The goal of this guide is to emphasize the major principles of Special Business Tax in Thailand. Note that, this type of Tax was enacted in 1992 and is levied on specific categories of businesses. However, let us know more about Specific Business Tax in Thailand.
What is Specific Business Tax in Thailand?
Specific Business Tax is an indirect tax. It is a replacement of the business tax since 1992. Additionally, it is applicable on businesses that are not subject to value-added tax (VAT).
Businesses with a turnover of more than THB 1.8 million in Thailand are subject to VAT. Moreover, VAT in Thailand is an indirect tax at each stage of production and distribution. However, some industries like financial institutions and services do not allow for a clear difference between production costs and value-added.
Who must pay Specific Business Tax in Thailand?
The following types of business or juristic entities in Thailand are liable to pay Specific Business Tax in Thailand:
- Banking under the law governing commercial banking or any other specific law
- Firstly, the business of finance, securities and, secondly credit foncier under the law. Moreover, they must be governing the operation of the business of finance, securities and credit foncier
- Life insurance under the law governing life insurance.
- Pawnbroking under the law governing pawn shops.
- Business with regular transactions similar to commercial banks. Importantly, it can be the provision of loans, provision of guarantees, exchange of currencies, issuance, purchase or sale of bills or transfer of money abroad by different means.
- Firstly, the sale of immovable property in a commercial or profitable manner. Moreover, it is irrespective of the manner in which such property is acquired. However, it must be only in accordance with the rules, procedures and conditions prescribed by a royal decree.
- Secondly, sale of securities in a securities market under the law governing securities exchange of Thailand
- Finally, any other business as prescribed by a royal decree.
Who is exempted from Specific Business Tax in Thailand?
The following types of activities and businesses are exempted from Specific Business Tax in Thailand:
- Bank of Thailand, the Government Savings Bank, the Government Housing Bank and the Bank for Agriculture and Agricultural Cooperatives
- Industrial Financial Corporation of Thailand
- A savings cooperative, only in respect of loans provided to its members or to another savings cooperative
- A provident fund under the law governing provident funds
- National Housing Authority, only in respect of sale or hire-purchase of an immovable property
- Pawnbroking business of a ministry, sub-ministry, department and a local government authority
- Any other business under section 91/2 as prescribed by a royal decree
Specific Business Tax Rates and Base
| Business | Tax base | Tax rates |
| Banking, finance and similar business | 1. Interest, discounts, service fees, other fees, gross profits from purchase or sale of, or obtained from, negotiable instruments or other instruments of indebtedness. 2. Gross profits from currency exchange issue of negotiable instruments or other instruments of indebtedness or remittance of currency to foreign countries. | 3% |
| Finance, securities and credit foncier business | 1. Interest, discounts, service fees, other fees, gross profits from purchase or sale of, or obtained from, negotiable instruments or other instruments of indebtedness. 2. Gross profits from currency exchange issue of negotiable instruments or other instruments of indebtedness or remittance of currency to foreign countries. | 3% |
| Life insurance | Interest, service fees and other fees. | 2.5% |
| Pawn brokerage | Interest, fees, remuneration from selling overdue property. | 2.5% |
| Businesses with regular transactions similar to commercial banks | 1. Interest, discounts, service fees, other fees, gross profits from purchase or sale of, or obtained from, negotiable instruments. Moreover, it is applicable on other instruments of indebtedness. 2. Gross profits from currency exchange issue of negotiable instruments or other instruments of indebtedness. Additionally, it is applicable on remittance of currency to foreign countries. | 3% |
| Real estate | Gross receipts | 0.1% |
| Sale of securities in a securities market | Gross receipts | 0.1% (exempted) |
Specific Business Tax Registration Process in Thailand
Where?
Note that, within 30 days of the start of their operations, a firm or individual liable to the special business tax. Therefore, they must register and submit Form P.T.01 to the Area Revenue Office in Bangkok. However, they have to do the same at the District Revenue Office if they are located elsewhere.
When?
Businesses that are subject to specific business taxes must file and pay tax returns. Additionally, they must submit Form P.T.40 to the tax office.
Additionally, the return and payment are due on the 15th of each month. However, in the case of a multi-branched office, each branch/place of business must complete it separately.
Note that, a firm do not have to pay tax for the month if the tax don’t exceed THB 100. However, it must still file and submit returns.
How?
Financial institutions, life insurance, and real estate are examples of enterprises in Thailand that are subject to a separate business tax because they are not subject to VAT.
Are you a foreign investor in Thailand? If yes, we recommend using Konrad Legal’s Tax Services for extra help and direction when it comes to filing and reporting taxes. Therefore, book your free round of consultation with our Tax and Audit Experts. Additionally, you may email us at [email protected].
