Corporate income tax in Thailand plays a crucial role when establishing a limited company, as it must be registered alongside the business registration. Companies must then submit annual accounting documents to the Revenue Department to ensure compliance and benefit from government support, particularly for SMEs.

Corporate income tax in Thailand targets juristic companies or partnerships operating within the country, as well as those earning income from Thailand without directly conducting business there. To navigate this, business owners should understand CIT to comply with regulations, optimise tax liabilities, and prevent legal issues. This knowledge facilitates strategic financial planning, accurate reporting, and effective management of company finances.

Types of entities liable for corporate income tax in Thailand

A: Domestic Entities: Companies incorporated under Thai law

Limited company
Public company limited
Limited partnership
Registered partnership

B : Foreign Entities: Companies or juristic persons incorporated under foreign law

Companies or partnerships incorporated abroad and conducting business in Thailand.
Entities incorporated abroad, conducting business elsewhere, including Thailand, in the case of goods or passenger transportation.
Foreign entities with employees, agents, or go-betweens conducting business in Thailand and receiving income or profits within the country.
Foreign entities not conducting business in Thailand but receiving assessable income under specific provisions of the Revenue Code.

C : Foreign Government Entities : Foreign governments, organisations, or other entities operating businesses in Thailand.

D : Joint Ventured

E : Foundations and Associations: Engaged in revenue-generating activities, excluding those specified by the Minister under the Revenue Code.

Tax return and payment for corporate income tax in Thailand

Annual Tax Returns:
- In addition to filing their tax returns (Form CIT 50) within 150 days after their accounting period’s end, Thai and foreign companies operating in Thailand must also ensure that tax payments accompany these returns. (Form CIT 50) (Free download for translation purpose only)
Profit Remittance Tax:
- Furthermore, companies remitting profits outside Thailand are subject to tax on those amounts.
- This tax is payable within seven days of the transfer date (Form CIT 54).
Half Year Tax Filing and Tax Prepayments:
- As a result, companies subject to CIT on net profits must make tax prepayments (Form CIT 51). (Form CIT 51) (Free download for translation purpose only)
- To calculate this prepayment, they estimate their annual net profit and tax liability, paying half of this estimated amount within two months after the first six months of their accounting period.
- As a result, the prepaid tax is offset against the annual tax liability.
Withholding Tax for Foreign Companies:
- Finally, a flat-rate tax applies to income paid to foreign companies not conducting business in Thailand.
- Therefore, the payer withholds tax at source during payment and files the return (Form CIT 54) within seven days of the following month.

Accounting Period

The accounting period is typically twelve months, with exceptions:

Newly incorporated entities may opt to use a period from their incorporation date to a specific date as their first accounting period.
Furthermore, companies may request the Director-General to modify the end date of an accounting period.
In response to such a request, the Director-General grants approval at his discretion.
Subsequently, the Director-General notifies the company within a reasonable time.

Corporate Tax Calculation in Thailand

CIT is calculated based on net profit on an accrual basis. Companies account for all revenue from their business during an accounting period, deducting expenses according to Revenue Code provisions. Dividend income from other Thai companies may be excluded from taxable income, with certain conditions.

Net Profit for Corporate Tax = Net Profit as per Financial Statements (Accrual Basis) + Non-Deductible Expenses – Income Not Recognized for Tax Purposes

Tax Rates for Corporations in Thailand

The corporate income tax rate in Thailand is 20% on net profit (for accounting periods 2015). However, rates vary depending on the taxpayer:

Income Not Recognised for Tax Purposes

In Thailand, for corporate tax purposes, certain items of income must be added back to the net profit reported in the financial statements to determine the taxable income. These adjustments are necessary because some forms of income recognised in financial statements might not be considered taxable, or there are specific tax adjustments required. Here are common examples of income that may need to be added back:

1. Non-Taxable Income

Dividend Income: Dividends received from Thai companies are generally exempt from corporate income tax, so they need to be added back if included in the financial statements.
Capital Gains: Certain capital gains, such as those from the sale of investments that are exempt under tax laws, should be added back.

