Thailand has ..

  • Investment promotion Act
  • National Competitiveness Act
  • The Revenue Code


East Economic Corridor (EEC)

Tax benefits to be granted from the BOI to a company operating in the EEC

1. Corporate income tax exemption for 10 years for investment in the aviation promotion zone, and the Innovation or Digital Park Thailand in the EEC;

2. Reduction of 50 % of   corporation income tax for 5 years after expiry of the period of the tax exemption for investment in the aviation promotion zone, and the Innovation or Digital Park Thailand in the EEC;

3.  Investment  in  any  of  10  targeted  industries  in  the  EEC  is  eligible  for  an  exemption  from corporate income tax for 8 years;

4. Investment in any of 10 targeted industries in the EEC is eligible for reduction of 50 % of corporation income tax for 5 years after expiry of the period of the tax exemption;

5. Investment in any general project in any industrial estate in the EEC is eligible for corporate income tax exemption for 8 years and reduction of 50 % of  corporation income tax for 3 years after expiry of the period of the tax exemption; and/or

The privilege packages of the BOI will be effective from 1 January 2018 to 30 December 2019.

National Competitiveness Act

  • Exemption of corporation income tax can be extended  for up to 15 years for any of qualified targeted industries.


The Revenue Department of Thailand opened an online public hearing in relation to a revised draft of a Bill on Transfer Pricing. The purpose of the revised draft of the Bill   is to amend the Revenue Code to prevent   tax avoidance from transfer pricing transactions  between related parties, and to have provisions on how to determine a market price in order to be in compliance with international standards.

Key features of the draft of the Bill on transfer pricing are set forth below:

  1. A  tax official  will be empowered  to adjust an  assessable income and deductions of a taxpayer that  entered  into  a  transaction  with  its  related  entity  under  different  conditions  from  those  in normal transaction between independent parties;
  2. The  phrase  "at  least  50%  direct  and  indirect  capital  shareholdings"  will  be  added  into  the definition of 'Related Business Entity or Related Juristic Partnership';
  3. An  entity  with  related  party  transactions  which  has  income  exceeding  the threshold will be required to submit a report outlining the nature/relationship and quantum of related party transactions within the annual tax return filing deadline and submit the transfer pricing documentation within 60 days or the extended period of 120 days upon the receipt of notice from the tax authority;
  4. An  entity  may  request  a  tax  refund  within  three  years  from  the  tax  return submission date or within 60 days after the receipt of an adjustment notice from a tax officer; and
  5. An entity that fails to comply with Section 71 ter of the Revenue Code or submits incomplete  or  incorrect  documentation  without  reasonable  explanation  may  be subject to a fine of not exceeding Baht 200,000.


Tax principles of Thailand

  • Thailand applies a worldwide taxation which is different from a territorial taxation.

Residence of a  company

  • Place of incorporation;
  • Place of central control and management; and/or
  • Place of the head office

A company in Thailand must pay taxes at two levels :

  • Corporate income tax on net profits of the company; and
  • Personal income tax or corporate income tax on dividends paid to an individual shareholder and a corporate shareholder

Corporate income tax is permanently fixed at 20% of net profits of a company or a partnership.


  • multi levels of companies
  • holding companies and an operating company

Tax matters

  • Dividend
  • Interest
  • Sale of goods
  • Provisions of services
  • Royalties
  • Capital gain


  • Dividend paid by one Thai company to another Thai company or a foreign company is normally charged with 10% withholding tax.
  • 10% withholding tax on dividend received by a foreign company from a Thai company may be reduced  to 5% withholding tax under a DTA.

0% withholding tax on the following:

  • Dividends received in Thailand by a Thai listed company or a Thai company holding at least 25% of the total shares of an affiliated Thai company provided that conditions are met.
  • Foreign dividend paid from a foreign company to a Thai company If the Thai company holds at least 25% of the total  shares  of  a  foreign  company  on  completion  of conditions.


WT on interest:

  • 1%  WT  on  interest  paid  fromone  Thai  company  to another Thai company
  • 15% WT on interest paid from one Thai company to a foreign company in general.

However,  15%  WT  on  interest  is  reduced  to  10%  WT  of interest if Interest is paid from a Thai company to a foreign financial institution.

