The main tax law applicable to FDI in Thailand is the Tax Code (“RC”), which covers the following taxes: –
(1) Corporate tax (“IS”)
CIT applies to companies and legal entities registered in Thailand or registered abroad but carrying on business in Thailand. With the exception of SMEs, companies registered in Thailand pay CIT based on their local and global income at the current rate of 20% of net profits. Foreign-registered companies doing business in Thailand are taxed on their net income from their operations in Thailand, with the exception of foreign companies engaged in international transport activities (e.g. international airlines, airlines, cruise lines and container ship operators), which are taxed on their gross income. Income.
(2) Personal income tax
A person resident in Thailand (anyone who spends 180 days or more in Thailand in a fiscal year) is subject to personal income tax on taxable income received in Thailand and income received in Thailand. foreign and imported into Thailand in a given tax year (calendar year). Personal income tax rates are progressive and range from 0% to 35%. A taxpayer can deduct personal expenses and certain allowances from gross income before calculating personal income tax, under certain conditions.
(3) Withholding tax
An investor based outside of Thailand who does not carry on a business in Thailand, but who receives taxable income, such as interest, dividends, or service charges, generated from Thailand is subject to withholding tax. at source at the rate of 10% (for dividends) and 15% (for other types of income) to be withheld by the payer from these payments. An exemption from withholding tax may apply under a double taxation treaty between Thailand and the country of origin of the income recipients.
(4) Value added tax (“VAT”)
A VAT registered business operator is required to charge VAT to customers on the sale of goods and provision of services. VAT is also due on the importation of goods. The current rate of VAT is 7%. Certain types of business, such as transport services (except international transport by air or sea vessel), are not subject to VAT. A business operator must remit the VAT collected from customers to the tax authorities once a month.
(5) Tax specific to companies (“SBT”)
Some companies are not subject to VAT but they are subject to an SBT according to their gross income received. These activities include commercial banking, finance, life insurance, factoring, real estate trading and stock trading on Thai stock exchanges (SET and MAI), etc. SBT’s current rates are 0.01% to 3.00% on the affected income. , depending on the type of business.
(6) Stamp duty
The RC requires that certain instruments, such as rental contracts, stock transfer instruments, hire-purchase contracts, powers of attorney, be provided with customs stamps indicating the payment of stamp duty, which is calculated at different rate according to the type of instrument. For example, a power of attorney is subject to a stamp duty of 30 THB per appointed agent. For some instruments, such as a loan agreement or a real estate rental agreement, with a transaction value greater than THB 1 million, payment of the stamp duty is made to the relevant government office.