Things you should know about doing business in Thailand
Find out the answers to your questions about how to set up and how to do business in Thailand here.
Does Thailand have specific transfer pricing laws?
No, Thailand currently does not have any specific transfer pricing provisions under the Thai Revenue Code.
Until now the Revenue Department has relied on some general provisions in the Revenue Code, which authorize the assessment officers to adjust a transfer price based on an arm's length price and determine or recalculate a Thai resident company's taxable income when the transfer price used by that company and its foreign related party is either below or above an arm's length price.
In May 2015, a draft Act on Revenue Code Amendment that will add specific transfer pricing provision into the Revenue Code was approved by the Cabinet, and has been awaiting consideration and approval by the National Assembly of Thailand to become an applicable law since then. One of the key provisions of the draft Act requires transfer pricing disclosures to be made within 150 days from the year-end closing date (same deadline as corporate income tax returns). Failure to comply would result in a penalty not exceeding THB 400,000.
Until now the Revenue Department has relied on some general provisions in the Revenue Code, which authorize the assessment officers to adjust a transfer price based on an arm's length price and determine or recalculate a Thai resident company's taxable income when the transfer price used by that company and its foreign related party is either below or above an arm's length price.
In May 2015, a draft Act on Revenue Code Amendment that will add specific transfer pricing provision into the Revenue Code was approved by the Cabinet, and has been awaiting consideration and approval by the National Assembly of Thailand to become an applicable law since then. One of the key provisions of the draft Act requires transfer pricing disclosures to be made within 150 days from the year-end closing date (same deadline as corporate income tax returns). Failure to comply would result in a penalty not exceeding THB 400,000.
Are capital gains subject to withholding tax?
Capital gains paid by a local buyer from selling shares in your Thai company are subject to a 15% withholding tax. However, if you are resident in the country which has a double tax agreement (DTA) with Thailand, the capital gains may be exempt from Thai tax by virtue of the Capital Gains Article of the DTA.
Are dividends subject to withholding tax?
Dividends paid to shareholders who are resident or non-resident individuals are subject to a withholding tax at the rate of 10%.
Dividends paid to corporate shareholders who are not resident in Thailand are also subject to a withholding tax at the rate of 10%. However, depending on certain conditions, dividends paid to Thai resident corporate shareholders may be exempt from tax.
Dividends paid to corporate shareholders who are not resident in Thailand are also subject to a withholding tax at the rate of 10%. However, depending on certain conditions, dividends paid to Thai resident corporate shareholders may be exempt from tax.
Does my company need to be VAT registered?
Compulsory VAT registration is required if your company turnover exceeds Baht 1.8 million per annum. Failure to register on time may incur penalties and surcharges for late registration. However, if your company is only selling goods or services that are exempt from VAT, your company is not required to register for VAT.
Voluntarily registration for VAT
Even if your company turnover does not exceed the threshold or if your company is selling certain goods that are exempt from VAT, you may voluntarily register for VAT. The advantage of this is that if your local customers are also VAT registered, the VAT they charge you, can be recovered. Also businesses can be better off registered as they may be entitled to refunds of VAT paid when importing goods and raw materials into Thailand.
Voluntarily registration for VAT
Even if your company turnover does not exceed the threshold or if your company is selling certain goods that are exempt from VAT, you may voluntarily register for VAT. The advantage of this is that if your local customers are also VAT registered, the VAT they charge you, can be recovered. Also businesses can be better off registered as they may be entitled to refunds of VAT paid when importing goods and raw materials into Thailand.
What are the corporate income tax obligations?
The following income tax filing obligations will apply to companies incorporated under Thai law:
- Filing of Annual Corporate Income Tax Return (Form PND.50) within 150 days from the last day of an accounting period; and
- Filing of Half Year Corporate Income Tax Return (PND.51) within two months from the last day of the first six months of an accounting period (except for the first accounting period which has a duration of less than twelve months).
- Filing of Annual Corporate Income Tax Return (Form PND.50) within 150 days from the last day of an accounting period; and
- Filing of Half Year Corporate Income Tax Return (PND.51) within two months from the last day of the first six months of an accounting period (except for the first accounting period which has a duration of less than twelve months).
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