thailand corporate income tax
TRANSCRIPT
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Income Tax onCorporations in
ThailandReported by
Princess Joy G. Florentin
on
January 10, 2015
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Corporate Income Tax (CIT)
A direct tax levied on a juristic
company or partnership carrying on
business in ThailandOR not carryingon business in Thailand but deriving
certain types of income from
Thailand.
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Taxable Entities
1. Juristic companies and partnerships
incorporated under Thai law;
a) Limited company
b) Public company limited
c) Limited partnership
d) Registered partnership
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Taxable Entities
2. A company or juristic partnership
incorporated under foreign laws:
a) and carrying on business in
Thailandb) and carrying on business in other
places including Thailand
c) and carrying on business in other
places including Thailand, in case
of carriage of goods or carriage of
passengers
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Taxable Entities
d) which has an employee, an agent
or a go-between for carrying on
business in Thailand and as a
result receives income or profitsin Thailand
e) 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.
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Taxable Entities
5. A foundation or associationcarrying on revenue generatingbusiness, but does not include
those as prescribed by the Ministerin accordance with Section 47(7)(b) under the Revenue Code.
6. Other juristic entities as announcedby the Director-General of theRevenue Department with theapproval of the Minister of Finance.
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Accounting Period
Shall be 12 months exceptin the following
cases :
1. A newly incorporated company or juristic
partnership may elect to use the period
from its incorporation date to any onedate as the first accounting period.
2. A company or juristic partnership may file
a request to the Director-General to
change the last day of an accountingperiod. In such a case, the DG shall have
the power to grant approval as he deems
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Accounting Period
appropriate. Such an order shall be
notified to the company or juristic
partnership who files the request
within a reasonable period of timeand in the case where the DG
grants the permission, the company
or juristic partnership shall comply
to the accounting period asprescribed by the DG.
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Taxable Income
In the calculation of CIT of a companycarrying on business in Thailand, it is
calculated from the company's net profit on
the accrual basis.
A company shall take into account allrevenue arising from or in consequence of
the business carried on in an accounting
period and deducting therefrom all expenses
in accordance with the condition prescribed
by the Revenue Code.
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Taxable Income
As for dividend income, one-half of thedividends received by Thai companies fromany other Thai companies may be excludedfrom the taxable income. However, the fullamount may be excluded from taxableincome if the recipient is a company listed inthe Stock Exchange of Thailand or therecipient owns at least 25% of thedistributing company's capital interest,
provided that the distributing company doesnot own a direct or indirect capital interest inthe recipient company.
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Taxable Income
The exclusion of dividends is applied only ifthe shares are acquired not less than 3months before receiving the dividends andare not disposed of within 3 months afterreceiving the dividends.
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Taxable Income
carrying on business in Thailand Includes the presence of an
employee, representative or go-between that results in the foreigncompany deriving income or gainsin Thailand.
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Deductible Expenses
1. Ordinary and necessary expenses.However, the deductible amount of the
following expenses is allowed at a special
rate:
200% deduction of R&D expense,
200% deduction of job training
expense,
200% deduction of expenditure on the
provision of equipment for thedisabled;
2. Interest, except interest on capital reserves
or funds of the company;
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Deductible Expenses
3. Taxes except for CIT and VAT paid to Thaigovernment;
4. Net losses carried forward from the last 5
accounting periods
5. Bad debts;6. Wear and tear;
7. Donations up to 2% of net profits;
8. Provident fund contributions;
9. Entertainment expenses up to 0.3% of grossreceipt but not exceeding 10M Baht.
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Deductible Expenses
10. Further tax deduction for donations made to
public education institutions, and also for any
expenses used for the maintenance of public
parks, public playgrounds, and/or sports
grounds;
11. Depreciation: Provided that in no case shallthe deduction exceed the following % of cost
as shown below. However, if a company
adopts an accounting method, which the
depreciation rates vary from year to year, the
company is allowed to do so provided that the
number of years over which an asset
depreciated shall not be less than 100 divided
by the percentage prescribed below.
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Non-Deductible Expenses
The following items shall not be allowed asexpenses in the calculation of net profits:
1. Additions to provisions or reserves
2. Fund except a registered*provident fund
3. Expense for personal, gift, or charitable
purpose except expense for public charity, orfor public benefit
4. Entertainment or service fees
5. Capital expense or expense for the addition,
change, expansion or improvement of an assetbut not for repair in order to maintain its
present condition.
6. Fine and/or surcharge, criminal fine, income
tax of a company or juristic partnership.
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Non-Deductible Expenses
7. The withdrawal of money without remuneration ofa partner in a juristic partnership
8. The part of salary of a shareholder or partner
which is paid in excess of appropriate amount.
9. Expense which is not actually incurred or
expense which should have been paid in anotheraccounting period except in the case where it
cannot be entered in any accounting period, then
it may be entered in the following accounting
period.
10.Remuneration for assets which a company or
juristic partnership owns and uses.
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Non-Deductible Expenses
15. Cost of purchase of asset and expense related to
the purchase or sale of asset, but only theamount in excess of normal cost and expensewithout reasonable cause.
16. Value of lost or depleted natural resources dueto the carrying on of business.
17. Value of assets apart from devalued assetssubject to Section 65 Bis.
18. Expense which a payer cannot identify therecipient.
19. Any expense payable from profits received afterthe end of an accounting period.
20. Expense similar to those specified in (1) to (19) aswill be prescribed by a Royal Decree.
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Tax Rates
The corporate income tax rate in Thailand is20 % on net profit (accounting periods 2013-2014) . However, the rates vary depending ontypes of taxpayers
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Filing and Payment
Thai and foreign companies carrying on
business in Thailand are required to file their
tax returns (Form CIT 50) within 150 days
from the closing date of their accounting
periods.
Tax payment must be submitted together
with the tax returns.
Any company disposing funds representing
profits out of Thailand is also required to paytax on the sum so disposedwithin 7days
from the disposal date(Form CIT 54).
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Filing and Payment
In addition to the annual tax payment, any
company subject to CIT on net profits is also
required to make tax prepayment (Form CIT
51).
A company is obliged to estimate its annual
net profit as well as its tax liability and pay
halfof the estimated tax amount within 2
months after the end of the first 6 months
of its accounting period. The prepaid tax iscreditable against its annual tax liability.
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Filing and Payment
As regards to income paid to foreign
company not carrying on business in
Thailand, the foreign company is subject to
tax at a flat rate in which the payer shall
withhold tax at source at the time ofpayment.The payer must file the return
(Form CIT 54) and make the payment to the
Revenue Department within 7 days of the
following month in which the payment ismade.
Withh ldi T
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Withholding Tax
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Small and Medium Enterprises (SMEs)
The CIT rates for SMEs are as follows:
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CIT Rates for SMEs
To be eligible for the tax rates, the SME mustmeet the following conditions:
1. Paid-up capital on the last day of any
accounting period must not exceed 5 MillionBaht, and
2. Income from the sale of goods and
provisions of services must not exceed 3
Million Baht in any accounting period.
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http://www.rd.go.th/publish/38686.0.html
http://www.pwc.com/th/en/publications/2014/20
14-thai-tax-booklet-web.pdf
http://www.thailandlawonline.com/revenue-
code/corporate-income-tax-law-in-the-
revenue-code