FAQs: Taxation
Q:
What is the income tax rate in Thailand?
A: For
individuals, income tax is imposed at a progressive rate ranging
from 10% to 37% for a resident of Thailand. With respect to a
non-resident of Thailand, he/she is subject to income tax in the
form of a withholding tax on certain types of income earned from
or in Thailand such as commission, royalties, interest, dividends,
rent or professional fees. The withholding tax rate is 15%, except
for dividends for which the rate applied is 10%. A
resident of Thailand for tax purposes means a person (Thai or
foreign) who resides in Thailand at one or more times for an aggregate
period of 180 days or more in any tax (calendar) year. For juristic
persons (companies or juristic partnerships), income tax is imposed
at the rate of 30% of net profits. A reduction of the corporate
income tax rate is granted to certain entities.
Q:
What is the income tax on foreign source
income earned by an individual?
A: Foreign
source income includes income from a post or office held abroad,
a business carried on abroad, and a property situated abroad.
Foreign source income will be subject to Thai income tax only
if the following two conditions are met:
(1) An individual is a resident of Thailand for tax purposes,
and
(2) The income is brought into Thailand in the year that it is
earned.
If only one of the above conditions is fulfilled, the foreign
source income will not be subject to Thai income tax.
Q: What is the due date for filing tax returns
of an individual?
A: An
individual must file annual income tax returns no later than the
end of March of the following year. Half-year income tax returns
are required for individuals who earn certain types of income
such as rent, professional fees, income from construction, income
from sale of goods, etc. The half-year income tax returns must
be filed no later than the end of September of that tax year.
Q:
What is the due date for filing income tax returns of a
juristic person?
A: A juristic person
must file half-year tax returns no later than two months after the first six months
of an accounting period and annual tax returns no later than 150 days after the
end of the accounting period.
Q:
Is there any consolidation treatment whereby companies within a group may
be treated as one tax entity?
A:
There is no consolidation treatment
under Thai tax law. Each corporation is taxed as a separate legal entity.
Q:
Are payments by a Thai juristic person to a foreign juristic person
subject to any Thai income tax?
A: Payments
of certain types of income, usually in the form of service fees,
royalties, interest, dividends, rent or professional fees from
or in Thailand to a foreign juristic person not carrying on business
in Thailand are subject to income tax in the form of a withholding
tax at the rate of 15%, except for dividends for which the rate
applied is 10%. A tax exemption or reduction may be granted under
double tax treaties.
Q:
What is the Thai income tax imposed on a foreign juristic person carrying
on business in Thailand?
A:
For a foreign juristic person carrying on business in Thailand, the income
tax imposed is 30% corporate income tax on net profits and 10% profit remittance
tax on profits remitted or deemed remitted abroad.
Q:
Does Thailand have a specific capital gains tax?
A:
There is no separate capital gains tax in Thailand. Capital gains are subject
to tax in the same manner as other income.
Q:
Does Thailand have a sales tax?
A:
Thailand has a value added tax ("VAT") instead of sales tax. The VAT is
imposed on sale of goods, provision of services and import of goods into Thailand.
Q:
What is the VAT rate?
A: The
VAT is currently imposed at the rate of 7%, which was reduced
from the normal rate of 10% since April 1, 1999. From October
1, 2010 onward, the VAT rate will be raised back to 10%. For export
of goods, the VAT rate applied is 0%.
Q:
When are VAT returns filed?
A: The
VAT registrant must file VAT returns and pay tax (if any) to the
local district office monthly within 15 days from the end of the
month in which the VAT is to be accounted for.
Q: Does Thailand have an inheritance
tax or gift tax?
A: Thailand does not have specific
laws on inheritance or gift taxes. Although Thailand has personal
income tax, income and property acquired through inheritance are
exempt from this tax.
Q: What are the transfer pricing
rules in Thailand?
A: The Revenue Department has
the power to make assessments regarding transfer of assets, rendering
of services or lending of money without any compensation, service
charge or interest, or with compensation, service charge or interest
in an amount considered to be lower than the market value, without
justification. Under transfer pricing regulations, the term "market
price" is defined as the price of the remuneration, service
fee, or interest which each independent party shall set fairly
in business practice, in the transfer of assets, provision of
services, or extension of loans of the same type as on the date
of such transfer of assets, or provision of services, or extension
of loans. The term "independent party" means a party
to the contract that has no relationship with the other party
in the aspects of management, control, or joint investment, directly
or indirectly. Additionally, the Revenue Department has the power
to determine the price of imported goods by comparing them with
the price of goods of the same category and type which are delivered
to another country.
Q:
Does Thailand impose tax on stock options granted by an employer to employees?
A: The
stock options received by an employee are subject to individual income tax at
the time they are exercised. The taxable income derived from receiving stock options
is based on the difference between the exercise price and the market price of
the shares on the date of receiving ownership in such shares.
(March 12, 2009)
The above is intended to
provide general information only. The contents do not constitute
legal advice and should not be relied upon as such. If legal advice
or other expert assistance is required, the services of competent
professionals should be sought.
For
further information, please contact Ms.
Sriwan Puapondh, Partner & Head of Taxation Group (sriwan.p@tillekeandgibbins.com).
