The standard corporate income tax rate in Thailand is 20 % of net profit, and companies with paid-up capital up to THB 5 million and income up to THB 30 million pay stepped rates: nothing on the first THB 300,000, 15 % up to THB 3 million and 20 % above. Returns are PND.51 at half-year and PND.50 annually.
A company registered in Thailand is taxed on its net profit from all sources, and a foreign company is taxed on income from a business carried on in Thailand. Net profit is accounting profit adjusted by the tax rules, so the starting point is the audited income statement and the end point is taxable income.
The standard rate of 20 % has applied for many years. Alongside it there are special rates and exemptions for particular activities and for promoted businesses, as covered on the BOI page. Always check the current rate table of the Revenue Department when you prepare an estimate.
Thailand also taxes dividends received and capital gains under their own rules. A company that holds shares in other companies should look at the exemptions available for dividends from Thai companies, which depend on the shareholding conditions.
Small companies and juristic partnerships benefit from a reduced scale. To qualify, the paid-up capital at the end of the accounting period must not exceed THB 5 million, and the income from sales of goods or services in that period must not exceed THB 30 million. The first THB 300,000 of net profit is exempt, profit from THB 300,001 to THB 3 million is taxed at 15 %, and the rest at 20 %.
Qualification is tested each accounting period. A company that raises its capital above THB 5 million, or whose income passes THB 30 million, loses the scale for that period. A capital increase made to satisfy a bank can therefore have a tax cost, and it should be planned with the accountant before the shareholders vote.
The rule looks at the company alone, though anti-avoidance principles apply where a business is deliberately split into several entities to preserve the lower rates.
Taxable income differs from accounting profit because of items the Revenue Code treats specially. Entertainment expenses, certain gifts, penalties, provisions and expenses without proper documents are partly or wholly non-deductible. Depreciation follows rate limits set by the Code rather than the company’s accounting policy.
Expenses must be supported by a proper document. A tax invoice, a receipt or a withholding certificate is the usual proof, and an expense supported only by a bank transfer risks being disallowed. Directors’ personal costs charged to the company are a frequent audit finding.
Keep a schedule bridging accounting profit to taxable profit, listing each adjustment with its legal reason. It speeds the preparation of the return and gives you a ready reply when the Revenue Department asks why the figures differ.
A company pays its tax in two instalments. Half-year, PND.51, is due within two months after the first six months of the accounting period and is based on an estimate of the full year’s profit, with half of the estimated tax payable. The annual return, PND.50, is due within 150 days after the end of the accounting period, and the balance is paid with it after crediting the PND.51 amount and the tax withheld by customers.
Underestimating the year’s profit at half-year can trigger a surcharge, so the estimate needs care. Where the full-year profit is higher than the estimate by a defined margin, the surcharge applies to the shortfall.
Withholding tax suffered during the year appears on 50 Tawi certificates received from customers. Collect them throughout the year and reconcile them to the ledger before filing, since unmatched certificates cannot be credited.
Reasonable year-round habits are to review interim profit each quarter, keep expense documents complete, collect 50 Tawi certificates and agree the adjustments schedule with your accountant before year-end. These habits reduce surprises more than any last-minute planning.
The multi-company ERP 4softerp can hold your accounts and provide the profit and loss figures your accountant starts from. It does not calculate corporate income tax, track SME status, prepare PND.51 or PND.50 or submit them. Those tasks are done by your accountant with the Revenue Department.
Ask whether the company is on track to stay within the SME limits for the current period, and what the tax difference would be if it is not. Ask which expenses are likely to be disallowed and whether documentation can still be completed before the books close.
Ask about losses. Thai rules allow a tax loss to be carried forward for a limited number of years, but they impose conditions, so find out how much loss you have, how long it remains usable and whether any restructuring would jeopardise it.
Ask about dividends and about transactions with related parties. Dividend distributions bring their own withholding and meeting formalities, and transactions with related companies are expected to be at market prices and documented accordingly.
Finally, ask when the audit will be finished, since the PND.50 depends on it, and what cash the company should set aside for the balance of tax.
Write the answers into a short memo and keep it with the working papers. When the Revenue Department asks about a position years later, the memo shows what was decided, on what facts and who agreed it, which is often the difference between a quick closure and a long dispute. It also helps the next accountant, who inherits the file without having been in the room. Date and sign the memo, and attach any calculations it refers to.
The half-year profit estimate for PND.51 is based on stale numbers.
Prepare interim profit and loss statements from your books in 4softerp together with your accountant. Profit estimates and the PND.51 filing are done outside the system.
It is unclear whether the company still qualifies as an SME after a capital increase or strong growth.
Check paid-up capital and cumulative income against the SME criteria with your accountant. The system does not track SME status for you.
The company raises capital before year-end and unexpectedly loses the SME rates.
Model the tax effect of any capital increase with your accountant before the shareholders’ meeting, and decide the timing accordingly. The system does not model tax or track SME status.
The standard rate is 20 % of net profit. Companies and juristic partnerships that meet the SME criteria pay stepped rates: an exemption on the first THB 300,000 of profit, 15 % up to THB 3 million and 20 % above that. Special rates apply to some promoted businesses, so check the rules for your situation.
Those with paid-up capital not exceeding THB 5 million at the end of the accounting period and income from sales of goods or services not exceeding THB 30 million in that period. The test is repeated each period, so a capital increase or a strong year can remove the reduced scale for that period.
The half-year return is due within two months after the end of the first six months of the accounting period. It is based on an estimate of the full-year profit, and half of the estimated tax is payable. A significant underestimate can bring a surcharge, so use up-to-date interim accounts.
The annual return is due within 150 days after the end of the accounting period, and the balance of tax is paid with it after crediting the PND.51 payment and withholding tax received. The audited financial statements should therefore be ready well before that date, since the return is based on them.
Examples include expenses without proper documents, penalties, certain entertainment and gift expenses above the limits, and personal costs of directors. Depreciation must follow the rates the Code allows. Keep a list of adjustments with the legal reason for each, and agree that list with your accountant before the return is filed.
A financial ERP for your books. Calculation and filing are done with your accountant and the Revenue Department.
