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Thailand Revenue Code

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Corporate Income Tax

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Section 65 Taxable income under this Part is net profit which is calculated by deducting income from business or income arising from business carried on in an accounting period with expenses in accordance with conditions prescribed in Section 65 Bis and Section 65 Ter. An accounting period shall be twelve months except in the following cases where it may be less than twelve months:

1. a newly incorporated company or juristic partnership may elect to use the period from its incorporation date to any one date as the first accounting period.

2. a company or juristic partnership may file a request to the Director-General to change the last day of an accounting period. In such a case, the Director-General shall have the power to grant approval as he deems appropriate. Such an order shall be notified to the company or juristic partnership who files the request within a reasonable period of time and in the case where the Director-General grants the permission, the company or juristic partnership shall comply to the accounting period as prescribed by the Director-General.

The calculation of income and expenses in paragraph 1 shall use an accrual basis. Income arising in an accounting period, even though it is not yet received in such accounting period, shall be included as income for that accounting period. All expenses relating to such income, even though they are not yet paid, shall be included as expenses for such accounting period.

In a necessary case, a taxpayer may file a request to the Director-General to change the accrual basis and accounting method for the calculation of income and expenses under paragraph 2, and when approved by the Director-General, he shall comply with the accounting period as prescribed by the Director-General.

 

Section 65/ 2 The calculation of net profit and net loss under this Part shall follow the following conditions:

(1) Items specified in Section 65 Ter shall not be deductible as expense.

(2) Depreciation and depletion of assets shall be deductible under the rules, procedures, conditions and rates specified by a Royal Decree.

The depreciation and depletion of assets shall be deductible in proportion to the period from the acquisition of such assets.

(3) Value of assets other than (6) shall use the normal purchase price of such asset and in the case of appreciation in the value of the asset, such appreciation shall not be included in the calculation of net profit or net loss. If any item of assets is entitled to depreciation or depletion, depreciation and depletion shall be deductible in the calculation of net profit or net loss in accordance with the rules, procedures, conditions and previous rates applicable before the appreciation in the value of assets by deducting and only the remaining period and remaining cost of capital of the assets shall be deducted.

(4) In the case of transfer of assets, provision of service or lending of money without remuneration, fee or interest; or with remuneration, fee or interest that is lower than the market price without reasonable cause, an assessment official shall have the power to assess such remuneration, fee or interest in accordance with the market price on the date of transfer, provision or lending.

(5) Money, asset or liability having value or price in foreign currency on the last day of an accounting period, shall be converted into value or price in Thai currency as follows:

• (a) in the case of a company or juristic partnership other than (b), the value or price of money or assets shall be converted to Thai currency using the average buying rate of commercial banks that is calculated by the Bank of Thailand. The value or price of liability shall be converted to Thai currency using the average selling rate of commercial banks that is calculated by the Bank of Thailand.

• (b) In case of a commercial bank, or other financial institution as prescribed by the Minister, the value or price of money, assets or liability shall be converted to Thai currency using the average buying and selling rates of commercial banks that are calculated by the Bank of Thailand.
  Money, assets or liability having value or price in foreign currency that is received or paid during an accounting period shall be converted into value or price in Thai currency using the market price on the day of such receipt or payment.

(6) Value of stock on the last day of an accounting period shall be calculated in accordance with the cost or market price, whichever is lower, and such value shall be deemed to be the value of stock carried forward into the new accounting period.

Once the calculation of cost in Paragraph 1 is calculated in accordance with an accounting rule, such rule shall continue to be used in the future unless the Director General grants approval to change the rule.

(7) In calculating the cost of goods imported from abroad, the assessment official shall have the power to assess by comparing with the cost of the same type and kind of goods imported into other countries.

(8) If the cost of goods is in foreign currency, it shall be converted into Thai currency using the market exchange rate on the day of the acquisition of the goods unless such foreign currency is convertible under official rate, then it shall be converted into Thai currency using that official rate.

(9) Writing off bad debts from debtor’s account shall be done only if it follows rules, procedures and conditions prescribed by a Ministerial Regulation, however, if debt payment is received in any accounting period, it shall be included as income for that accounting period.

