Consumption taxes

Nature of the tax

Value Added Tax (VAT) has been implemented in Thailand since 1992 replacing Business Tax (BT). VAT is an indirect tax imposed on the value added of each stage of production and distribution.

Tax rate

The rate is currently 7% (it is suppose to be increase to 10% in October 2010 but this sensitive measure could be postpone),

Reduced tax rate

Certain activities are liable to VAT at the rate of zero percent:
- export of goods;
- services rendered in Thailand and utilized outside Thailand in accordance with rule, procedure and condition prescribed by the Director-General;
- aircraft or sea-vessels engaging in international transportation;
- supply of goods and services to government agencies or state-owned enterprises;
- supply of goods and services to the United Nations and its agencies as well as embassies, consulate-general and consulates;
- supply of goods and services between bonded warehouses or between enterprises located in EPZs.

Other consumption taxes

None

Corporate taxes

Tax rate

Tax rate for foreign companies

Non residents have to pay the VAT.

Capital gains taxation

All earned income from capital gains is taxed the same as regular income.

Main allowable deductions and tax credit

Certain exemptions from corporate income tax are provided under the Revenue Code, Royal Decrees issued under the Revenue Code, and the Investment Promotion Act :

-Dividends paid by a limited company, registered under Thai law, to another Thai limited company or to a company registered under the law governing the Stock Exchange of Thailand may be exempt from corporate income tax, if the holding of the shares in the payer company is in compliance with conditions prescribed in the Revenue Code.

- A reduction or exemption from tax may be granted to juristic entities in accordance with tax treaties between Thailand and foreign countries.

- A corporate income tax exemption for a period of 3 to 8 years may be granted to promoted businesses under the Investment Promotion Act.

In addition, dividends, fees for goodwill, copyright or other rights received from the promoted businesses may also be exempt from income tax in the hands of the recipient.   Regarding Deductible Expenses and Allowance:

Generally, expenses incurred exclusively for the purpose of generating income or for the purpose of business, are tax deductible. However, the deduction of some expenses and allowances must comply with the rules prescribed in the Revenue Code.

For additional information access the 2009 DELOITTE tax guide on Thailand.

Other corporate taxes

A 12.5% taxe is levied on the rental value of real property. A 3.3% transfer tax also apply on immovable property.

Individual taxes

Tax rate

Allowable deductions and tax credit

Income which is exempt from personal income tax concerns in particular:
- transport expenses spent in good faith by an employee or a holder of office exclusively, and wholly for carrying out his/her duties;
- medical expenses paid by an employer for an employee and his/her family;
- share of profits obtained from a non-registered ordinary partnership or a group of persons;
- income from sale of securities on the Stock Exchange of Thailand

Some deductions are also in place and are detailed on the Revenue Department web site.

Special expatriate tax regime

Expatriates working for qualifying regional operating headquarters in Thailand may opt to be taxed at the final withholding tax rate of 15% instead of the normal progressive tax rates for a maximum period of 4 consecutive years, whether or not he or she has occasionally been travelling out of Thailand during that period.

Double taxation treaties

Countries with whom a double taxation treaty have been signed

See the list of the convention signed by Thailand

Withholding taxes

Dividends: 10%, Interest: 15%, Royalties: 15%

Bilateral agreement

Sources of fiscal information

Tax Authorities

Thai Customs

Revenue Department of Thailand

Other domestic resources

Thailand tax overview