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Business Taxes for Small Business Owners in Thailand

December 3, 2014 | Sharon Cheong

Foreign businesses operating in Thailand locally or from sources outside of it are required to pay Corporate Income Tax (CIT) to the Thailand Revenue Department. These businesses include juristic partnerships as well as companies such as branches of foreign companies, associations, foundations, registered partnerships that are either limited or ordinary, joint ventures, and limited companies. 

Besides CIT, you'll also have to pay Personal Income Tax, Stamp Duty, and Value Added Tax or Specific Business Tax. These will be remitted to Thailand's Ministry of Finance. Keep in mind that the local government collects property and municipal tax. Meanwhile, the Excise Department monitors and collects excise taxes. Last but not the least, the Customs Department monitors and collects import and export tax. 

CIT Computation and Other Compensations 

Computing CIT is based on the stipulations of the Thai Revenue Code. Corporate taxpayers should remember that audited financial statements are required for earnings and that 50% of the income tax should be paid by the end of the eighth month. Failure to pay taxes will result in a 20% fine of the arrears. 

Thai companies, in general, are also required to pay fuel tax, check transaction tax, transportation tax, advertising tax, property transfer tax, and property tax as well as social security contributions and workmen compensation fund. 

A foreign business that has an agent, an employee, or a branch in Thailand has to pay 20% tax from the profits made by the business. This rate will increase to 30% after 2015. International transportation companies pay 3% of gross receipts. 

Taxation for Foreign Companies Abroad 

A foreign business that doesn't have a business specifically in Thailand will have to pay withholding tax on certain income categories derived from Thailand. This tax can be exempted or reduced depending on income type, as per the Double Taxation Agreement's provisions. 

Profit remittance is at 10%, dividends are also at 10%, and other income such as professional fees, rents, capital gains, royalties, and interests are at 15%. 

Tax Treaties in Thailand 

To avoid double taxation, a small business in Thailand must be aware of tax treaties. Thailand currently has treaty agreements with the following 57 countries: Estonia, Taiwan, Burma, Chile, Russia, Kuwait, Vietnam, Uzbekistan, the United States of America, Northern Ireland, the United Kingdom of Great Britain, the United Arab Emirates, Ukraine, Turkey, Switzerland, Sweden, Sri Lanka, Spain, South Africa, Slovenia, Singapore, Seychelles, Romania, Poland, the Philippines, Pakistan, Oman, Norway, New Zealand, the Netherlands, Nepal, Mauritius, Malaysia, Luxembourg, Laos, Korea, Japan, Italy, Israel, Indonesia, India, Hungary, Hong Kong, Germany, France, Finland, Denmark, Czech Republic, Cyprus, China P.R., Canada, Bulgaria, Belgium, Bahrain, Bangladesh, Austria, Australia, and Armenia. 

Conclusion 

Small- and medium-sized businesses in Thailand should brush up on their knowledge of the local CIT law. They should be aware of the Thailand taxation rules related to foreign-owned companies and foreign-based companies that serve the Thai market. Also, such businesses must research about their locality's treaty agreement with Thailand to avoid double taxation. 

If you wish to learn more about business registration requirements for your SMB, feel free to get in touch with the Thailand Board of Investment and Thailand Department of Business Registration for more details. 

Servcorp offers corporate registration services and virtual office solutions for businesses in Thailand.