The tax year for a company is its accounting period, which must be of 12 months’ duration. However, it may be less than 12 months in the case of the first accounting period after incorporation, the accounting period of dissolution, or after approval for a change in the accounting period has been received from the Revenue Department and the Business Development Department.
The tax system is one of self-assessment. A company prepares and files its tax returns by the due dates and at the same time pays the taxes calculated to be due. The annual CIT return is due 150 days from the closing date of the accounting period.
A half-year CIT return must be filed within two months after the end of the first six months of an accounting period. The tax is computed on one-half of the estimated profit for the full accounting period, except for listed companies, banks, certain other financial institutions, and other companies under prescribed conditions, where the tax is based on the actual net profit for the first six months.
Payment of tax
CIT is paid twice in each year at the time of filing the tax returns as above. The balance of the tax due is payable within 150 days from the closing date of the accounting period. Credit is given for the amount of tax paid at the half-year.
Tax audit process
If, within a period of two years from the date of filing a tax return, the assessment officer has reason to believe that false or inadequate information has been declared in a return, the assessment officer has the power to issue a summons requesting the presence of the person responsible, or a witness, for examination, and to order either of them to produce accounts or other relevant evidence, provided that advance notice of seven days is given. The subsequent examination of the books and records is normally carried out at the company's offices if it is inconvenient to transfer all the documents to the tax office. After completion of the examination, the assessment officer has the power to adjust the amounts previously assessed or included in a return on the basis of the evidence, and issue a further assessment for tax together with penalties and surcharges, or adjust the amount of losses available for carryforward.
Tax audits may cover the previous five accounting periods from the date of filing a tax return with the approval of the Director-General if the assessment officer has evidence of an intention to evade tax or in the case of a claim for a refund of tax. However, under the Civil and Commercial Code, the Revenue Department can assess tax for up to ten years.
Statute of limitations
The statute of limitations for tax is ten years.
Topics of focus for tax authorities
Topics of focus for tax authorities currently include the following:
- Deductibility of management service fees or expenses allocated to Thailand by foreign affiliates.
- International inter-company transactions and transfer pricing.