1. Thailand’s tax framework

The basic law of Thailand’s taxation is the Taxation Act (Renenue Code), which mainly adjusts personal income tax, corporate income tax, value-added tax, special business tax and stamp duty. In addition, the Fuel Income Tax Act governs oil and gas concession activities, the Customs Act governs customs duties and import and export activities, and excise tax and property tax are governed by other laws.

Thailand’s taxes can be divided into two categories: direct taxes and indirect taxes. Direct taxes include personal income tax, corporate income tax, and petroleum income tax. Indirect taxes include value-added tax, special industry taxes, customs duties, consumption taxes, stamp taxes, and property taxes. In terms of tax attribution, it can also be divided into two parts, namely central tax and local tax. Central taxes dominate and are mainly divided into six categories, while local taxes are divided into two categories.

Central taxes include income tax on income and profits, payroll tax for the purpose of social security distribution, real estate transfer tax on property, value-added tax, consumption tax, special business tax, playing card tax, international Import duties, export taxes, etc. levied on trade and transactions.

Local taxes include property taxes and motor vehicle taxes. Among them, property taxes include real estate rental tax, land development tax, real estate transfer tax levied on real estate, value-added tax surcharges on goods and services, special business tax surcharges, consumption tax surcharges on some goods, and levies on the use of certain goods and property or A tax that gives permission to engage in a certain activity.

2. Tax Management Organization

Thailand’s Ministry of Finance is the competent department responsible for finance and taxation management in Thailand. It has jurisdiction over the Fiscal Policy Office, Auditor General’s Office, Finance Department, Customs Department, Eight departments including the National Excise Department, Taxation Department, and National Debt Management Office, and 16 state-owned enterprises including the Government Lottery Office, Tobacco Monopoly Bureau, Housing Bank, Thai Import and Export Bank, Poker Factory, and Asset Management Company. Among them, those responsible for tax collection and management are mainly the Taxation Department, the National Commodity Tax Department, and the Customs Department, which is responsible for customs duties collection. The Taxation Department is mainly responsible for collecting income tax, value-added tax, special industry tax and stamp duty. The National Goods Tax Department collects consumption tax on specific commodities, and the Customs Department is responsible for collecting import and export duties. Local governments are responsible for the collection of property taxes and local taxes.

The Thai Tax Department was established in 1915. It is the highest administrative agency responsible for tax collection and administration under the Ministry of Finance of Thailand. It mainly collects and manages the following taxes: personal income tax, corporate income tax, value-added tax, special business tax, stamp duty and petroleum income tax. . The Taxation Department implements a director-responsibility system and has four deputy directors. The organizational structure of the tax department is divided into two parts across the country, namely, the central tax administration and the tax administration agencies of each government.

In recent years, the Thai tax agency has continuously proposed more effective collection methods, established a more fair and effective tax collection mechanism, and ensured that tax collection and administration work is coordinated with government policies through the development of information technology platforms.

The tax administration of each province includes the provincial tax office and the district tax office outside Bangkok. Tax administration agencies below the provincial level report directly to the provincial governor or district chief executive.

Classification table of various taxes collected by the Thai Taxation Department

(Fiscal year 1998-2003)

(Millions of baht)

Tax type\Year 1998 1999 2000 2001 2002 2003

1. Personal income tax 122,946 106,070 91,790 101,146 108,371 117,309

2. Corporate income tax 99,478 108,820 145,558 149,663 170,415 208,859

3. Value-added tax 232,388 201,976 192,512 215,318 228,196 261,306

4. Special business tax 35,241 21,311 17,016 12,852 13,715 12,757

5. Business tax 342 185 126 84 99 N/A *

7. Fuel income tax 5,316 10,872 10,739 17,154 19,128 21 , 773

8. Others 263 258 236 241 236 330

Total 498, 964 452, 317 461, 325 499, 868 544, 281 627, 682

(Official website of the Thai Taxation Department)

The National Goods and Taxation Department implements the director-director responsibility system, and consists of the Tax Management Department, the Revenue Department, the Audit Supervision Bureau, the Legal Affairs Bureau, the Tax Planning Bureau and the consumption tax offices of each province. and other departments. Consumption tax is mainly levied on certain goods or services specified in the Consumption Tax Act. Taxable goods or services mainly include: gasoline and gasoline products, non-alcoholic beverages, air conditioners and other electrical appliances, lead crystal products, cars, motorcycles, yachts, perfumes, and wool. Carpets, batteries, places such as racetracks and golf courses, etc.

