accounting and corporate income tax
Revenue Department Thailand: Corporate Income Tax (external)
The basic accounting principles practiced in the Europe and the United States are accepted in Thailand. The Institute of Certified Accountants and Auditors of Thailand is the authoritative group promoting the application of generally accepted accounting principles. Auditing standards conforming to international auditing standards are, to the greater extent, recognized and practiced by authorized auditors in Thailand. Any accounting method which is adopted by a company must be used consistently and may be changed only with approval of the Revenue Department.
Audited financial statements of juristic entities (that is, a limited company, a registered partnership, a branch, or representative office, or a regional office of a foreign corporation, or a joint venture in Thailand) must be certified by an authorized auditor and submitted to the Revenue Department and (except for joint ventures) to the Commercial Registrar for each accounting year. At the end of fiscal year certified financial statement must be submitted to the Commercial Department.
Accounting transactions may be recorded in a foreign language, but there should be a Thai translation.
Corporate Income Tax
Thai corporation tax (or corporate income tax) refers to as the percentage of the profits of registered companies, i.e. tax levied on the profits made by companies or associations. A newly established company in Thailand is liable for income tax and must obtain a tax I.D. card and number for the company from the Thailand Revenue Department within 60 days of incorporation or the start of operations.
If it is expected that its gross income will exceed 1.8 million baht per annum it must register for Value Added Tax within 30 days of the date they reach 1,8 million baht in sales.
A newly established company in Thailand must hire a certified accountant. Companies must keep books and follow accounting procedures specified in the Civil and Commercial Code, the Revenue Code and the Accounts Act. Documents may be prepared in any language, provided that a Thai translation is attached. All accounting entries should be written in ink, typewritten, or printed. A newly-established company or partnership should close accounts within 12 months from the date of its registration. The director is responsible for the regular keeping of books and documents in accordance with the law and must file balance sheets and audited accounts every year with the Revenue Department and Ministry of Commerce.
In general, the basic accounting principles practiced in Europe and the United States are accepted in Thailand.
The general corporate tax rate in Thailand is 30% for companies with a paid up share capital of more than 5 Million Thai Baht. The government has reduced corporate tax rates to promote specific business sectors and small and medium enterprises. The tax rate for companies with a paid up share capital not more than 5 Million Thai Baht at the end of its tax year shall be taxed at rate of:
- 15% over the first one million Thai Baht profit;
- 25% over the profit between one million and three million and;
- 30% for profits over three million Thai Baht.
- Dividends distributed by a local company to its foreign shareholders are subject to a dividend withholding tax at 10%. This rate is not reduced under any of the double taxation treaties concluded by Thailand.
- The rate of depreciation for capital expenditures is 5% for buildings.
- Net losses may be carried forward over five consecutive years. No carry back of losses is allowed.
The director(s) is responsible for the existence and regular keeping of books and documents in accordance with the law and this has to be done even though there is no business activity. The commercial registration department has the authority and could be closing down all those companies that are not actively trading or paying tax.