What are the employment taxes?

Any person, regardless of tax residency status, who derives employment income from working for a Thai employer in Thailand is subject to personal income tax, whether paid within or outside Thailand.

Individuals who stay in Thailand for a total of at least 180 days in a tax (calendar) year are considered Thai tax residents under local tax law. Property ownership, nationality, or legal right to remain in Thailand are not factors to be considered for tax resident status.

What taxes or contributions must the employee and employer pay?

1. Employees who are tax residents

Employees who are tax residents are subject to PIT at progressive rates ranging from 5% to 35%. Every year, the tax year runs from January 1 to December 31.

Taxable Income (baht) Tax Rate (%)
Under 150,000 Exempt
more than 150,000 but less than 300,000 5
more than 300,000 but less than 500,000 10
more than 500,000 but less than 750,000 15
more than 750,000 but less than 1,000,000 20
more than 1,000,000 but less than 2,000,000 25
more than 2,000,000 but less than 4,000,000 30
Over 4,000,000 35

Employers and employees are required to contribute to the Social Security Fund an amount equal to 5% of the employee’s gross wages, up to a monthly maximum of THB 750. Under certain conditions, the rate of social security contribution can be temporarily reduced (such as COVID-19).

2. Employees who are non-tax residents

Non-tax resident employees working for Thai employers are also subject to PIT at progressive rates ranging from 5% to 35% in the context of employment in Thailand.

3. Employers

Employers are required to withhold income tax at the applicable progressive rates and remit the amount to the Thai tax authority by the seventh day of the month following the month of payment.
Employers must contribute between 0.2 percent and 1 percent (depending on the employer’s classification) of an employee’s annual earnings (up to a maximum of THB 240,000) to the Workmen’s Compensation Fund each year, depending on the employer’s classification.

When is a business vehicle taxed?

1. Tax Resident Company

Companies incorporated in Thailand are considered to be Thai tax residents.

2. Non-Tax Resident Company

Non-tax resident business entities that do not conduct business in Thailand must pay income tax at a flat rate of 15% (or 10% for dividends) on the gross amount of their Thai-sourced income (such as service fees, royalties, interest, and rental income), unless otherwise exempted or reduced under tax treaties. Income tax is paid by the payer of income through tax withheld at the source at the time of payment.

Non-tax resident business entities that conduct business in Thailand (via a branch or office, for example) are subject to corporate income tax in Thailand. If a non-tax resident business entity does not have a permanent establishment under an applicable tax treaty, the corporate income tax may be exempted.

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What are the main taxes for businesses?

1. Corporate Income Tax

The standard corporate income tax rate is 20%, and it is levied on the net taxable profit earned during any given accounting period. Qualified small and medium-sized enterprises are granted reduced rates ranging from 15% to 20%, with an exemption for the first THB 300,000 in net profit.
Corporate income tax returns must be filed twice per fiscal year (half-year tax return and annual tax return).
A half-year tax return must be filed within two months of the end of an accounting period’s first six months.
Annual tax returns must be filed within 150 days of the end of the fiscal year. Tax returns can be filed in hardcopy at a local revenue office or electronically via the Thai Revenue Department‘s website.

2. Value Added tax (VAT)

VAT is currently levied at a rate of 7% (or 0% for exports of goods and services) on the following types of business transactions:

➤ Goods for sale
➤ Service provision
➤ Revenue from exports
➤ Import of goods for any reason

3. Specific Business Tax

Certain business activities are subject to SBT rather than VAT, with payable rates ranging from 0.1 to 3 percent of gross monthly receipts. Among these companies are:

➤ Banking or other similar activities
➤ In the ordinary course of business, lending money on the security of a property mortgage
➤ Securities
➤ Life insurance coverage
➤ Services provided by pawnshops
➤ Commercial sales of immovable property or profit-making sales of immovable property

4. Municipal Tax

Municipal tax is levied on businesses subject to SBT at a rate of 10% of the SBT payable. The municipal tax is already included in the 7% VAT rate.

5. Stamp Duty

Stamp duty is levied on 28 instruments/documents (Stamp Duty Schedule, Revenue Code). The rate of stamp duty payable and the persons subject to stamp duty are determined by the instrument/document executed. If the instrument/document is executed in Thailand, the stamp duty must be paid within 15 days of the execution date. Stamp duty on an instrument or document executed outside Thailand must be paid within 30 days of the item’s arrival in Thailand.

How are dividends, interest and IP royalties taxed?

1. Dividends Paid

Dividends are subject to a withholding tax of 10%.

2. Dividends Received

Dividends are taxed as the ordinary income of the Thai company. Tax exemptions are granted under certain conditions.

3. Interest Paid

Interest is subject to a withholding tax of 15%, which can be exempted or reduced to 3% or 10% under certain tax treaties.

4. IP Royalties Paid

Royalties paid to foreign corporate shareholders are subject to a withholding tax of 15%, which can be exempted or reduced to 5%, 8% or 10% under certain tax treaties.

Business taxes in thailand

Tax for Groups, Affiliates and Related Parties

Is it necessary to allocate the income of a foreign subsidiary to a parent company that is a tax resident?

Thailand has no laws governing controlled foreign corporations. Only the real dividends paid to a Thai parent company by a foreign subsidiary are taxed.

Are there any regulations on transfer pricing?

Thailand has transfer pricing regulations that follow the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations in general.

In addition to transfer pricing restrictions, the Thai Revenue Department has the authority to assess unrelated party transactions for the following reasons:

➤ Assets are transferred without remuneration
➤ Providing services without charging a fee
➤ Money lending with no interest

It can also conduct assessments of other operations with compensation, service charges, or interest in an amount determined to be less than market value without explanation.

Customs Duties

How are imports and exports taxed?

Imported products and a few chosen exported goods are subject to customs duty. The Harmonised Commodity Description and Coding System is used to assess customs duty.
Thailand, as a party to the General Agreement on Tariffs and Trade and a WTO member, follows all relevant norms and codes while calculating customs duties.
VAT applies to both imports and exports.

Double Tax Treaties

Thailand has 61 double tax treaties in place with 61 countries, including Australia, China, the United Kingdom of Great Britain and Northern Ireland, Hong Kong, Singapore, and the United States.

Consult Thailand tax specialists

Outsourcing tax to a reputable business service provider allows you to optimize your taxes and stay in compliance with tax laws, all while freeing up your time for more value-added or lead-generating activities. A business service provider can also provide company secretarial services, update your company’s governance procedures, and liaise with the Thai government on any administrative matters pertaining to your company’s incorporation.

Our tax specialists at Themis Partner implement the tax planning strategies that are best suited to your company. We will collaborate with you to reduce your company’s existing tax liabilities and assist you in staying on top of your tax obligations.