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Thailand: AEC and Thai tax competition

01 December 2011

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To encourage inbound investment and to support the full entry into the Association of Southeast Asian nations Economic Community (AEC) in 2015, the Thai Cabinet, in its meeting of October 2011, resolved to revise the a number of corporate tax rates.

The standard corporate tax rate of 30% will be reduced to 23% of net profit in 2012 and will be reduced to 20% in 2013 onwards.

The corporate tax rate of small and medium enterprises (SMEs) will be as follows:

  • Net profit not exceeding THB 150,000 ($4800) will be exempt from corporate tax;
  • In 2012 onwards, a tax rate of 15% will be applicable for net profit exceeding THB150,000 but not more than THB1 million;
  • In 2012, a tax rate of 23% will be applicable for net profit exceeding THB1 million;
  • In 2013 onwards, a tax rate of 20% will be applicable for net profit exceed THB1 million.

An eligible SME is a company which has paid its capital at the end of the accounting period not exceeding THB5 million and generates income not exceeding THB30 million per accounting period.

A company which listed its shares in the Stock Exchange of Thailand before December 31 2009 will be eligible to a corporate tax rate of 23% in stead of 25% in 2012 and the rate will be reduced to 20% in 2013 onwards.

A tax rate of 25% will be applicable for a listed company in the stock market for alternative investors (MAI) only for net profit not greater than THB50 million in 2011. Where MAI companies are eligible for the previous tax rate of 20% in 2011, the rate of 20% remains.

As a result, the government will lose its tax revenue of around THB150 billion, which will ultimately affect the state revenue in 2012 by about THB52.5 billion.

However, the government believes that this tax measure generate more tax revenue in the long term to compensate such loss. In addition, the Cabinet resolved that the Ministry of Finance and the Board of Investment (BOI) will review the tax privileges under the BOI promotion schemes given to the BOI operators in order to cover the loss of tax revenue arising from the tax rate reduction. The review will take into account the tax holiday offered in other countries in the region for tax competition purposes.

The Thai government will adopt the deficit budget policy in its 2012 budget year. It is foreseeable that tax collection will be heavier and more tax scrutiny will be expanded to new tax bases.

Chinapat Visuttipat (
HNP Counsel Taxand
Tel: +66 0 2632 1800
Fax: +66 0 2632 1332

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