Thailand Cuts Taxes on Business, Individuals

September 11th, 2013
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Note: This law is expected to pass the Thai Parliament in March, 2014.

Thailand’s tax structure is similar to that of many other countries in that tax rates are progressive for both business and individuals. In a move to boost the country’s economy by stimulating growth, the Thai Cabinet recently approved reductions in both sets of rates. The top corporate rate is being lowered to 20% from 23%, and the top individual rate will come down to 35%, from 37%. Most other brackets are being reduced as well.

New Tax Rates Take Effect Soon

Thailand's Complex Tax Structure

Thailand’s Complex Tax Structure

Corporate income tax is levied on activities in Thailand or deriving certain types of income from Thailand from outside the country. Tax rates on businesses depend on ownership structure. As of the 2013 tax year, both partnerships and individual owners (non-juristic persons) will be taxed at a rate of 20% of net or estimated income. According to the Thailand Revenue Department, the following rates will apply:

Tax Rates
Tax Payer Tax Base Rate
Small Company Net profit not exceeding 1 million Bht 20%
Companies listed in Stock Exchange of Thailand (SET) – Net profit for first 300 million Bht – Net profit for the amount exceeding 300 million baht -25% -30%
Companies newly listed in Stock Exchange of Thailand (SET) Net Profit 25%
Company newly listed in Market for Alternative Investment (MAI) – Net Profit for the amount not exceeding 50 millions baht 25%
Bank deriving profits from International Banking Facilities (IBF) Net profit 10%
Foreign company engaging in international transportation Gross receipts 3%
Foreign company not carrying on business in Thailand receiving dividends from Thailand Gross receipts 10%
Foreign company not carrying on business in Thailand receiving other types of income apart from dividend from Thailand Gross receipts 15%
Foreign company disposing profit out of Thailand. Amount disposed 10%
Profitable association and foundation. Gross receipts 2% or 10%
Small Company Net profit not exceeding 1 million Bht 20%

Despite the reduction, calculations of actual taxes due remain complex. For example, a business must pay taxes on either the previous year’s net income or the previous year’s tax liability. The difference between the two is that the latter is defined as the amount of tax liable before any withholding is considered. Penalties for underpayment can be as high as 20% of the additional amount due. Rates on most personal income tax brackets will be as follows:

Personal Income Tax (Bht X 1,000)
Income Old Rate New Rate
0 – 300 10% 5%
300 – 500 10% 10%
500 – 750 20% 15%
750 – 1,000 20% 20%
1,000 – 2,000 30% 20%
2,000 – 4,000 30% 30%
Above 4,000 37% 35%

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