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

The threat of 50% tariffs on Brazilian goods coincides with new Brazilian legal powers to adopt retaliatory economic measures, local experts tell ITR
The country’s chancellor appears to have backtracked from previous pillar two scepticism; in other news, Donald Trump threatened Russia with 100% tariffs
In its latest G20 update, the OECD also revealed tense discussions with the US where the ‘significant threat’ of Section 899 was highlighted
The tax agency has increased compliance yield from wealthy individuals but cannot identify how much tax is paid by UK billionaires, the committee also claimed
Saffery cautioned that documentation requirements in new government proposals must be limited if medium-sized companies are not exempted from TP
The global minimum tax deal is not viable without US participation, Friedrich Merz has argued
Section 899 of the ‘one big beautiful’ bill would have spelled disaster for many international investors into the US, but following its shelving, attention turns to the fate of the OECD’s pillars
DLA Piper’s co-head of tax for the US and Latin America tells ITR about her fervent belief in equal access to the law, loving yoga, and paternal inspirations
Tax expert Craig Hillier agrees with the comparison of pillar two to using a sledgehammer to crack a nut
The amount is reported to be up 57% from the £5.6bn that the UK tax agency believes was underpaid in the previous year
Gift this article