How Do Taxes Work for Foreign Businesses in Thailand?

It has been increasingly easier to do business in Thailand over the past several years, so it hasn’t caught many Thai nationals by surprise that many foreigners want to invest here. 

But when you’re operating in a new country, it’s important to be familiar with the various regulations that apply to your business, such as Thailand’s accounting standards and tax policies.  

So from Thailand’s withholding tax rates to customs duties, let’s have a closer look at the taxes that foreigners are subject to when they set up shop here. 

What Taxes Apply to Foreign Companies in Thailand? 

Corporate Income Tax

The government levies corporate income taxes (CIT) on companies that were incorporated here and overseas ones that earn from activities in Thailand. The standard rate is 20%, but this can be lower depending on your annual revenue. For example, smaller businesses with a paid-up capital below 5 million THB can have the following tax rates: 

• 0% for profits not exceeding 300,000 THB

• 15% for profits between 300,001 to 3 million THB

• 20% for profits greater than 3 million THB

If you run a branch office in Thailand, the remittances made to the overseas head office also have a 10% branch tax. 

Withholding Tax

Foreign-owned companies are subject to withholding tax in Thailand (WHT) regardless of whether they directly do business here or are generating income from Thai activities. The types of payments that require WHT include: 

• Services

• Royalties 

• Interest 

• Dividends

• Capital

Value-Added Tax 

Thailand also imposes a 7% VAT on many goods and services offered by businesses here — including foreign-owned companies. However, there are exemptions to this, such as basic groceries, healthcare, and education. 

Specific Business Tax

Some businesses like banking, insurance, and real estate services are subject to this tax instead of corporate income taxes. The rates range from 0.01 to 3% depending on the type of business activity, but there’s also an additional municipality tax of 10%. 

Foreign Businesses Enjoy Tax Benefits Too 

Fortunately for many foreign entrepreneurs, Thailand offers several tax incentives and exemptions for companies in certain business sectors. For instance, if you received a BOI promotion, you could enjoy corporate tax exemptions for a period ranging between 3 to 13 years. Transportation and utility costs, as well as expenses related to training and R&D, can all have considerable deductions. 

You may also enjoy reduced tax rates if you come from a country with a double taxation agreement with Thailand. 

Get Expert Help With Your Tax Accounting in Thailand 

The country’s taxation system can be quite a handful to deal with, regardless of how experienced you are as a business owner.  It’s highly advisable to hire one of Thailand’s accounting firms to handle your tax obligations. They can take over tasks such as:

• Claim deductions and manage tax refunds

• Advise you on various ways to legally reduce your taxes

• Calculate your tax returns accurately and file them on your behalf

Working with an experienced accounting team can save you precious time and unwanted stress — a game changer for any up-and-coming business. 

Do Your Taxes Right to Thrive in Thailand

Running a prosperous business can no doubt be a rewarding experience for any foreigner in Thailand. However, you should start familiarising yourself with the rules that apply to your enterprise, be it Thailand’s withholding tax rates or tax incentives. When you understand these and implement them correctly, you stand a better chance of thriving here. 

And do keep in mind that you can always engage with an accounting firm in Thailand. With their help in handling your money, you can keep your eyes on the horizon and become the successful entrepreneur you’re meant to be.