All questions

Direct taxation of businesses

i Tax on profitsDetermination of taxable profit

CIT is usually imposed on the net profits of a business for one tax year (the tax year can be any 12-month period selected by each taxpayer). Net profits are ascertained according to conditions imposed under the Revenue Code. An all-inclusive concept of income is used, and all realised economic gains are treated as income (including capital gains), whether they occur regularly or only occasionally.

CIT is generally computed on an accrual basis – that is, income accruing in any accounting period (whether or not it has been received) is included as income for that period, and expenses may be deducted as they accrue (whether or not they have actually been paid out).

As a general matter, expenses incurred exclusively for the purpose of acquiring profits, or from conducting business in Thailand (other than those expenses specifically excluded), are deductible expenses for determining net profit. Therefore, normal business expenses, interest incurred during the normal course of business operations, qualifying bad debts and depreciation at maximum rates ranging from 5 to 20 per cent per annum are allowed as deductions. Any generally accepted accounting method may be used to calculate depreciation, as long as the resulting depreciation rate is not greater than that provided by using the straight-line method at the rate prescribed in the Revenue Code. The following items, inter alia, are not allowed as deductions:

  1. the portion of the purchase price of assets that exceeds the normal price, without justifiable reasons;
  2. private expenses, including gifts for customers;
  3. gifts to charitable institutions exceeding 2 per cent of net profit;
  4. capital expenditures;
  5. CIT, penalties, surcharges and criminal fines under the Revenue Code;
  6. the portion of salary paid to shareholders that exceeds a reasonable amount; and
  7. any expenses not exclusively incurred for the purpose of making profits or business.

Entertainment expenses up to a maximum of 0.3 per cent of gross revenues or the paid-up capital of the company (whichever is higher) are deductible if they are generally necessary for that type of business, but only up to 10 million baht. Certain bad debts can generally be written off if reasonable efforts have been made to recover them under criteria set out in relevant regulations. For example, where a lawsuit has been filed against the debtor, the court has issued an order or injunction, and the debtor has no assets to repay the debt.


Net losses may be carried forward for five consecutive years. However, there is no provision for the carry-back of losses. Losses survive a change in ownership, such as a change of shareholders of the company. However, in changes of ownership where the company is dissolved and liquidated (e.g., in an amalgamation), losses of the dissolved company are not transferred to the new company.


In general, all companies and registered partnerships pay CIT at a flat rate of 20 per cent of net profits. However, the following progressive rates have applied to net profits derived by small and medium-sized enterprises (companies or juristic partnerships with paid-up capital of not more than 5 million baht, and with an annual income from the supply of goods and services of not more than 30 million baht), for the accounting period beginning on 1 January 2017 onwards:

Amount of net profits (baht)CIT rates
1 to 300,000Exempt
300,001 to 3 million15 per cent
3,000,001 upwards20 per cent

Standard deductions are allowed depending on the type of business activity that give rise to the income. Net profits are taxed at the normal rate. Any Thai or foreign-incorporated company or registered partnership conducting business in Thailand that fails to file a return in accordance with the law may be assessed to owe income tax at a rate of 5 per cent of the aggregate of either its gross receipts or total sales, without any deductions. Certain types of business are subject to CIT on their gross receipts or gross sales instead of their net profits. For example, foreign-incorporated companies engaged in the business of international transportation of passengers or goods pay 3 per cent CIT on gross receipts of fares collected in Thailand, or gross freight collected in or outside Thailand with regard to goods carried out of Thailand. Foundations and associations pay CIT at a rate of either 2 or 10 per cent of their gross income, depending on the type of income they have received.


CIT is payable twice a year. The first instalment is 50 per cent of the total tax, normally based on estimated net profits for the year. This is due within two months of the close of the first half of the financial year of the company. An annual income tax return must be filed within 150 days of the close of the company's financial year. In the case of failure to file, a penalty of twice the amount of tax due is imposed when an official conducts an assessment. If tax is to be paid on the basis of net profits, then the return must be accompanied by an audited financial statement. If tax is to be paid on a gross-receipts basis, then a statement of gross receipts must be filed along with the return. Currently, filing can be done either by paper return or an electronic form.

The Revenue Department of the Ministry of Finance is responsible for tax under the Revenue Code (e.g., income tax, value added tax (VAT), specific business tax (SBT) and stamp duty). Other taxes (e.g., customs duty, excise tax, property tax, and signboard tax) are the responsibility of other government authorities.

There is a standard appeal procedure for grievances arising from income tax assessments. To qualify for consideration, an appeal must be filed with the Board of Appeals within 30 days of receiving the notice of assessment. A further appeal can be made to the tax court against the Board's decision within 30 days of the date of receipt of the decision on appeal.

Tax grouping

There is no concept of consolidated tax grouping in Thailand. All corporate entities are treated as separate taxable entities and are subject to tax on their own merits.

ii Other relevant taxesVAT

VAT is essentially a consumption tax on goods and services, operating at each stage of production and distribution. In effect, VAT covers all retailers, manufacturers, wholesalers, producers and importers of goods, as well as service providers, other than those excluded by the Revenue Code.

VAT is currently levied at a reduced rate of 7 per cent; however, this rate will increase to a standard rate of 10 per cent from 1 October 2019 onwards (unless the reduced rate is extended). Municipal tax at a rate of one-ninth of the VAT is already included in the VAT rate. VAT on exported goods and services, under the terms and conditions of the Revenue Code, is rated at zero per cent.

Certain businesses are exempt from VAT, including the following:

  1. enterprises with annual gross sales of less than 1.8 million baht;
  2. private and government healthcare services;
  3. educational services;
  4. religious and charitable organisations; and
  5. leasing of immovable property.

Eight categories of businesses are subject to SBT:

  1. banking and similar businesses;
  2. finance, securities and credit foncier businesses;
  3. life insurance brokers;
  4. pawnbrokers;
  5. traders of immovable property;
  6. securities repurchase businesses;
  7. factoring businesses; and
  8. selling securities on the SET (currently exempt).

SBT is imposed on gross receipts at rates ranging from 0.01 to 3 per cent, according to the nature of the services provided. Businesses that are subject to SBT must also pay municipal tax at a rate of 10 per cent of the SBT. As such, the effective SBT rates vary from 0.011 to 3.3 per cent.

Stamp duty

Stamp duty is levied on the execution or importation of 28 dutiable documents listed in the Stamp Duty Schedule of the Revenue Code, including share transfer instruments and hire-of-work contracts. Rates and payment procedures depend upon the type of instrument. Penalties for failure to stamp documents can be imposed at a rate of up to six times the original duty. Furthermore, documents that have not been properly stamped are not admissible as evidence in civil court proceedings.