Companies incorporated in Thailand are taxed on worldwide income. A company incorporated abroad (i.e. a company organised under foreign laws or a foreign company) is taxed on its profits arising from or in consequence of the business carried on in Thailand.
The corporate income tax (CIT) rate is 20%.
A foreign company not carrying on business in Thailand is subject to a final withholding tax (WHT) on certain types of assessable income (e.g. interest, dividends, royalties, rentals, and service fees) paid from or in Thailand. The rate of tax is generally 15%, except for dividends, which is 10%, while other rates may apply under the provisions of a double tax treaty (DTT).
Rates for companies with low paid-in capital and income
Companies and juristic partnerships with paid-in capital not exceeding 5 million Thai baht (THB) at the end of any accounting period and income from the sale of goods and/or the provision of services not exceeding THB 30 million are subject to tax at the following rates:
|Net profit (THB)||Tax rate (%)|
|0 to 300,000||0|
|300,001 to 3 million||15|
|Over 3 million||20|
Petroleum income tax
International oil companies can engage in exploration and production activities in Thailand under a concession, a production sharing contract, or a service contract.
Taxation on income from petroleum operations is imposed on petroleum concessionaire companies and production sharing producers by the Petroleum Income Tax Acts (PITA). Petroleum companies under a service contract are not taxed under the PITA but under the Revenue Code.
Companies taxed under the PITA are exempt from taxes and duties on income imposed under the Revenue Code and under any other laws. The exemption applies provided that the company pays taxes and duties on income subject to the PITA or on dividends paid out of income subject to the PITA.
Petroleum companies under a concession are taxed at the rate of 50% of their annual net profit from petroleum operations, including profit from the transfer of their concession interests and other activities incidental to the petroleum operations. Deductions are allowed for ‘ordinary and necessary’ business expenses, as well as depreciation of capital expenditure, petroleum royalties, and other charges. Certain types of expenses are specifically disallowed for deduction, including interest.
A production sharing producer is taxed at the rate of 20% of its annual net profit derived from its petroleum business, including profits derived from the transfer of interests in the nature of rights, annuity, or any other recurring income as a consequence thereof.
Petroleum companies subject to PITA, including companies that have entered into a production sharing contract, can adopt (with the permission of the Director-General) a foreign functional currency for preparing its accounting books and records and keep them in a foreign language. Where this is adopted, the foreign functional currency must be used when calculating the net profit subject to petroleum income tax.
Local income taxes
There are no local government taxes on income in Thailand.