Doing business in Thailand requires a solid understanding of the Corporate Income Tax (CIT) system. Thailand’s tax landscape continues to evolve with clear regulations designed to support both local enterprises and foreign investors.
This comprehensive guide explains the key components of CIT in 2025, helping business owners and CFOs navigate compliance and optimize tax planning.
What is Corporate Income Tax?
Corporate Income Tax is a direct tax applied to the net profit of companies and partnerships earning income from Thailand. This tax is mandatory for a broad range of entities including limited companies, registered partnerships, joint ventures, branches of foreign corporations, and business foundations.
For foreign entities, CIT applies only to income generated from Thai sources, whereas Thai-incorporated companies are taxed on worldwide income unless reduced by specific treaties or exemptions.
Who is Considered to Pay Corporate Income Tax in Thailand?
Understanding who must pay Corporate Income Tax (CIT) in Thailand is crucial for both foreign and local businesses to maintain compliance and avoid penalties. The following entities are generally liable for CIT under Thai law:
- Thai-registered companies and juristic partnerships such as limited companies, public companies, and joint ventures incorporated under Thai law.
- Foreign companies or juristic partnerships conducting business in Thailand with a permanent establishment (PE) such as branches, offices, factories, or construction sites.
- Foreign companies without a PE but earning Thai-sourced income like dividends, interest, royalties, and capital gains, which may be subject to withholding tax or CIT.
- Foundations, associations, and organizations engaging in revenue-generating activities.
- Foreign governments or juridical persons conducting commercial business in Thailand.
- Joint ventures and consortia operating locally.
- Companies or partnerships receiving Thai-sourced income but not actively conducting business in Thailand.
This inclusive liability framework ensures businesses engaged in activities linked to Thailand pay appropriate taxes under the Revenue Code.
Corporate Tax Rates in Thailand for SMEs and Startups
The standard corporate income tax rate is 20%. However, there are progressive tax rates designed to ease the burden on small and medium enterprises (SMEs):
- Net profits up to 300,000 baht are exempt from CIT.
- Profits between 300,001 baht and 3 million baht are taxed at 15%.
- Profits exceeding 3 million baht are subject to the standard 20% rate.
These tiered rates help startups and SMEs grow by reducing early-stage tax liabilities.
Filing and Payment Requirements
Companies must file annual CIT returns with the Thai Revenue Department, accompanied by audited financial statements prepared by certified auditors. The filing deadline is 150 days after the end of the accounting period, often the fiscal year-end.
Additionally, companies must file a half-year Corporate Income Tax (CIT) return within two months after the end of the first six months of their accounting period. The tax is generally calculated on one-half of the estimated annual profit, except for listed companies, banks, certain financial institutions, and other companies under prescribed conditions, where the tax is based on the actual net profit for the first six months. Late payments may result in penalties of 1.5% monthly interest and fines of up to 20% of the outstanding tax amount.
Thai law mandates electronic filing options and payment facilities, making compliance more efficient for businesses.
Tax Incentives for Special Economic Zones and BOI Promotion
Thailand encourages investment in targeted regions and industries through tax incentives:
- Companies operating in designated Special Economic Zones may qualify for a reduced CIT rate of 10% for up to 10 years.
- Businesses promoted by the Thailand Board of Investment (BOI) enjoy tax holidays that can exempt profits from CIT for 3–8 years depending on the project scope. After the exemption period, a reduced CIT rate of 10% may apply for an additional 5 years.
These incentives make Thailand an attractive destination for manufacturing, technology, and export-oriented firms.
Calculating Taxable Income Under Thai Financial Reporting Standards (TFRS)
Taxable income in Thailand is determined based on accounting profits prepared in accordance with the Thai Financial Reporting Standards (TFRS). Companies listed on the Stock Exchange of Thailand (SET) are required to adopt full TFRS, while Small and Medium Enterprises (SMEs) generally apply TFRS for Non-Publicly Accountable Entities (TFRS for NPAEs).
Deductible expenses typically include operational costs, employee salaries, interest expenses, research and development expenditures, and allowable charitable donations. Non-deductible items, such as personal expenses and general reserves, are excluded from allowable deductions. Maintaining comprehensive and accurate financial records is crucial to maximize eligible deductions and ensure compliance with Thai tax regulations.
Dividend Income and Tax Treatment
Dividends distributed by Thai companies are generally taxable. However, only half of dividends received from other Thai companies are included in the taxable income if shares were held for at least three months before and after the dividend date.
If a company holds 25% or more of the voting shares in another Thai company, it is exempt from tax on dividends received, assuming compliance with holding period rules. Listed companies on the Stock Exchange of Thailand enjoy full exemption on dividends from other listed companies under similar conditions.
Penalties and Compliance Risks for Corporate Income Tax in Thailand
Non-compliance with CIT requirements, including late filings, incomplete information, or underpayment of tax, can trigger severe penalties. These can include fines up to twice the amount of tax owed, interest charges, and reputational damage.
For foreign businesses unfamiliar with local tax nuances, enlisting professional accounting and tax services is essential to avoid costly mistakes.
Why Accurate Accounting is Essential
Accurate accounting forms the foundation of proper tax calculation. Reliable bookkeeping and timely financial reporting ensure companies submit correct tax assessments and take advantage of available deductions and incentives.
For foreign-owned companies in Thailand, aligning accounting practices with both local and international standards is crucial for audit readiness and regulatory compliance.
Get Expert Support to Master Thailand’s Corporate Tax System
Thailand’s Corporate Income Tax framework supports dynamic business growth while promoting fiscal transparency and fairness. Understanding this landscape is vital for legal compliance and strategic planning.
SVBL specializes in helping foreign businesses comply with Thailand’s evolving tax regulations. From monthly bookkeeping to audit coordination and annual tax filings, our services deliver clarity and peace of mind so you can focus on building your business.
If you would like, SVBL can assist with personalized consultations on your corporate tax obligations in Thailand, ensuring your business benefits from the best tax strategies in 2025 and beyond.