Thailand

4. Taxation

Governed by the Revenue Code, Thailand has Value Added Tax (VAT), Personal Income Tax, and Corporate Income Tax along with customs duty and excise tax, property tax, municipal tax, stamp tax, and sign board tax. Thailand has Double Tax Treaties in force with 55 countries, and seven ASEAN members – Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, and Vietnam – are included in this number. In March 2012, the Thai government approved nine new tax treaties between Thailand and Brunei, Estonia, Ireland, Kenya, Lithuania, Morocco, Papua New Guinea, Tajikistan, and Zimbabwe that will come into effect when the diplomatic procedures are complete. Regarding a Double Tax Treaty between Thailand and Cambodia, in a press release by the Director-General of the Revenue Department in May 2012, he stressed the importance of having a tax treaty between Thailand and all AEC members and that negotiations with Cambodia would start as soon as possible.

 

Question: According to the Revenue code, what kinds of tax does Thailand have?

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4.1  Value added tax (VAT) – Value added tax (VAT) is a non-cumulative consumption tax levied on all goods and services at a reduced rate of 7% that will return to 10% in 2014. Individuals and businesses that supply goods or services must register as VAT operators except when annual turnover is less than 1.8 million baht. Some business types are excluded from VAT payment and pay the Specific Business Tax (SBT) that’s 0.1%to 3% of gross receipts.

 

Question: What is VAT?

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4.2  Personal income tax – Personal income tax rates apply for tax residents and non-residents. Residents pay tax on all income from sources within Thailand and any foreign income remitted into the country. Non-residents only pay tax on their Thailand income. Individuals living in Thailand for 180 days or more in a year are considered residents. Thailand recently changed its personal income tax rate structure, and for the 2013 and 2014 tax years, all personal income will be taxed at a progressive rate of 5% up to 35% and tax brackets have been expanded from five to seven. Most capital gains are considered income. The standard deduction for a taxpayer is up THB 60,000 plus up to another THB 60,000 for their spouse along with THB 15,000 a child (limited to 3 children), and other qualified donations aggregating to not more than 10% of the net income before tax.

 

Question: What is the tax rate for residents and non-residents in Thailand?

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4.3  Corporate income tax – All juristic persons, entities created or registered according to the law, are subject to Corporate Income Tax. To become more competitive before the 2015 ASEAN Economic Community integration, Thailand dropped its corporate tax rate to 23% on 1 January 2012 and dropped it further to 20% on 1 January 2013. For Thai SMEs with a paid up capital not exceeding baht 5 million and an income not exceeding baht 30 million, the first THB 150,000 is exempt and then up to THB 1 million is taxed at 15%. Above THB 1 million comes under normal corporate tax rates.

 

Question: Why did Thailand drop its corporate tax rate?

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 (Source: http://www.dejudomlaw.com/guide/december-2013/ retrieved 11/2/2014)

 

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