When establishing a business in Thailand there are three main types of company structures to consider, and under Thai law, different tax implications arise for each type of company.
Limited companies – including wholly-owned subsidiaries of foreign companies established under Thai law; Ordinary and limited liability partnerships; and Branches of foreign companies earning income from within Thailand.
The JusLaws Taxation Practice provides clients with practical, cost-effective advice on selecting the most suitable company type for carrying out business in Thailand and in structuring corporate taxes.
Companies and partnerships established under Thai law are subject to tax on income derived from sources both within and outside of Thailand. Generally, the corporate income tax (CIT) rate is 30 percent. CIT is imposed on the worldwide net profits of Thai companies. It is also levied on the net profits of Thai-sourced income of foreign companies.
The majority of foreigners doing business in Thailand choose to establish a Thai limited company.
Our Taxation Practice has unparalleled expertise and experience in providing corporate tax planning services to individuals and investors establishing their businesses in Thailand. Areas of consideration include –
Taxpayer Both Thai companies and foreign companies doing business in Thailand are subject to CIT. A Thai company is one that has been set up under Thai law. CIT is imposed on its worldwide net profits.
A foreign company can be established under the laws of Thailand for the purpose of carrying out business in Thailand. It is subject to CIT on net profits derived from its business activity in Thailand. A foreign company can also be one that does not actually do business in Thailand but derives income from within Thailand in the form of dividends, interest, rents, professional fees, or service fees. The gross amount of income received is subject to CIT.
Tax calculation CIT is based on the net profits of a company.
Withholding tax There are certain types of income for which tax must be withheld at the source. The rate is determined by the type of income involved and the tax status of the recipient.
Tax rates The rates vary depending on the type of taxpayer. In most instances, the CIT rate is 30 percent on net profits, but the Small and Medium Enterprise (SME) rate ranges from zero, for exempt companies, up to 30 percent.
Tax payments These are levied at the end of each 12-month accounting period.