Businesses who incorporate in Bangkok may face hefty tax repercussions. We will go through the tax repercussions of forming a business in Bangkok in this post, covering corporate income tax, value-added tax (VAT), and withholding tax.
Corporate Income Tax
Taxes on business profits are known as corporate income taxes. The corporate income tax rate in Thailand is 20%. Small and medium-sized businesses (SMEs) might, nevertheless, qualify for a 15% corporate income tax rate reduction if their annual revenue is less than 200 million baht. The annual corporate income tax is due and must be filed, together with the tax return, within 150 days after the end of the business’ fiscal year.
The availability of tax rebates is one benefit of forming a corporation in Bangkok. For instance, businesses that engage in R&D activities may be able to deduct up to 300% of their real R&D costs from their taxes. Additionally, businesses that make investments in certain sectors, like infrastructure, renewable energy, or agriculture, may qualify for tax breaks or lower tax rates.
Value-Added Tax (VAT)
A tax known as value-added tax (VAT) is levied on the value added to products and services at every step of production and distribution. The typical VAT rate in Thailand is 7%. Businesses that make more than 1.8 million Baht in yearly income are required to register for VAT and levy VAT on their sales. Businesses can voluntarily register for VAT even if they fall below this level.
Monthly VAT returns must be submitted by registered businesses, and any outstanding VAT must be paid within 15 days after the end of the month. In order to determine the net amount payable or receivable, the VAT paid on purchases can be subtracted from the VAT received on sales. Businesses can get their VAT back if they export goods or services outside of Thailand.
Withholding tax is a tax imposed on payments made to non-resident individuals or companies. In Thailand, the withholding tax rate varies depending on the type of income and the status of the recipient. For example, the withholding tax rate on dividends paid to non-resident individuals is 10%, while the rate for royalties paid to non-resident companies is 15%.
Companies that make payments subject to withholding tax must withhold the tax and remit it to the tax authorities on behalf of the recipient. Failure to do so can result in penalties and interest charges. Non-resident recipients can claim a credit for the withholding tax paid against their income tax liability in their home country.
Businesses who incorporate in Bangkok may face hefty tax repercussions. The corporate income tax rate and any potential tax advantages must be known by businesses. Companies must also be aware of the withholding tax rates and criteria and register for VAT if their revenue exceeds the threshold. Businesses may make educated judgments and efficiently manage their tax responsibilities by being aware of the financial repercussions of incorporating in Bangkok.