Thailand corporate taxation update
Speaker on the Thai Tax Regulatory Updates & Efficient Tax Planning conference
The tax conference in Bangkok gave an update on Thailand’s tax legislation and the policy of its Revenue Department. PUGNATORIUS Ltd. lectured on “The implications of Thailand’s corporate income tax rate for international tax planning” in front of an international auditorium of foreign investors.
Thai domestic taxation and tax planning opportunities
Thailand’s corporations are taxed on their worldwide income. The corporate income tax rate amounts 20%. Lower rates apply for SME’s with a paid-up capital of no more than THB 5 million and revenue of no more than THB 30 million. Losses can be carried forward for up to five years. A loss carryback is not possible. Thailand has no group taxation (tax consolidation).
On dividends, a withholding tax of 10% is due which can be deducted from the Thai personal income tax of the shareholder. Alternatively, this amount can be deemed as the final tax burden. Income from dividends is tax exempted under certain conditions.
Thailand has transfer pricing rules, but no thin-capitalization or controlled foreign company legislation. The tax year is the accounting period of not more than twelve months. Tax returns are due 150 days after the accounting period ends.
Thailand’s Board of Investment grants significant tax incentives, including tax holidays for, e.g., eight years.
The Value Added Tax rate amounts generally 7%. Companies with an annual turnover of not more than THB 1.8 million baht are exempted from VAT.
International tax planning utilizes the fact, that international tax systems are not harmonized, and that each country provides a specific tax environment for local (and international) business activities. Non-application of the tools and modules of international tax planning instruments results in a voluntarily and unnecessarily high tax burden.
The Thai Tax Amnesty Act 2019
Under the “Act for the Exemption on Penalties, Surcharges, and Criminal Offenses and Support of Operations Under the Revenue Code, B.E. 2562”, SME’s are exempted from penalties, surcharges, and any criminal charges regarding CIT, value-added tax (VAT), specific business tax (SBT), and stamp duty on any incorrect or unfiled tax returns before March 26, 2019.
To participate in this program requires online registration with Thailand’s Revenue Department on or before June 30, 2019. A registration receipt has to be submitted together with the tax returns.
This program follows the Thailand Tax Amnesty Act 2015, the “Royal Act on the Exemption and Support for Tax Operations Under the Revenue Code, B.E. 2558” granting certain amnesty regarding income for the accounting period ending on or before January 1, 2016.
Thai tax advice and international tax planning
At PUGNATORIUS, structuring international transactions, operations, and investments is an active segment of our practice. To break the rules you have to know them. The law firm offers tailor-made, flexible solutions in the following tax matters:
- Worldwide tax minimization, international tax planning for both corporate and personal needs including the use of offshore companies.
- Tax-efficient structuring of cross-border investments, including the optimum use of tax treaties, foreign tax credits, tax deferral, and entity classifications.
- Reorganization of corporations and partnerships, tax structuring advice for international groups, tax efficient holding company locations.
- Transfer pricing strategies, arm’s length pricing.
- Contract manufacturing and toll manufacturing, stripped or limited risk distributorship schemes, tax-efficient lump-sum turnkey contracts.
- BEPS, Base erosion and profit shifting strategies.
- Personal income tax planning combined with cross-border estate planning and asset protection schemes.
- Compliance with anti-abuse and GAAR general anti-avoidance rules.
The firm provides strategic international tax advice and individually tailored tax planning solutions for the needs of a demanding corporate and private clientele from all over the world. Security in an insecure tax environment. Tax strategies for challenging times.