement, balance sheet, special account, etc.
4. Cooperate and assist the Revenue Department officers and provide additional documents or information when required as well as comply with the summon
5. Pay tax as assessed by the Revenue Department officers on time. In case a taxpayer fails to pay a complete sum, the assessment officer has the right to seize, attach and sell that asset by auction even without a court decision. Cash raised from the transaction will be used to pay off tax arrears.

Any taxpayer who does not comply with the law will face civil and criminal action. Hence, it’s highly advisable to contact Thai tax experts like MSNA to consult about filing your taxes in Thailand.

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:

1. 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.
2. 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.
3. 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.
4. 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:

1. Interest on bonds or debentures issued by a government organization;
2. 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;
3. Interest on loans paid by a finance company;
4. 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.

We got asked a lot of times about the difference between being a tax resident and a non-tax resident in Thailand when filing the Thai personal income tax returns.

Taxpayers in Thailand are classified into resident and non-resident. A tax resident is any person living in Thailand for a period of more than 180 days in any tax calendar year. A tax resident of Thailand has the duty to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand.

However, there are cases where foreign-based income is not subject to Thailand taxes even if the taxpayer is a tax resident of Thailand.

A non-tax resident on the other hand means any person not living in Thailand but has income from sources in Thailand. He/she has the duty to pay tax only on income sourced in Thailand.

Contact MSNA for assistance in filing your Thai personal income tax returns in Thailand.