Tax rates in Thailand

Company Tax

20%

Tax Rate For Foreign Companies

A domestic corporation is subject to tax on worldwide income, while a foreign corporation is subject to tax on income generated in Thailand.A foreign company not engaged in business within Thailand faces a final withholding tax on specific types of assessable income, including interest, dividends, royalties, rentals, and service fees, paid from or in Thailand. Typically, the tax rate is 15%, except for dividends, which are taxed at 10%. However, alternative rates may be applicable under the terms of a double tax treaty.

Branches of foreign corporations are liable for Corporate Income Tax solely on profits earned locally. Any branch profits sent back to the foreign headquarters face an extra tax at a 10% rate. However, this tax isn't solely on remittances but extends to any disposal of profits abroad. Even the crediting of profit to the head office account in the books is considered a disposal of profit abroad, regardless of whether funds are physically remitted.

Capital Gains Taxation

Capital gains are treated as ordinary income and taxed accordingly for corporate income tax purposes. As such, capital losses can be used to offset net taxable profits.
Capital gains paid to overseas recipients are subject to a 15% withholding tax, although an exemption may apply to gains derived by investors from certain countries with which Thailand has signed a double taxation agreement.

Main Allowable Deductions and Tax Credits

Usually, taxes are eligible for deduction, excluding corporate income tax and VAT. Interest on loans taken for business or profit-making endeavors qualifies for deduction. Initial expenses like incorporation fees and registration charges are deductible upon payment. Bad debts written off and provident fund contributions are also deductible, subject to specific conditions and procedures.

Losses are permitted to be carried forward for up to five accounting periods to offset future profits. However, carrying losses back to previous periods for deduction is not permitted.

Donations to specified charities or for public benefit, as well as those to education or sports associations, are deductible in the amount actually paid but not exceeding 2% of net profit.
Royalties, management service fees, and interest charges paid at arm’s length to foreign affiliates are also deductible.

Business activities promoted by the Board of Investment (BOI) can enjoy tax holidays ranging from three to eight years. Additional tax exemption periods might be granted for specific investment zones.

International Business Centers (IBCs) generating income from qualifying services (like management, technical support, and financial management) and qualifying royalty income (stemming from research and development and technological innovation within Thailand) from related enterprises may qualify for reduced corporate income tax rates. These rates vary: 8% if annual operating expenditure paid to Thai recipients is at least THB 60 million, 5% if expenditure hits THB 300 million, and 3% if expenditure reaches THB 600 million. IBCs also receive exemptions from corporate income tax on dividend income from associated enterprises and from specific business tax (SBT) on treasury services income to associated enterprises.

Other Corporate Taxes

Certain businesses not under the VAT umbrella, like commercial banking, akin financial operations, immovable property sales (taxed at 3%), and life insurance (taxed at 2.5%), are subject to Specific Business Tax (SBT), collected at fixed rates on gross revenue. The tax rate for specific revenue streams of commercial banks, finance, securities, credit foncier, and similar transaction-intensive businesses has been reduced to 0.01%. Additionally, a municipality tax, constituting 10% of the tax, is also levied.

From 2020, a Land and Construction Tax Act replaced the house and land tax and the local development tax. The maximum tax rate depends on the type of land/building and the appraisal value, as follows:
- for land used for agricultural purposes, the progressive tax rates range from 0.01% on land valued up to THB 75 million to 0.1% on land valued above THB 1 billion
- for land used for residential purposes, the progressive tax rates range from 0.02% on land valued up to THB 50 million to 0.1% on land valued above THB 100 million
- for land used for commercial purposes, the progressive tax rates range from 0.3% on land valued up to THB 50 million to 0.7% on land valued above THB 5 billion
- for land that is left unattended or that is not being utilized to the extent appropriate for its nature, the progressive tax rates range from 0.3% to 3% (the tax rate will increase by 0.3% annually if the land is not used).

Stamp duty is applicable to specific instruments as outlined in the Revenue Code, with rates varying according to the instrument type; for instance, leases, hire of work agreements, transfers of shares/debentures, and loans incur a 0.1% duty, while loan agreements are charged at 0.05% (with a cap of THB 10,000), among others.

Capital duty does not officially exist in Thailand; however, there is a one-time fee when registering a company.

Employers are required to contribute 5% of the employee's remuneration to the Social Security Fund (capped at a contribution of THB 750/month).

Other Domestic Resources

Revenue Department of Thailand

Tax Rate

Allowable Deductions and Tax Credits

The law provides for a personal allowance of THB 60,000 each for the taxpayer and the taxpayer's spouse (provided that the taxpayer's spouse does not file one's own return) and THB 30,000 for each child. Furthermore, an allowance for parental care of THB 30,000 per parent is deductible. A non-resident is allowed deductions for spouses, children, and parents only if they are residents in Thailand.

A standard deduction of 50%, capped at THB 100,000, is available in respect of employment income, whereas business deductions are not available against employment income.
Donations to educational institutions, public health care facilities, approved charities, and the Technology Development Fund for Education are deductible in the amount donated, capped at 10% of net income after all allowances and deductions (however, a double tax deduction is allowed in respect of donations to support certain educational programmes and cultural activities).
Health insurance premiums up to THB 15,000 paid to a life or non-life insurance business in Thailand for the taxpayer's parents or the parents of the spouse of the taxpayer is allowable as a deduction. Premiums paid by a taxpayer for his own health insurance can be deducted up to THB 25,000.
Life insurance premiums paid by a taxpayer on one's own life are allowed as a deduction, provided that the insurance policies are for a minimum period of ten years and the insurer is carrying on a life insurance business in Thailand. If the policy includes a savings plan that provides an annual return to the policyholder exceeding 20% of the annual premium, the entire premium will be non-deductible. Health and life insurance premiums can be deducted up to an overall amount capped at THB 100,000 (including the health insurance premium deduction). In addition, premiums paid for life insurance for the taxpayer's spouse who does not earn an income are deductible up to a maximum of THB 10,000, provided the marital status exists throughout the tax year.
Mortgage interest incurred for the purpose of purchase or construction of a residential building in Thailand may be deducted up to THB 100,000. Retirement mutual fund contributions can be deducted up to 30% of assessable income received that is subject to income tax (limited to THB 500,000/tax year). The deduction for an investment in a super savings fund is limited to 30% of assessable income subject to income tax, with a maximum deduction of THB 200,000 per tax year. However, if the taxpayer has also made contributions to qualified pension life insurance as mentioned earlier, those contributions will be included within the THB 500,000 limit.

For business incomes, all expenses exclusively incurred for the purpose of the business may be deducted; or else the taxpayer can opt for a standard deduction ranging from 10% to 60%, according to the type of business.

Special Expatriate Tax Regime

Taxpayers are classified into “resident” and “non-resident”. “Resident” means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however, subject to tax only on income from sources in Thailand.
Foreign-source income of Thai residents derived on or after 1 January 2024 is taxed in the calendar year when it is brought into Thailand, irrespective of the calendar year in which the income is earned.

Expatriates working for companies qualifying for the international business centre regime may opt to be taxed at the final withholding tax rate of 15% instead of the normal progressive tax rates for a maximum period of 4 consecutive years, whether or not he or she has occasionally been travelling out of Thailand during that period.