Corporate income tax is a direct tax imposed on a juristic company or partnership carrying on business in Thailand or deriving certain types of income from Thailand.
Under the tax code, there are five (5) types of taxable person
1. A company or a juristic partnership established under Thai law
2. A company or a juristic partnership established under foreign law
3. A business operating in a commercial or profitable manner by a foreign government, organization of a foreign government or any other juristic person established under a foreign law
4. Joint venture
5. A foundation or association carrying on revenue-generating business.
Companies or juristic partnerships established under Thai law are subject to corporate income tax on worldwide income. On the other hand, a foreign corporation, organized or existing under the laws of any foreign country, is taxed only on income derived from sources within Thailand.
In order to receive the tax return, the company must have paid its corporate income tax less than withholding tax. All companies carrying on business in Thailand are required to file their tax returns, together with the tax payment, within 150 days from the closing date of their accounting period. Generally, the accounting period consists of 12 months. However, a newly incorporated company may choose to use the period from its incorporation date to any one date as the first accounting period. If a company wishes to change its accounting period, it must obtain written approval from the director general of the Revenue Department.
Any company subject to corporate income tax on net profits is also required to make tax prepayment. These are taxes paid in advance before you actually incur them. A company must estimate its projected income as well as its tax liability. Half of the estimated tax amount must be paid within two months after the first six months of its accounting period. The prepaid tax is creditable against its annual tax liability.
A company or juristic partnership incorporated under foreign laws and not carrying on business in Thailand but receiving assessable income which is paid from or in Thailand shall be liable to pay tax at a flat rate in which the payer shall withhold tax at source at the time of payment. The payer must file the return and make the payment to the Revenue Department within seven days of the following month in which the payment is made.
CIT is calculated from the company’s net profit on the accrual basis. A company shall take into account the sum of all revenues less all deductible expenses. 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.
As for dividend income, half of the dividends received by Thai companies from any other Thai companies may be excluded from the taxable income. However, the full amount may be excluded from taxable income if the recipient company is listed in the Stock Exchange of Thailand or owns at least 25 percent of the distributing company’s capital interest, provided that the distributing company does not own a direct or indirect capital interest in the recipient company. The exclusion of dividends is applied only if the shares are acquired not less than three months before receiving the dividends and are not disposed of within three months after receiving the dividends.