| TAXATION
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What
are major taxes in Thailand? |
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Corporate
Income Tax (CIT), Personal Income Tax (PIT), Value Added Tax
(VAT) and Specific Business Tax (SBT) |
Corporate Income Tax |
| Tax
Payer |
All
companies and partnerships which are registered under Thai
law, or which are registered under foreign laws and carrying
on business in Thailand are subject to corporate income tax.
Note that the definition of ‘carrying on business in
Thailand’ is very broad.
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| Principle |
The corporate income tax is imposed on
the net profits of the business during its fiscal year. In
determining taxable net profits, companies should take into
account the rules imposed on value of assets, deductible expenses,
and depreciation as well as the type of businesses eligible
to the tax exception.
Generally
the corporate income tax rate is 30%. There are various rates
from 10% to 30% for some businesses i.e. those registered
in stock exchange market, those with paid-up capital of no
more than 5 million Baht at the end of the fiscal year, etc.
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| Filing
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The
Revenue Code demands corporate tax to be filed two times in
any accounting year round period. All businesses are required
to file a mid-year corporate income tax return within 2 months
from the date of six-month period and an annual corporate income
tax return within 150 days after the close of their accounting
period. The tax should be paid at that time. The penalty charge
is applied to late filing. . |
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| Withholding
Tax |
To
prevent the avoidance of tax filing and to relieve taxpayer’s
burden from paying a lump sum amount at once, withholding tax
was introduced. The payer of assessable income has to issue
a withholding tax certificate to the recipient of the payment,
who is then able to utilize tax withheld as a tax credit of
his corporate/ personal tax liability. In the event tax withheld
exceeds annual tax liability, the taxpayer is entitled to a
refund of tax over-withheld.
Withholding tax return/remittance is required to be submitted
to the Revenue Department within the seventh day of the month
following the related transaction.
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Personal Income Tax |
| Tax
Payer |
Every
individual who derives income from employment of business carried
on in Thailand is subject to personal income tax, regardless
where such income is paid (i.e. inside or outside of Thailand)
and his length of stay in Thailand.
A
person who derives income from foreign sources is subject
to tax under the condition of being present in Thailand for
more than 180 days and such income is brought into Thailand
in the same tax year (calendar year) income is earned. Exemptions
are granted to certain persons such as UN officers and diplomats,
under the terms of international and bilateral agreements.
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| Principle |
Personal
income tax is imposed on net income, that is - the amount after
deductible expense and allowance. The personal income tax rates
are ranged from 0% to 37% depending on an amount of net annual
income. |
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| Filing
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All
individuals is required to file an annual personal income tax
return by March 31st of the following year. Any additional tax
(i.e. if under-withheld by employer) must be paid at this time.
In the even tax has been over-withheld a refund may be claimed. |
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| Withholding
Tax |
Similar
to Corporate income tax, any company, partnership or other juristic
entity which pays assessable income to any recipient having
duty to pay personal income tax must withhold the tax and remit
this to the Revenue Department within the seventh day of the
following month |
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Value Added Tax |
| Tax
payer |
Taxable
persons include business operators, importers and other taxable
persons. Most business operations are required for VAT, the
exception being:
?
The operations subject to Specific Business Tax (SBT also
introduced in 1992) except those related to VAT
? The Operations exempt from SBT
? Exempt business (e.g. sale or import of agricultural products,
educational service)
? Small operations whose annual revenue is below Baht 1,200,000
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| Principle |
Value
Added Tax (VAT) was introduced in 1992 to replace the complex
business tax system which had been in place for almost thirty
years. VAT is imposed on value added at every stage of the production
process: Producers, providers of services, wholesalers, retailers,
exporters and importers. The VAT must be paid on monthly basis,
calculated as:
Output tax – Input tax = Tax paid
There are two rates of VAT currently applicable: 0% and 7%,
which has been reduced from 10%. It is very important to understand
when taxpayer is liable to VAT (i.e. when selling goods, providing
services or importing is realized).
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| Filing |
The
Revenue Code requires VAT to be filed within fifteenth day of
following month. Tax payers may pay additional tax or carry
forward the over-paid to next month |
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Specific Business Tax |
| Tax
Payer |
Businesses
that are subject to SBT
? Commercial banks and similar businesses
? Insurance companies (Life insurance and Non-life insurance)
? Financial securities firms and credit foncier business
? Sales on the stock exchange
? Sales on non-movable properties
? Pawn shops
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| Principle |
SBT
was introduced in 1992, when Business tax was canceled, to cover
businesses that are not under VAT. However, specific business
may be subject to both SBT and VAT if its operation related
to VAT.
The SBT is computed on the monthly gross receipt at various
rates, i.e. from 0.1% to 3%, up to the type of specific businesses.
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| Filing |
The
Revenue Code requires SBT to be filed within fifteenth day of
following month; except for sales on non-movable properties,
tax will be withheld by Land Department at the time of recording
registration of rights and juristic act. |
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