The corporate tax system of Thailand pays tax on the capital level, and all corporate owners are responsible for its regulation. Companies, business owners, and international entrepreneurs who want to settle their new corporations in Thailand are all accountable for paying their legal taxes. The tax is necessary to comply with the country’s laws and regulations. Although the current corporate tax is 20%, Thailand’s Petroleum Income Tax Act taxes 50% of petroleum companies' annual net profit. This shows Thailand’s unique approach that how they deal taxing their natural resources. Understanding the tax system develops the ability to make the right business decisions and grasp tax strategies. Here, we’ll cover all possible aspects of Thailand's corporate tax system.

Corporate Tax Rate

The current corporate tax rate, which is 20% of net profit, is applicable to all employment holders and business owners who generate their income through Thai or international sources. This rate has relaxation and deductibles under specific changes.

Tax Relaxation Or Deductibles Conditions

• Foreign employers or corporate owners who send their profits to Thailand are taxable in the same year of remittance.
• Small and medium-sized companies have varying tax rates compared to international-level businesses.
• The small companies that generate 5 million Thai Baht less from it or their services are not earning more than 30 million THB are subjected to the following tax rate:
  • 0% tax is applied on up to 300,000 THB net profit
  • A 15% Tax rate is applicable on enterprises of 300,001 to 3 million net profit
  • 20% tax applies when the sale of goods exceeds 3 million.
• Petroleum sales companies must pay a 50% tax on their annual net profit. However, a concession is also offered for those who operate their business through a sharing contract. A 20% tax rate applies to each partner for the sharing contract.

The tax rate for Foreign Companies

Although foreign companies do not operate in Thailand, they are taxed when they derive certain income from Thailand. The annual net profit rate is decided at 15%. Dividends have a 5 % concession, and their tax rate is 10%.

Recent changes or updates

Corporate income Tax is still 20%, but the specific business rate is reduced with a 0.01% ratio. This concession is introduced for commercial banks, securities, and finance businesses. Similarly, the 7% VAT rate has also been extended for one more year and applies to the tax rate until September 30, 2024.

Tax Return System

A tax return system is a legal way to check and balance a country's individual and business income, expenses, and financial records. Thailand’s tax return system has the following key points:

Filing calendar and deadlines for annual tax

Thailand’s tax year starts on 31 December, and taxpayers must submit their documents by March 31st of the following year. 8th April is the last date for filing taxes through online platforms.

Tax Return Forms and Documentation Needed

1. Forms: There are two primary forms for filing taxes in Thailand:

• P.N.D. 90 form is used for filing taxes of multiple income sources, including employment.
• P.N.D. 91 form is only for employees who earn income from single employment.

1. Documentation:
   • Passport or ID of Thailand for foreign taxpayers
   • A tax identification number is also required and issued by the Revenue Department for each taxpayer.
   • Documents proving the source of income are necessary, such as salary slips, interest, and rental certificates.
   • Slips of expenses to apply for allowable deducts and tax credits.

Electronic Filing Options

1. E-filing system: Taxpayers can file their forms through user-friendly online platforms.
2. E-services: The department's official website allows filers to download and submit the tax form after filling it out. New filers can also use e-services to register themselves.
3.  Customers can download their tax forms, become filers, and pay their taxes online at the Revenue Department's official website.
4. Mobile apps: The RD SmartTax app is the easiest way to file taxes on the electric platform.

Withholding Tax

Tax withholding means the payer withholds some income and directly submits it to the government. This process ensures a safe and steady flow of revenue and serves as a tax credit against the annual tax rate.

Rates and Exemptions

The rate of withholding tax varies between 1% to 5%, depending on the type of payment:

• A 3% withholding tax applies to legal, accounting, construction, cleaning, and repair services.
• 1% to 3% is for transportation services.
• 3% to 5% can be reserved from rental incomes.
• 2% to 3% is applicable on advertising 
• Employment corporates can hold 0% to 35%

Payment and Filing Obligations

• Filing Requirements: Withholding tax applies to those companies who purchase services from individuals or juristic persons. PND3 form is required for individuals, and PND 53 is used for juristic persons.
• Deadlines: Withholding tax returns must be filed within 7 to 15 days after the end of the salary month.
• Payment: According to the taxpayer, the withholding tax is paid to the revenue department by filing the PND 3 and PND 53 forms. Companies must provide individuals with copies of withholding tax certificates to prove their tax credits while filing annual Tax returns. 
• Electronic Filing: The e-filing website is a convenient way of filing withholding tax. The Revenue Department offers online apps and forms to fill out and submit on mobile phones.

Reimbursement System for Foreign Investors

Thailand’s reimbursement system was established to facilitate foreign investors for better revenue. This system includes the following expenses:

• Reimbursement of Medical Expenses: Foreign investors use this option to ensure better medical quality in their home countries. The system has government-to-government and government-to-business options.
•  Incentives on Investment: Thailand’s government offers multiple foreign investor-oriented incentives. These incentives include tax benefits, relaxation of land ownership, and long-term residency visas.

Eligibility and application process

• Foreign investors who ensure better medical facilities in their home country are eligible for this agreement.
• Investors from foreign countries interested in investing in Thailand's economy are eligible for a reimbursement system.

To apply, successful investors should contact BOI. They guide the whole application process and the calculation of incentives.

Tax Rebate System

The tax rebate system provides reduction and tax liability for taxpayers. This system provides extra protection for investment and spending. Thailand’s tax rebate facilitates investors in the following ways:

• Tax credits that an investor earns as a result of investment and expenditures help to reduce the total amount of payable tax.
• Tax Deductions also minimize the total taxable amount by reducing tax liability. Business activities and investments can be mentioned as deductions.

Eligibility and application process

• Infrastructure, technology, and energy investments are eligible for the Rebate system. It also depends on the investment ratio of 
• The application process is straightforward, but it's become easy with the assistance of professional accountants.

Penalty for late-filing

The consequences of late filing in Thailand's Corporate Tax System depend on the type of tax and duration of delay:

• Late filing and payment penalties: If taxpayers do not file their tax forms within the due date or fail to pay the payment after registration, the Revenue Department can charge heavy fines or imprisonment. The seriousness of the penalty depends on the period of delay and the actual amount of unpaid tax.
• Interest rates: Sometimes, the penalty amount is charged in interest, which applies daily, and its rate depends on the actual tax.
• Potential legal consequences: Failure to file taxes for a long time can result in legal consequences, such as fines, asset seizure, work permit cancellation, tax refund issues,  imprisonment, and prosecution. The Revenue Department can also freeze taxpayers' bank accounts or seize their assets.

Final Analysis

The tax return system is beneficial for improving any country's annual revenue. With the cooperation of citizens, the reimbursement of laws is easier; hence, corporates should follow the government guidelines for smooth business and employment services. Failure to file taxes on time can cause severe legal and financial issues. If you are a foreigner and want to make any type of investment in Thailand or want to be part of any corporate, you should not leave any throne unturned about Thailand's Corporate Tax System to avoid hitting rock bottom.