If any bad debt that is included as income is paid afterwards, it shall no longer be included as income again.

(10) For a limited company incorporated under Thai laws, dividends received from a company incorporated under Thai laws, mutual fund or financial institution incorporated under the specific Thai laws for the purpose of lending to promote agriculture, commerce or industry and share of profits derived from a joint venture shall be included as income, but only half of the amount received. However, the following limited companies incorporated under Thai laws shall not include as income the dividends received from a company incorporated under Thai laws, mutual fund or financial institution incorporated under the specific Thai laws for the purpose of lending to promote agriculture, commerce or industry and share of profits from a joint venture as income;

• (a)listed company

• (b)limited company other than (a) which hold shares in a limited company paying dividends at least 25 % of voting shares and the limited company paying the dividends does not hold shares in the limited company receiving the dividends, whether directly or indirectly.

Paragraph 1 shall not apply in a case where a limited company or a listed company deriving income which is the said dividend or share of profits by holding shares or investment units which incur the dividends or share of profits less than 3 months as from the date of acquisition of the shares or the investment units to the date in which such income arises, or by transferring shares or investment units 3 months from the date in which such income arises.

Dividends from the investment of provident funds under Section 65 Ter (2) shall not be deemed to be dividends or share of profits under Paragraph 2.5

(11) Interest on loan which is subject to withholding tax under the law governing Petroleum Income Tax shall be included in the calculation of income, but only the amount remaining after the tax is withheld under the above law.

(12) Dividends or share of profits which is subject to withholding tax under the governing Petroleum Income Tax, shall be included in the calculation of income, only the amount remaining after the tax is withheld under the above law, and if recipient is a listed company or is a company incorporated under Thai laws and falling under Section 75, the provisions in (10) shall apply mutatis mutandis.

(13) A foundation or association which carries on business that produces revenue shall not include registration fees or maintenance fees from members, or cash or assets received as donations or gifts, whichever the case may be, in the calculation of his income.

(14) An output tax received or receivable by a company or juristic partnership which is a VAT registrant, and the value added tax which is not a tax under Section 82/16 and refunded under Chapter 4 shall not be included as income.

 

Section 65/ 3 The following items shall not be allowed as expenses in the calculation of net profits:

(1) Reserves except:

• (a) Insurance premium reserves for life insurance set aside before calculation of profit, but only the amount not exceeding 65% of the amount of insurance premiums received in an accounting period after deducting premiums for re- insurance. 
  In a case where money is paid out on an amount insured on any life insurance policy whether in full or in part, only the paid amount which does not exceed the reserves under Paragraph 1 for such policy shall not be allowed as expense. 
  In a case where any life insurance policy contract is terminated, the amount of remaining reserve under Paragraph 1 for such policy shall be calculated in the calculation of income in the accounting period in which the contract is terminated.

• (b) Insurance premium reserves for any other insurance set aside before the calculation of profit, but only the amount not exceeding 40% of the amount of insurance premiums received in an accounting period after deducting premiums for re-insurance and this amount of reserves set aside shall be income in the calculation of net profit for tax purposes in the following accounting period.

• (c) A reserve set aside for bad debts or suspected bad debts from liability arising from the provision of credit which a commercial bank, finance company, securities company or credit foncier company sets aside under the laws governing commercial banks or laws governing the finance business, securities business and credit foncier business, as the case may be; but only the amount set aside which increases from such type of reserve appearing in the balance sheet of the previous accounting period.

For the increased reserve set aside under paragraph 1 and treated as expense for the purpose of calculating net profit or net loss in any accounting period, if afterwards, there is a reduction of such reserve, such reduced reserve which was already used as expense shall be included as income in the accounting period in which the reserve is reduced.

(2) Fund except provident fund under the rules, procedures and conditions prescribed by a Ministerial regulations.

(3) Expense for personal, gift, or charitable purpose except expense for public charity, or for public benefit as the Director-General prescribes with the approval of the Minister, shall be deductible in an amount not exceeding 2% of net profit. Expense for education or sports as the Director-General prescribes with the approval of the Minister shall also be deductible in an amount not exceeding 2% of net profit.

(4) Entertainment or service fees that are not in accordance with the rules prescribed by a Ministerial Regulation.