Most goods are subject to ad valorem tax, while gasoline and non-alcoholic beverages are subject to price or quantity and weight.

Under the following special circumstances, some goods or services may be exempted from consumption tax: goods exempted from customs duties according to the customs law; exported goods and damaged or deteriorated goods; goods donated to charities; goods owned by diplomatic personnel Items; fuel or fuel products for use on international aircraft or ships of over 500 tonnage; services provided by donating proceeds to public charities.

The Customs Department is a government agency directly under the Ministry of Finance. It is mainly responsible for the collection of tariffs, and the collection of value-added tax, consumption tax, etc. in the import and export links. It is responsible for customs supervision, combating smuggling, tax evasion and other illegal activities, and International trade facilitation.

Introduction to the three and four major tax types

(1) Personal income tax (PIT)

The tax year for Thailand’s personal income tax is the calendar year. Thai residents or non-residents must pay personal income tax on their legal income or assets in Thailand. The tax base is the balance of all taxable income after deducting relevant expenses, and is levied at 5-level progressive tax rates ranging from 5% to 37%.

According to international practice and bilateral agreements, United Nations officials, diplomats and some visiting experts are exempt from personal income tax.

According to the relevant provisions of Section 40 of the Revenue Act, some personal income can be deducted before tax according to relevant standards. For example, rental income can be deducted by 10-30% according to the type of property rented; professional fees 60% of the medical income can be deducted and 30% of other income, 40% of copyright income, employment or service income can be deducted, and 70% of contractor income can be deducted. Income from other commercial activities specified in Article 40 can be deducted based on the number of commercial activities. Natural deductions range from 65% to 85%.

(2) Corporate income tax (CIT):

Corporate income tax is imposed on legal entities or partnerships established in accordance with domestic or foreign laws to engage in business in Thailand. A direct tax levied on business activities. Calculated on the basis of net profit in accordance with the accrual basis, that is, the balance after deducting allowable deductions for expenses stipulated in the Tax Code from all operating income in the current accounting year. For dividend income, half of the dividends received by a Thai company from another Thai company can be deducted from taxable income. If it is a company listed on the stock exchange, all dividends received by it can be deducted from taxable income.

Companies with legal personality in Thailand are required to pay tax in accordance with the law. The tax rate is 30% of the net profit and is paid every six months. Funds, federations, associations, etc. pay 2-10% of net income. The tax for international transport companies and the aviation industry is 3% of net income.

Unregistered foreign companies may not be registered in Thailand Companies only need to pay tax on their income in Thailand. Normal business expenses and depreciation subsidies are deducted from the net profit at a rate ranging from 5 to 100%. There is no corporate income tax on interest payments on foreign loans.

Company? Income from cooperation with other departments? Profits are exempt from 50% tax. For companies that own equity in other companies and are listed on the Thai Securities Exchange, all dividends received are tax-free, but shareholders are required to hold shares for at least 3 months before or after receiving dividends.

Among the allowable deductions, research and development costs can be deducted twice, and vocational training costs can be deducted 1.5 times.

In Thailand, there are various forms of business organizations. Choosing different forms of registration will affect the difference in tax rates and tax benefits. The most common ones are divided into two categories: Thai companies and foreign companies. A Thai company refers to a company registered under Thai law, and the proportion of foreign capital is no more than 49% of the total capital. A foreign company refers to a company operating in Thailand but registered under foreign law, or a company that does not operate in Thailand but has sources from Thailand. of the income of the company.

The normal corporate income tax rate for Thai companies is 30%, but the following situations can receive preferential treatment at a low tax rate:

Small companies with registered capital of less than 5 million baht have low net profits If the net profit is between 1 million baht and 1 million baht, the income tax will be calculated and paid at 20%; if the net profit is between 1 and 3 million baht, the income tax will be calculated and paid at 25%.

If the net profit of a company registered on the Stock Exchange (SET) is less than 300 million baht, the payment is calculated at 25%.

Companies newly registered on the stock exchange or the New Stock Investment Market (MAI) are subject to corporate income tax calculated at 25% and 20% of net profits respectively.

International financial institutions and regional operating headquarters located in Bangkok are required to pay 10% of their legitimate income and profits.

Associations and foundations pay 2% and 10% of total income.