15% WT on interest may be reduced to  0% if the interest is beneficially owned by a resident of the  other  contracting   state   and   is   paid   with respect to indebtedness arising as a consequence of a sale on credit of any equipment, merchandise or  service  except  where  the  sale  was  between persons  not  dealing  with  each  other  at  arm's length.

  • What are financial institutions ?

    • Is a bond discount regarded as capital gain or interest ?
  • Interest or service fee:
  • Front-end fee
  • Management fee
  • Underwriting fee
  • Standby fee


  • tax law of Thailand has no provisions on debt to equity ratio.

however, debt to equity ratio may exist in an investment certificate of the BOI or a foreign business license.


  • A lot of countries impose limitation on interest.
  • However, tax law of Thailand does not impose limitation on interest.


  • Sale of goods in Thailand is generally exempt from WT but export of some goods from Thailand is subject to WT.
  • Sale of goods from a Thai company to a foreign company is exempted from WT unless the foreign company has its PE in Thailand.


  • Payments of three installments were made at 35% , 35% and 35% each for the price of goods of 100 %.

Is 5% exceeding 100%  regarded as payments for goods or payment of interest  ?


  • Service fee in Thailand is subject to 3% WT
  • Service  fee  paid from  a  Thai  company  to  a  foreign company  is  subject  to  15%  withholding  tax  unless  the foreign company is incorporated in a foreign country with a DTA with Thailand and does not have a PE in Thailand, the service fee is exempted from Thai tax.


  • Royalty  in  Thailand  paid  by  one  Thai  company  to  another  Thai company is subject to 3%WT
  • Royalty paid by a Thai company to a foreign company is subject to 15 %WT but 15% WT may be reduced to:

    • 5 % WT for payment for use of software;
    • 8 % WT for payment for use of industrial, commercial or scientific equipment; or
    • 15% for payment for use of trade mark , patent and know- how

Royalty or service fee:

  • Payment for use of software
  • Payment for software training Issues


  • Details   of   provisions   of   any   relevant   DTA   between Thailand   and   its   counterparty   must   be   reviewed   to determine whether payment for lease of machinery and equipment may be business profit or royalty.
  • Payment under a Technical Assistant Agreement may be regarded as business profit or royalty which depends upon provisions of  the technical Assistant Agreement


Capital gains on sale of shares

  • Capital gains on sale of shares from a Thai company to a foreign  company  are  subject  to  withholding  tax  in  Thailand unless withholding tax is exempted under provisions of any double taxation agreement.

Capital gains on sale of shares

  • Under one  DTA , capital gain on a sale of shares is exempted from WT
  • Under another   DTA, capital gain on a sale of shares is still subject to WT

    • Tax planning for capital gains on shares should be properly and carefully prepared.

Capital gains on sale of real estate:

  • Capital gains on sale of real estate are subject to withholding tax of a country where the real estate is located


10% standard rate of VAT has been long reduced to 7% on payment for goods , for services, for importation of goods and/or importation of services from 1992 to 30 September 2018 and 10% VAT will be applicable unless the reduction will be further extended after 30 September 2018.


  • What are services rendered in Thailand and used in a foreign country ?
  • What are services rendered in Thailand but are not used in a foreign country ?


  • Beneficial ownership is not enacted in the Revenue Code of Thailand but is inserted in some of DTAs between Thailand and its counterparties.
  • At  present  ,  Thailand  has  a  double  taxation  agreement  with  60 jurisdictions.
  • DTA between Singapore and Thailand is effective from 1 January 2017.


PE under a DTA between Thailand and its counterparty may cover:

  • -a building site, a construction , assembly and installation project for a period or periods aggregating more than 120 days within any 12-month period; or
  • -furnishing   of services   including consultancy services by an enterprise through  employees  if  the  activities  continue  for  a  period  or  periods aggregating more than 90 days within any 12-month period

As of the date of this material , Thailand does not have:

  • Thin capitalization rules
  • Controlled foreign companies rules
  • GAAR
  • SAAR
  • Thailand is a member of the Global Forum on BEPS Action Plans.
  • Thailand is in the process of studying 15 BEPS Action Plans.
  • Thailand does not adopt multilateral instruments on BEPS.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.