(5) Capital expense or expense for the addition, change, expansion or improvement of an asset but not for repair in order to maintain its present condition.

(6) Fine and/or surcharge, criminal fine, income tax of a company or juristic partnership.

(6 Bis) Value added tax paid or payable and input tax of a company or juristic partnership which is a VAT registrant except value added tax and input tax of a registrant paid under Section 82/16, input tax not deductible in the calculation of value added tax under Section 82/5(4) or other input tax as prescribed by a Royal Decree.

(7) The withdrawal of money without remuneration of a partner in a juristic partnership

(8) The part of salary of a shareholder or partner which is paid in excess of appropriate amount.

(9) Expense which is not actually incurred or expense which should have been paid in another accounting period except in the case where it cannot be entered in any accounting period, then it may be entered in the following accounting period.

(10) Remuneration for assets which a company or juristic partnership owns and uses.

(11) Interest paid to equity, reserves or funds of the company or juristic partnership itself.

(12) Damages claimable from an insurance or other protection contracts or loss from previous accounting periods except net loss carried forward for five years up to the present accounting period.

(13) Expense which is not for the purpose of making profits or for the business.

(14) Expense which is not for the purpose of business in Thailand.

(15) Cost of purchase of asset and expense related to the purchase or sale of asset, but only the amount in excess of normal cost and expense without reasonable cause.

(16) Value of lost or depleted natural resources due to the carrying on of business.

(17) Value of assets apart from devalued assets subject to Section 65 Bis

(18) Expense which a payer cannot identify the recipient.

(19) Any expense payable from profits received after the end of an accounting period.

(20) Expense similar to those specified in (1) to (19) as will be prescribed by a Royal Decree.

 

Section 65/ 4 A government enterprise shall pay income tax on behalf of the seller of goods being a company or juristic partnership which purchases goods from a government enterprise under procedures, rates and type of goods prescribed by a Ministerial Regulations, but only on the income from the sale of such goods. The tax paid on behalf the taxpayer under paragraph 1 shall be treated as credit of the taxpayer in tax calculation.

 

Section 66 A company or juristic partnership incorporated under Thai laws or incorporated under foreign laws and carrying on business in Thailand shall pay tax in accordance with the provisions in this Part.

A company or juristic partnership incorporated under foreign laws and carrying on business in other places including Thailand shall pay tax on the net profits from the business or related to the business carried on in Thailand in an accounting period and the calculation shall follow Section 65 and Section 65 Bis. However, if the above net profits cannot be calculated, the provisions regarding the assessment of taxes under Section 71 (1) shall be applied mutatis mutandis.

 

Section 67 The payment of tax under this Part shall be in accordance with the rates specified in the table of Income Tax rates attached to this Part. Except in the case of a company or juristic partnership under paragraph 2 of Section 66 carrying on international transportation business, it shall pay tax on the transportation business under the following rules:

1. In case of carriage of passengers, it shall pay tax at the rate of 3% of fares, fees and other benefits chargeable in Thailand before deducting any expense from such carriage of passengers.

2. In case of carriage of goods, it shall pay tax at the rate of 3% of freight charges, fees and other benefits, whether chargeable in Thailand or not, before deducting any expense from such carriage of goods.

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Section 67/ bis (2) For the purpose of collecting tax prior to the time limit under Section 68, a company or juristic partnership shall file a tax return in the form prescribed by the Director-General together with tax payment at the local Amphur office within 2 months from the last day of a six-month period from the first day of an accounting period as follows:

1. In the case of a company or juristic partnership other than described in (2), it shall estimate net profit or net loss from the business or relating to the business which is already carried on or is going to be carried on in an accounting period and shall calculate and pay tax in an amount of one half of the estimated profit in such accounting period.

2. the case of a listed company, a commercial bank under the laws governing commercial banks, or a finance company, securities company or credit foncier company under the laws governing the finance business, securities business and credit foncier business, or a company or juristic partnership under the rules, procedures and conditions prescribed by the Director-General, it shall calculate and pay tax from net profit of a six-month period from the first day of an accounting period under conditions specified in Section 65 Bis and Section 65 Ter. 
   The tax paid on behalf the taxpayer under paragraph 1 shall be treated as credit of the taxpayer in tax calculation.