Foreign companies operating in Thailand, whether as branches, offices, individuals or agents, should pay income tax on 30% of their business profits from Thailand. International transportation companies calculate and pay 3% of total revenue.

Foreign companies that do not conduct business in Thailand pay withholding income tax on some items of income derived from Thailand. The tax rates on different incomes can be reduced or exempted according to the provisions of double taxation agreements.

Foreign companies investing in Thailand can enjoy a variety of tax benefits if they register as Thai companies. For example, companies that obtain BOI investment promotion preferential treatment can receive income tax reductions and exemptions for 3-8 years; they are located in an export processing zone. and free trade zones, or companies that have obtained preferential treatment for investment promotion, the import tariffs on raw materials and machinery and equipment will be reduced or exempted; for companies that have obtained preferential treatment for investment promotion, transportation and water and water supply costs can be doubled when calculating taxes; hiring The cost of project research and development by senior researchers can be deducted twice when calculating taxes; the cost of employee training to improve the level of human resources can be deducted 1.5 times; small and medium-sized enterprises can deduct 10% of the cost at one time when acquiring computers, factories and machinery and equipment. 40%, 25% and 40% depreciation are included in the cost.

Companies operating in Thailand must file tax returns and pay taxes twice a year. The semi-annual tax return should be submitted to the tax authorities within two months after the end of the first half of the fiscal year, and the taxable income is 50% of the company's expected annual net profit; the annual tax return should be submitted within 150 days after the end of the fiscal year. tax authorities.

(3) Value-added tax (VAT)

The value-added tax system will be implemented from January 1, 1992, replacing the original commercial tax system. In 1999, Thailand's ordinary value-added tax rate was reduced from 10% to 7%.

VAT is an indirect tax levied on the value-added part in every step of production and sales. Any individual or entity with an annual turnover exceeding 1.2 million baht shall pay VAT in Thailand as long as it sells taxable goods or provides taxable services in Thailand. Importers, regardless of whether they are registered in Thailand, are required to pay VAT, which is collected by the Customs Department when the goods are imported.

VAT taxpayers include manufacturers, service industries, wholesalers, retailers and import and export companies. Value-added tax is paid monthly, and the tax payable = output tax - input tax.

Exemptions from VAT include small businesses with an annual turnover of less than 1.2 million baht; sales or imports of unprocessed agricultural products, livestock and agricultural raw materials, such as fertilizers, seeds and chemicals; sales or imports Newspapers, magazines and textbooks; auditing, legal services, health services and other professional services; cultural and religious services;

Goods or taxable services subject to zero rating include exported goods and goods provided in Thailand but used abroad services, international transport aircraft or ships, goods or services provided to government agencies or state-owned enterprises under foreign aid projects, goods or services provided to United Nations agencies or diplomatic agencies, goods or services provided between bonded warehouses or export processing zones (EPZs) .

The "Tax Act" stipulates in detail the time when tax liability occurs according to different sales settlement methods. For goods, generally when goods are sold, it is when the goods are transferred or when the ownership of the goods is transferred. Or the day when the payment is received and the invoice is issued; if the goods are sold by installment payment, it is the day of payment as stipulated in the contract, or the day when the payment is received and the invoice is issued; for imported goods, when the customs duties are paid, or When a guarantee is provided, when a guarantor is established, or when a bill of lading is issued; for exported goods, in addition to the imported goods, it also includes when the goods are transferred to the export processing zone or exported from the bonded warehouse; for taxable services, payment is when, or when an invoice is issued, or when services are used. The one that satisfies the above conditions at the same time shall prevail.

When the monthly input tax is greater than the output tax, the taxpayer can apply for a tax refund and receive a cash refund or tax credit in the next month. For zero-rated goods, taxpayers always enjoy tax refund treatment.

The input tax related to entertainment expenses is not deductible, but can be treated as a deductible expense when calculating corporate income tax.

(4) Special Business Tax (SBT):

Special business tax is an indirect tax implemented in 1992 to replace the original business tax. Some businesses that are not subject to VAT are included in the scope of special business tax.

The businesses that are levied special business tax mainly include banking, finance and related businesses, life insurance, pawn industry and brokerage industry, real estate and other businesses stipulated in the Royal Act. Among them, banking, finance and related businesses are 3% of interest, discounts, service fees, and foreign exchange profits; 2.5% of interest, service fees, and other fees for life insurance; 2.5% of interest, fees, and sales of expired property for the pawn industry and brokerage industry; and 2.5% of income for the real estate industry. 3% of the total amount, the repurchase agreement is 3% of the difference between the selling price and the repurchase price, and the agency business is 3% of the interest, discounts, and service fees collected. A 10% local tax is added to the special business tax.

