subject: Quick Thai Law Guide To Juristic Income Tax [print this page] Corporate income tax under Thai law is administered in a way that many accountants in other countries wish their income tax was set up - it is quite simple in comparison to the rafts of codas, provisions, proofs and paperwork that is required elsewhere. Corporate income tax is officially known as juristic income tax under Thai law; today Thai business law firms take you through the basics of the system.
What is juristic income tax levied on?
Thai law firms note that juristic income tax is levied on net profit; any expenses for a business will effectively come out of your pre-tax income. Jursitc companies and partnerships, including private and public limited companies, foundations, joint ventures and associations must pay corporate income tax.
In some cases companies with foreign-derived income operating in Thailand also have to pay income tax; Thai law firms note that the country is not often earmarked as a desirable jurisdiction for offshore companies. If a company satisfies any of the following conditions, they will need to pay juristic income tax in Thailand:
- The company has an employee, representative or go-between in Thailand
- The company derives income or gains from Thailand
- The company owns or rents premises for the purpose of carrying on business in the country.
Juristic income tax rates under Thai law
Most juristic taxpayers have a flat rate of 30% to pay on their profits, after deductibles have been taken off (see below). However, taxation rates are lowered in some special cases:
- If your company is a small to medium enterprise and has less than TB 5 million of paid up capital, a sliding tax scale is applicable. The first TB 1 million of profit is taxed at 15%; TB 1 million to TB 3 million is taxed at 25%, and TB 3 million and above is taxed at 30%.
- If your company is listed on the Stock Exchange of Thailand (see Thai corporate legal services for assistance in setting this up), the first 5 years of profit can be reduced by up to 5% off the normal 30% rate.
- Companies that are established as Regional Operating Headquarters (ROHs) recently had their significant long-time tax breaks extended, according to Thailand business law experts. At certain income levels the juristic tax rates for ROHS can be reduced as low as 10% of net profit.
The conditions a company must satisfy and the income which is actually subject to the reductions can be quite complex; most companies which have ROHs in the country utilize Thailand corporate legal services to determine their eligibility and income which attracts discounted rates.
Juristic income tax deductions
These fall into 5 main categories:
- Normal business expenses
- Depreciation allowances
- Employer contributions to pension and provident funds
