Are you aware of the tax laws in Thailand? Here’s a brief tax law guide for you;
Corporate Taxes
Resident and Foreign Companies
Residents are taxed on income, whereas non-residents are taxed on the Thai-sourced income. However, a non-resident will have to pay the Value Added Tax.
Foreign Companies
A domestic corporation is liable to pay tax on income. On the other hand, a foreign corporation is subjected to pay on the income generated in Thailand.
Capital Gains Taxation
Considered as ordinary income, capital gains are taxed for corporate income tax. When paid to the overseas recipients, capital gains are subjected to 15% withholding tax. However, an exemption may be applicable to gains that are derived by the investors from tax treaty countries.
Consumption Taxes
Nature of the Tax
Since 1992, Value Added Tax (VAT) has been implemented as a replacement of Business Tax. It is actually an indirect tax imposed on value added of production and distribution.
Standard Rate
The standardized rate of Value Added Tax is 10%, whereas the rate is presently reduced to 7%, but till 30 September 2018, keeping the provision for extension.
Reduced Tax Rate
A few activities are liable to Value Added Tax at a rate of 0%:
aircraft or sea-vessels engaging in international transportation;
- export of goods;
- services offered and utilized in Thailand, complying with the rules, procedures and conditions demonstrated by the Director-General;
- supply goods and services to the government agencies and/or state-owned enterprises;
- supply goods and services to the United Nations and embassies and consulates;
- supply goods and services between enterprises located in EPZs
Exclusion from Taxation
A few activities are exempted from Value Added Tax.
- Businesses, especially small, with annual turnover lesser than 1.8 million baht;
- Sales and import of the unprocessed agricultural products such as fertilizers, animal feeds, etc.;
- Basic services including healthcare, education, etc.
Individual Taxes
Residents and Non-Residents
“Resident” refers to individuals in Thailand for a certain period, aggregating to more than 180 days in the tax (calendar) year. A Thailand’s resident is subjected to pay tax on income derived while residing in Thailand and on the portion of foreign income brought into Thailand. As for a non-resident, the individual is subjected to be taxed on the income, coming from the sources in the Kingdom.
Double Taxation Treaties
There are almost 61 countries with whom Thailand has signed a Double Taxation Treaties. Some of the countries are Cambodia, America, Australia, Bangladesh, Belarus and Belgium and much more. These countries usually pay withholding tax calculated as; Dividends: 10%, Interest: 10%/15%, Royalties: 15%.