Businesses exempt from special business tax mainly include the business of the Bank of Thailand, Government Savings Bank, Government Housing Bank and Bank of Agriculture and Agricultural Cooperatives, Export-Import Bank of Thailand, Thailand Industrial Finance Corporation, asset management companies, small industries The business of financial companies and secondary mortgage companies, the business of the National Housing Authority, government pawnbrokers and pension fund institutions, and the sales of securities listed on the Stock Exchange of Thailand.

Units and individuals engaged in special business tax business must register with the tax authorities as special business tax taxpayers within 30 days after opening and fill in the taxpayer registration application form.

Regardless of whether business occurs or not, special business tax returns must be filled in on a monthly basis and submitted and paid to the local tax authorities before the 15th of the following month. If you have multiple business locations, you should file and pay separately, unless approved by the Director of Taxation.

IV. Special incentives and treatments

(1) Encourage export enterprises to operate in accordance with the law and provide preferential treatment.

The Taxation Department identifies two types of enterprises, "Quality Exporters" and "Registered Exporters", based on the business and tax payment status of export enterprises, and provides preferential treatment in tax refunds. It is beneficial to enterprises to receive export tax refunds in a timely manner. Cash flow.

Export enterprises recognized as "high-quality exporters" that fill in the VAT return form through the Internet can receive an export tax refund 15 days after filling in the form; fill in the newspaper tax return form in the tax payment hall of the local tax office Those who submit a telegraphic form can receive an export tax refund within 45 days after filling in the form. The discount is valid for two years, and an extension application can be submitted three months before expiration.

Enterprises that apply to become a "Quality Exporter" must be a limited company or joint-stock company registered for VAT, with a paid-in capital of not less than 1,000 baht, and have achieved a certain export volume in the past year. Proportion. The exporter's export tax refund is directly deposited into the bank account, and the VAT is paid together with the branch; he must have a good tax payment record and no disciplinary violations. The certified public accountant hired by the company must be unanimously appointed by the shareholders' meeting, and the relevant information of the certified public accountant must be reported to the tax department.

The application conditions for "Registered Exporter" are similar to those for "Quality Exporter", with some conditions slightly wider, so the treatment enjoyed by "Registered Exporter" is inferior to that of "Quality Exporter". Exporters who file tax returns through the Internet can receive export tax refunds within 30 days, and exporters who fill out newspaper tax teleportation forms in the tax hall can receive export tax refunds within 45 days.

(2) Encourage the establishment of Regional Operating Headquarters (Regional Operating Headquarters)

ROH refers to a company registered in Thailand to conduct business and provide exclusive qualified services to its affiliated companies or branches. joint stock company. Proprietary qualification services provided include:

Operation and management services, technical services, business planning and coordination, raw material and accessories deployment and supply, research and development, marketing and promotion plans, training and personnel management, economic and investment research and analysis, etc. Supportive services, etc.

Establishing a regional operating headquarters (ROH) in Thailand can enjoy more tax benefits, including corporate income tax exemptions, special depreciation rates, and special personal income tax treatment for personnel working for ROH.

Reduction and exemption of corporate income tax. Income tax from providing specially qualified services to affiliated enterprises or branches is levied at a reduced rate of 10%. Royalty income collected for R&D work by affiliated enterprises or branches in Thailand is levied at a reduced rate of 10%. Corporate income tax is levied at a reduced rate of 10%. Related companies can also enjoy this treatment; interest income from loans provided to related companies or branches is subject to a reduced corporate income tax of 10%; dividend income from related companies is tax-free, and dividends paid to companies outside Thailand that do not conduct business in Thailand duty free.

Accelerated depreciation permission. Fixed assets can be depreciated at a lump sum of 25% of the total cost on the date of acquisition, and the remaining portion is calculated at the normal depreciation rate. However, the depreciation period of buildings purchased and constructed for normal operations of ROH should not be less than 20 years.

Treatments for expatriates. For personnel sent by ROH to work abroad, their income from providing services is exempt from personal income tax in Thailand. But its income must be paid by foreign institutions. Expatriates can also choose to pay a withholding tax of 15%, so that this part of the income does not need to be included in the annual personal income declaration.

