One of the most important parts of running a business in Thailand is taxes. You need to know how many types of tax you need to pay and file. Knowing how much tax you need to pay in advance can decrease the amount of taxes you have to pay.
It also keeps you away from the large penalties resulting from not paying tax properly.
There are three types of taxes you need to deal with as a company:
- corporate taxes
- VAT
- other
After reading this article, read this exclusive content on tax filing timelines in Thailand.
Corporate Taxes
Corporate income tax is the main tax applied to businesses in Thailand. Companies operating in Thailand are generally subject to corporate income tax and must file corporate income tax returns, even if no tax is payable.
For small and medium-sized enterprises (SMEs), corporate income tax is calculated on net profit using the following progressive rates.
- 0 to THB300,000 – 0%
- THB300,001 to THB3 million – 15%
- Over THB3 million – 20%
SMEs in Thailand are companies with paid-up capital of no more than THB5 million and annual revenue from sales and services of no more than THB30 million.
Non-SME companies are subject to a flat corporate income tax rate of 20% on net profit.
Simply speaking, net profit is calculated by the total revenue of the company minus the total expenses.
All forms of income you receive with your company name are counted as revenue, no matter if it’s in the form of cash, wire transfers, checks, and so on.
On the other hand, all forms of expenses you pay for the company are counted as company expenses. But you need to have solid proof that it’s a company expense.
The best way to do that is to ask for a tax invoice or a receipt with a company name printed on it.
If you pay for a service and the service provider can’t give you a receipt, you can, on the other hand, prepare an expense form and let the service provider sign it.
In this case, you also need a copy of the service provider’s ID card.
If you pay for a service that doesn’t have a receipt, such as for a taxi, it can still be counted as a company expense as long as the number is reasonable.
Corporate income tax can be exempted for several years if your company is promoted by the BOI, depending on the activity and incentives granted.
VAT
Once your company has annual taxable revenue over THB1.8 million, you have to register for VAT within 30 days.
Once you have the registration, you need to charge VAT for your taxable products and services. VAT is similar to what we call “sales tax” in the West.
The current VAT rate in Thailand is 7%.
It gets complicated when you, as a VAT-registered company, use a service from another VAT-registered company.
When such a case happens, you may need to withhold income tax and pay it to the Revenue Department the following month. This is separate from VAT. Input tax is the VAT your company pays to suppliers and may be used to offset output VAT.
The most common percentage of the withholding tax is 3%. But it can be different depending on your service type.
To give you an example, if you pay for a service costing THB10,000, the VAT of that service is going to be THB700. If the withholding tax rate is 3%, you need to withhold THB300 from the service fee and pay the service provider THB10,400 instead of THB10,700.
Every time you withhold tax, you need to issue a withholding tax certificate to a service provider and keep a copy of that certificate for yourself.
For paper filing, by the 15th of every month, you need to file and pay VAT at the Revenue Department with the following formula: output tax – input tax. Online filing deadlines can be later under Revenue Department rules.
If the output tax is more than the input tax for that month, you need to pay the outstanding balance to the Revenue Department.
On the other hand, if the input tax is more than output tax, you can ask for a tax refund or use it as a credit to reduce your VAT next month.
You can file VAT online. If you haven’t registered for online filing yet, you can apply through the Revenue Department’s e-filing website or contact the Revenue Department office in your area.
Specific Business Tax (SBT)
Certain business types have specific business tax. Most of these businesses are related to finance and insurance. Each business type has a specific way to calculate and file taxes. You should check with an accountant who has experience with accounting for these businesses.
Tax Refunds
It’s possible to get a tax refund back from the Revenue Department. However, it takes time. And you can risk yourself paying more tax than getting the refund back. Read this exclusive article on how to maximize your chances of getting a tax refund.
Tax Filing Timeline
There is a specific timeline for filing all types of taxes in Thailand. You should file taxes before the deadline to prevent any penalty that may harm your business. The most common penalties are fines. But serious tax filing failures can lead to criminal penalties.
You can check this exclusive content on all tax filing timelines in Thailand.
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