A guide to Thailand's major taxes and fees

The eight major taxes imposed in Thailand are:

Corporate income tax: Thai incorporated entities are generally subject to tax on their worldwide income. Foreign incorporated companies are subject to tax on income derived from carrying on business in Thailand or on certain categories of income paid from Thailand. The standard corporate tax rate is 20%.

Petroleum income tax: Petroleum, including natural gas, operations are subject to petroleum income tax.

Personal income tax: Individuals are subject to levies on Thai-sourced income. Tax residents of Thailand are also subject to tax on foreign-sourced income which is remitted to Thailand in the same year it is received. Personal tax rates range from 5% to 35%.

Value-added tax (VAT): This levy is imposed on certain goods and services sold or used in Thailand. Specified goods imported into Thailand are also subject to VAT as are services performed outside Thailand that are used in Thailand. The VAT rate is 7%.

Specific business tax: This is imposed on the gross receipts of businesses exempt from VAT, including:

• Banking and similar businesses;

• Finance, securities and credit foncier;

• Life insurance;

• Pawnbroking;

• Sale of immoveable properties in a commercial manner or for profit; and

• Factoring. Stamp duty: This is imposed on certain documents executed in Thailand or brought into Thailand. Customs duty: This levy is imposed on some imports and exports that include rawhide and wood materials. Excise tax: This is imposed on specified products, such as alcohol, passenger cars and certain services.

Incentives

The Board of Investment can grant a wide range of fiscal and non-fiscal incentives, as well as guarantees to qualifying investment projects, such as:

• Exemptions or a reduction of import tax on imported machinery or raw materials and components;

• Exemptions from corporate income tax and an additional 50% reduction of corporate income tax for five years after the tax holiday period; and

• Exemptions from tax on dividends paid out of promoted profits during the income tax holiday. Companies that establish an international trade centre or their regional or international headquarters in Thailand will receive a number of tax concessions on qualifying income and remittances offshore. Concessionary treatment is also granted to expatriate employees.

Tax Losses

Tax losses incurred can be carried forward for five years for corporate income tax purposes and 10 years for petroleum income tax purposes. Tax losses cannot be transferred to related companies.

Withholding Taxes

Thailand has an extensive withholding system that requires withholding tax to be deducted from specified domestic and international payments, e.g., dividends, interest, rents and royalties.

Tax Treaty Network

Thailand has an extensive tax treaty network. As of June 2018, Thailand had a total of 61 tax treaties in force.

Foreign Tax Credits

Thai-incorporated companies are entitled to claim a foreign tax credit for tax paid in a foreign country on income which is also subject to Thai corporate income tax. The foreign tax credit cannot exceed the amount of Thai corporate income tax payable on the income.

Transfer Pricing 

Transfer pricing guidelines are based on the arm’s-length principle, which supplements the requirements under Thai law for market-rate pricing in relation to both related and unrelated party dealings.

Anti-Avoidance Rules

Thai tax law has limited general anti-avoidance provisions pursuant to which the Revenue Department may deny a tax deduction for artificial or fictitious expenses or expenses not exclusively for business purpose or acquiring profits.