Resident companies are liable to corporate tax in Thailand on their worldwide income, wherever derived. Taxable income is defined as gross income from all sources unless specifically exempt, less substantiated and reasonable expenditure and allowances necessary for the business. Under specific incentive rules, tax law allows for exceptional deductions (over and above actual cost) and/or depreciation.
Effective 14 May 2018, income from digital assets, including income from holding or transfer of cryptocurrency and digital tokens is treated as ordinary income and subject to tax in Thailand.
Capital gains are generally treated as ordinary business income.
Dividends are generally treated as ordinary business income. However, partial and full exemptions are available for specific cases, as follows:
In general, dividends received by resident companies from other resident companies are exempt from tax for 50% of their amount. The exempt amount is increased to 100% (and the dividends received are fully exempt if the shares are acquired at least three months before the dividends are received and are not disposed of until at least three months after receiving the dividends; and if:
- The recipient is listed on the Stock Exchange of Thailand; or
- The recipient owns at least 25% equity interest in the distributing company, and the distributing company does not have a direct or indirect equity interest in the recipient.
Dividends received from foreign companies are exempt from tax if all the following conditions are fulfilled:
- The recipient company holds at least 25% of the shares with voting rights of the foreign company for a minimum of six months prior to the date on which the dividends are received; and
- The net profits of the foreign company serving for the dividend distribution were subject to tax at a rate of not less than 15% in the foreign country.
The share of profits received from an unincorporated joint venture carrying on business in Thailand is exempt from tax.
Effective 13 November 2019, mutual funds are subject to tax on their income received after 20 August 2019.
Accordingly, companies/ investors are eligible for a tax exemption on the following types of investment income received after 20 August 2019 from mutual funds:
- Share of profits derived from certain specifiedfixed-income mutual funds;
- Capital gains derived from the sale of investment units in certain specifiedfixed-income mutual funds under the law governing securities and stock exchanges; and
- Share of profits received derived from other mutual funds (except real estate property funds) by legal persons established under Thai law or funds established and operated by an investment management company (50% exemption for non-unlisted companyies and 100% exemption for listed companyies), subject to certain conditions provided the fund units are held for three months before and after the distribution of the share of profits.
Subject to a few exceptions, income is recognized on an accrual basis.