2. Income Not Recognised for Tax Purposes

Unrealised Gains: Gains that are recognised in financial statements but not yet realised (e.g., revaluation gains) may need to be added back.
Foreign Income: Some foreign income might not be subject to Thai tax, necessitating an adjustment.

3. Specific Tax Adjustments

Tax Incentives: Income that benefits from tax incentives or exemptions (e.g., from BOI-promoted activities) may need to be adjusted according to specific tax regulations.
Adjustments for Accounting Policies: Differences between accounting standards and tax laws may require certain adjustments, such as provisions or adjustments for deferred tax.

Corporate Tax Regulation for SME in Thailand

Thailand’s tax rate structure actively supports Small and Medium Enterprises (SMEs) by providing lower tax rates to eligible companies. Below, we present a detailed breakdown of the SME corporate income tax rates.

1. Eligibility Criteria for SME Tax Rates:

To qualify as a small and medium-sized enterprise (SME) in Thailand, a company must be registered under Thai law.
Furthermore, the company’s paid-up capital should not exceed THB 5 million at the end of the accounting period.
Additionally, the company’s annual income (gross receipts) must not exceed THB 30 million.

2. SME Corporate Income Tax Rates:

Net Profit Up to THB 300,000: Exempt from corporate income tax.
Net Profit from THB 300,001 to THB 3,000,000: Taxed at 15%.
Net Profit Over THB 3,000,000: Taxed at 20%.

3. Additional Considerations:

SMEs may be eligible for further tax incentives, such as deductions for certain expenses or additional allowances, depending on government policies and specific industry regulations.
It’s crucial for SMEs to maintain accurate financial records to ensure they qualify for these rates and benefits, as the Revenue Department may require documentation to verify eligibility.

These tax rates are designed to reduce the financial burden on smaller businesses and encourage their growth and development within Thailand’s economy.

Summary of Fines, Penalties, and Surcharges for Corporate Income Tax in Thailand

Late Filing Penalties

Fine: 2,000 THB for each late filing instance.
Surcharge: 1.5% per month on the tax due, capped at the total tax amount.

Incorrect Filing or Non-Filing Penalties

Fines: Up to 200% of the tax due.
Legal action: Possible legal consequences.

Voluntary Disclosure

Reduced penalties: May be eligible for reduced penalties if underpayment is voluntarily disclosed before an audit by the Revenue Department.

Form Submission Requirements

Form	Submission Deadline	Penalty for Late Submission
PND 50(Annual Tax Return)	Within 150 days from the end of the accounting period	2,000 THB (up to 7 days late), 4,000 THB (more than 7 days late)
PND 51(Half-Year Tax Return)	Within 2 months from the end of the first 6 months of the accounting period	1,000 THB (up to 7 days late), 2,000 THB (more than 7 days late)

Surcharges for Late or Underpaid Taxes

Late submission of annual tax return: 1.5% per month surcharge.
Underpayment of half-year tax: 20% surcharge on the underpaid amount.

Calculation of Half-Year Tax

Listed companies, banks, and institutions: Based on actual net profit.
Other Companies: Based on half of the estimated net profit for the entire year.

Penalties for Underestimation

Surcharge: 20% on the tax shortfall if the CIT 51 submitted net profit estimate is more than 25% off.
Maximum fine: THB 2,000 for late filing.

Justifiable Reasons for Underestimation

Half-year tax payable is at least half of the previous year’s total tax payable.
Half-year tax payable is less than half due to a tax exemption or reduction but based on at least half of the previous year’s actual net profit.

Understanding and properly managing corporate income tax in Thailand is crucial for every limited company. Failing to do so can result in significant penalty charges if there are any missing details when filing and submitting to the Revenue Department. SMEBAAS provides full-service tax support as well as expert collaboration.

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