Corporate Income Tax (CIT)

Corporate Income Tax (CIT) is a direct tax levied on a juristic company or partnership that is established in Thailand or derives income from Thailand.

Corporate income tax is levied on both Thai and foreign companies on the net profit at the end of each accounting period of 12 months.
A Thai company is subject to tax in Thailand on its worldwide net profit.
A foreign company, doing business in Thailand is subject to corporate tax only for net profit arising from business carried on in Thailand.
When a foreign company withdraws its profit from Thailand, such profit will be subject to tax on the disposed amount.

Basis for Corporate Tax calculation

In the calculation of CIT of a company carrying on business in Thailand, it is calculated from the company's net profit on the accrual basis.
The net profit is difference between all revenue arising from business and all expenses in accordance with the condition prescribed by the Revenue Code.
As for dividend income, one-half of the dividends received by Thai companies from any other Thai companies may be excluded from the taxable income; however the full amount may be excluded if the recipient is a company listed in the Stock Exchange of Thailand or the recipient owns at least 25% of the distributing company's capital interest.
Inventory should be valued at cost or market price, whichever is lower.
A net loss carry-over for a five-year period is allowed.

Deductible Costs for Corporate Tax calculation

1. Ordinary and necessary expenses. I.e. expenses and purchases to run the business. Special rates apply for expenses of research and development (200% of the actual cost), job training expenses (150% of actual cost) and expenditure of equipment for disabled (200% of the expenses).
   
2. Interest, except interest on capital reserves and interest on company funding. If a company has shared capital that is not fully paid yet, a loan to the owners will substitute the shortcoming amount. The company is considered to have gained interest profit from its loan.
   
3. Taxes, except for Corporate Tax and VAT.
   
4. Net losses carried forward from the last 5 years.
   
5. Write-Offs on bad debts. Be aware to have proof of bad debts i.e. correspondence on getting the payment.
   
6. Devaluation and missing stock.
   
7. Entertainment expenses limited to 0.3% of the gross income; or fully paid up on share capital whichever is higher..
   
8. Depreciation that follows a consistent depreciation scheme. Once an asset's depreciation is started, the yearly depreciation rate should not change. Depreciation periods vary per type of assets ranging from 3 years, for computers, to 20 years for buildings.
   
9. Donations up to 2% of the net profit.
   
10. Provident fund contributions.

Corporate Income Tax rates

The corporate income tax rate in Thailand is 30% on net profit. However, the rates vary depending on types of taxpayers.

• Small Company, a company with paid-up capital less than 5 million Baht.
  • Net profit not exceeding 150,000 Baht (exempt)
    
  • Net profit over 150,000 Baht but not exceeding 1 million Baht (15%)
    
  • Net profit over 1 million but not higher than 3 million Baht (25%)
    
  • Net profit exceeding 3 million Baht (30%)
    
• Medium Company, a company with a paid-up capital more than 5 million Baht, pays 30% corporate income tax.
  
• Special rates apply for companies listed in the Stock Exchange of Thailand, foreign companies carrying on business in Thailand, profitable associations and foundations, international banks and companies listed in the market for alternative investments.

Corporate Income Tax submission and payment

Thai and foreign companies carrying on business in Thailand are required to file their tax submission (Form CIT 50) within 150 days from the closing date of their accounting periods.
Tax payment must be done together with the tax submission.
Any company disposing funds representing profits out of Thailand is also required to pay tax on the disposed sum within seven days from the disposal date (Form CIT 54).

In addition to the annual tax payment, any company subject to CIT is also required to make a half-year tax prepayment (Form CIT 51).
Companies are obliged to forecast their annual net profit and pre-pay half of the estimated yearly CIT within two months after the end of the first six months of its accounting period.