Thailand: AEC and Thai tax competition

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Thailand: AEC and Thai tax competition

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 (chinapat.vs@hnpcounsel.com)

HNP Counsel Taxand

Tel: +66 0 2632 1800

Fax: +66 0 2632 1332

Website: www.hnpcounsel.com

more across site & shared bottom lb ros

More from across our site

New Zealand is bucking the trend of its international counterparts with its investment-friendly visa approach. Here’s what high-net-worth investors need to know
However, nearly 10% of reports only disclosed activities in tax havens, according to the Fair Tax Foundation; in other news, Plante Moran sealed a US east coast merger
While pillar one is still alive, it will apply to a smaller group of companies, Brian Foley also told ITR
Tax teams that centralise and automate their pillar two data will have a much easier time during reporting season, says Hank Moonen, CEO of TaxModel
While GCCs drive efficiency for multinationals, they also present a host of TP risks that should be considered carefully
PwC Ireland has also called for simplifying Ireland’s tax code and a reduction in its capital gains tax in a pre-budget submission
Effective audit management requires more than documentation; it’s the way taxpayers engage that can shape audit direction, manage procedural ambiguity, and preserve options for appeal or litigation
American advisers are falling short of client expectations when it comes to providing value-added services, but remaining tight-lipped won’t make the problem go away
Awards
The Social Impact Awards unveil new categories to reflect a changing legal and social landscape
Australia's approach to tax policy has undergone significant shifts in recent years, reflecting global trends and unique domestic considerations. These developments merit close attention from tax professionals
Gift this article