Thailand corporate taxation update

PUGNATORIUS Ltd. as the 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. 

After the conference was held several years ago, the views and requirements regarding Thai taxes have changed significantly. New, highly dynamic developments, require that one must adjust to a moving target. The Bangkok tax law firm is the dedicated Thai tax counsel of the international Advisory Excellence Group. It monitors new tax developments and provides tax-efficient solutions for investments 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. 

Traditional Thai tax principles: 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.

BOI tax holidays: Thailand’s Board of Investment grants significant tax incentives, including tax holidays for, e.g., eight years. 

VAT: 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 structuring: 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 PUGNATORIUSLtd., structuring international transactions, operations, and investments is an active segment of its 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.

Disclaimer: A little knowledge is a dangerous thing. This low-resolution high-level outlook constitutes neither legal advice nor an attorney-client relationship.

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