What the new tax
cuts mean for companies based in Thailand
standard company tax rate in Thailand has long been 30%. Several
recent changes to the company tax rate will mean that many companies
will now pay tax as low as 10% or 20% on their profits. We summarise
the recent changes as follows:
In December, the cabinet approved a number of new tax measures for
Regional Operating Headquarters (ROH) based in Thailand.
Net profits from ROH Operations including interest and royalties are
now subject to 10% Corporate Income Tax. The laws implementing the new
tax measures have not yet been issued.
The new tax measures, coupled with improvements to the existing ROH
privileges, will make Thailand more competitive with traditional
regional head-quarters locations such as Singapore, Malaysia and Hong
SME company tax rates:
Reduced company tax rates for small and medium enterprises (SME's)
became effective on Jan 31 this year. The rates for accounting periods
commencing on or after Jan 1, 2002 onward are 20% on net profits up to
one million baht, 25% on net profits of one to three million baht, and
30% on net profits above three million baht.
To be eligible for these rates, a company must not have more than five
million baht in paid-up capital at the end of the accounting period.
The Finance Ministry expects more than 85% of companies liable to
Corporate Income Tax will be eligible for the reduced rates.
Royal Decree No. 387 issued under the Revenue Code grants reduced tax
rates for companies listed on the Stock Exchange of Thailand (SET),
including the Market for AIternative Investment (MAl).
The reduced tax rates for listed companies are as follows:
25% for listed companies on the SET prior to Sept. 6 2001 on net
profits not exceeding 300 million Baht.
20% for companies listed on the MAl within three years from Sept 6,
25% for companies listed on the SET other than the MAI within three
years from Sept 6, 2001.
The reduced rates will apply for five consecutive accounting periods
only. For companies listed prior to Sept 6, 2001, the reduced rates
will first apply for the accounting period beginning on or after Sept
6, 2001. For newly listed companies, the reduced rate will first apply
for the accounting period beginning on or after the listing date.
Conditions apply to prevent companies listed prior to Dept. 6, 2001
from taking advantage of the lower tax rates granted to newly listed
The reduced rates will not be conferred on companies that delist and
then relist or on newly listed companies that carry on the business of
a company listed prior to Sept. 6, 2001 due to a business transfer or
Venture capital companies investing in SME’s:
The Royal Decree No. 396 issued
under the Revenue Code, effective from Jan. 31, 2002, grants corporate
tax exemptions to venture capital companies that invest in SME’s.
Dividends received from SME’s and gains arising from the
transfer of shares in SME’s are granted exemption from corporate tax.
A number of rules, procedures and conditions are prescribed in the
Royal Decree. Corporate shareholders in a venture capital company that
receives an exemption from corporate income tax are also granted
exemption from income tax on:
Dividends received from the company; and
Gains arising from the transfer of shares in the company.
Bangkok Post, April 17, 2002
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