Paragraph 1 shall not apply to a company or juristic partnership whose first or final accounting period is less than 12 months.

 

Section 67/ 3 In the case where a company or juristic partnership does not file a tax return and pay tax under Section 67 Bis (1) or filed a return and paid tax under Section 67 Bis (1) by underestimating net profits exceeding twenty five per cent of the net profits deriving from the business or relating to the business carried on in an accounting period without reasonable cause, such company or juristic company shall pay surcharge of twenty per cent of the amount of tax payable under Section 67 Bis (1) or half of the amount of tax payable in that accounting period or of tax which should have been paid as the case may be.

In the case where a company or juristic partnership does not file a tax return and pay tax under Section 67 Bis (2) or incorrectly filed a tax return and paid tax under Section 67 Bis (2) without reasonable cause resulting in an amount of the underpaid tax, such company or juristic company shall pay surcharge of twenty per cent of the amount of tax payable under Section 67 Bis (2) or of tax which should have been paid as the case may be.

Surcharge under paragraphs 1 and 2 shall be deemed tax and may be reduced in accordance with regulations prescribed by the Director-General with the approval of the Minister.

 

Section 68 Within 150 days from the last day of an accounting period, a company or a juristic partnership shall file a tax return showing items necessary for tax calculation in an accounting period in the form prescribed by the Director-General together with tax payment at the Amphur office.

 

Section 68 Bis For the purpose of tax calculation, a company or juristic partnership should keep a balance sheet, an operating account and a profit and loss account in an accounting period in accordance with Section 65.

A company or juristic partnership under Paragraph 2 of Section 66 which carries on international transportation business shall keep an account of gross income before deduction of expenses regarding passenger fees, freight fees, other taxable benefits instead of a balance sheet, an operating account and a profit and loss account in the accounting period specifically for such transportation business.

 

Section 69 Within 150 days from the last day of an accounting period, a company or juristic partnership shall file a tax return showing items necessary for tax calculation in accordance with Section 65, Section 65 Bis, Section 66 and Section 67 regarding income, expenses, net profits and other information to an assessment official in the form prescribed by the Director-General together with a balance sheet, an operating account and a profit and loss account, income account, expenditure or gross income account which a person under Section 3 Septem examines and certifies for the above accounting period, as the case may be.

 

Section 69 Bis (2) Subject to Section 70, if the Government, a government enterprise, Tessabarn, Sukapibarn or other local government agency is the payer of assessable income under Section 40 to any company or juristic partnership, it shall withhold income tax at the rate of 1 per cent. The tax withheld shall be treated as a credit in income tax calculation of the company or juristic partnership for the accounting period within which the tax was withheld. For this purpose, Section 52, Section 53, Section 54, Section 58 and Section 59 shall apply mutatis mutandis.

Section 69 Ter (3) A person, partnership, company, association or a body of persons pays assessable income under Section 40 (8) to a company or juristic partnership which sells immovable property shall withhold income tax at the rate of 1 per cent and remit it to an official responsible for registration of rights and juristic acts at the time of registration and provisions of Paragraphs 2 and 3 of Section 52 shall apply mutatis mutandis.

Tax withheld and remitted under Paragraph 1 shall be treated as a credit in income tax calculation of the company or juristic partnership which tax was withheld for the accounting period in which the tax was withheld.

 

Section 70 A company or juristic partnership incorporated under foreign laws and not carrying on business in Thailand but receiving assessable income under Section 40 (2) (3) (4) (5) or (6) which is paid from or in Thailand, shall be liable to pay tax. The payer of income shall deduct corporate income tax from such assessable income at the corporate income tax rate and remit it to the local Amphur office together with the filing of a tax return in the form prescribed by the Director General within 7 days from the last day of the month in which such income is paid. Section 54 shall also apply mutatis mutandis.

The provisions of Paragraph 1 shall not apply in the case where a company or juristic partnership incorporated under foreign laws receives assessable income being interest from the Government or a financial institution incorporated under the specific Thai laws for the purpose of lending to promote agriculture, commerce or industry.

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