Corporate tax structuring in Thailand

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.

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.

Tax planning for corporate income taxation, personal income taxation, wealth taxation: Tax planning is not limited to corporations and multinational organizations. Personal income tax planning gains significant importance in the case of multinational families. Families with members, assets or income sources in different countries can benefit from tax planning instruments to avoid taxes on certain activities, to minimize the overall income tax liability and to shift the timing of a taxable event.

The BEPS initiative (Base erosion and profit shifting) of the OECD is a game changer to the tax world as we know it. International tax planning is placed on a new foundation. Ask us how BEPS will be a disruptive factor to your value chain strategy.

PUGNATORIUS can efficiently and precisely set out a strategy to manage your ongoing tax exposure both locally and internationally, taking into account the bigger picture. The firm provides professional advice for mitigating taxation in an efficient, innovative and legal way. Since international tax issues can impact business operations anywhere around the globe, we maintain long-term, handpicked relationships with global affiliates that share our policy and standards.

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.

If you have any queries about what we do, or if you would like to approach us to discuss your legal requirements, please e-mail, message or call us using the details set out on the top of this page. 

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