The prerequisite for ROH to enjoy the above tax incentives is that it meets the following conditions: A legal person company or partnership established in accordance with Thai law; the company’s paid-in capital in the previous year is not less than 10 million baht; the company should be 3 The above affiliated enterprises or branches in countries other than Thailand provide services; the income from providing services to foreign affiliated enterprises or branches should not be less than 50% of their total income; relevant information is filed with the tax department.

(3) Encourage the development of small and medium-sized enterprises

To encourage and promote the development of small and medium-sized enterprises, Thailand provides the following tax incentives to small and medium-sized enterprises (SMEs):

For Thai companies with paid-in capital of 5 million baht and below, the corporate income tax rate is reduced. If the net profit is less than 1 million baht, the income tax rate is 20%. If the net profit is between 1 million and 3 million baht, the income tax rate is 25%. If the profit exceeds 3 million baht, the normal 30% tax rate is applicable.

Thai companies with durable assets (excluding land) worth less than 2 million baht and employing less than 200 employees can obtain the following concessions in the first year: computer hardware and peripheral equipment can be obtained after Depreciation is calculated at a lump sum of 30% of the total cost on the day of acquisition, and the remaining portion is calculated at the normal depreciation rate, but the depreciation period should not be less than 3 accounting years; buildings and factories can be depreciated at a lump sum of 25% of the total cost on the date of acquisition. Depreciation, the remaining part is calculated at the normal depreciation rate, but the annual depreciation amount should not exceed 5% of the total cost; machinery and equipment can be depreciated at a lump sum of 30% of the total cost on the date of acquisition, and the remaining part is calculated at the normal depreciation rate, but Annual depreciation should not exceed 25% of the total cost; dividend income received by qualified venture capital (VC) companies from investing in Thai companies with durable assets (excluding land) of less than 2 million baht and employing less than 200 employees and capital gains from the sale of shares are all exempt from corporate income tax.

5. Experience worth learning from for my country

After analyzing and studying the situation of economic globalization and drawing on the characteristics and trends of foreign tax system reforms, my country's current tax system should be in the following aspects Make improvements.

(1) The main problems existing in my country’s current tax system are the unreasonable ratio of direct taxes and indirect taxes. The proportion of indirect taxes is too large and the burden is too heavy. The proportion of direct taxes, especially personal income tax, is low, which directly affects the government. macro-control function. Therefore, a tax structure that adapts to international norms should be established, appropriately reduce the proportion of turnover tax, increase the proportion of income tax, levy social security tax, and gradually establish a tax structure with value-added tax, income tax and social security tax as the main body, and reflect taxation through value-added tax The income tax has the function of organizing revenue, the income tax realizes the function of economic regulation, and the social security tax plays the function of stabilizing society.

(2) In terms of value-added tax, Thailand implements a low tax rate of 7%, which makes it easy to realize export tax rebates, which is conducive to the capital turnover of enterprises and increases the enthusiasm for exports. Due to the high value-added tax rate in my country, tax refund rates change frequently, and tax refund arrears are common.

In addition, there is a gap between my country's current unstandardized production-based VAT and the standardized consumption-based VAT system in the world. There are problems of double taxation and tax imbalance, which is not conducive to the neutrality of VAT. It allows domestic products to enter the international market at a tax-free cost to participate in fair competition, which is also not conducive to fixed asset investment. At present, my country has begun to try to transform in Liaoning, adopting the practice of deducting investment in machinery and equipment. After gaining certain experience, it should be promoted as soon as possible, and eventually all new fixed assets will be included in the scope of deduction, and the transition to consumption-based value-added tax will be achieved.

(3) The collection of consumption tax is timely and reflects the country’s consumption orientation. With the progress of society and the improvement of people's living standards, the current consumption tax items and collection scope should be adjusted, taxation should be stopped on ordinary consumer goods such as skin care and hair care products, cosmetics, etc., and the tax rates on luxury goods, high-end consumer goods and high-consumption behaviors should be increased, and The purpose of protecting resources and the environment is achieved through consumption tax regulation.

(4) Improve the income tax system in accordance with international norms. For many years, our country has been implementing an enterprise income tax policy that differentiates domestic and foreign enterprises. Foreign-invested enterprises enjoy super-national treatment, and domestic enterprises bear a heavy burden, which hinders fair competition at home and abroad. Therefore, we should study and unify the income tax laws of domestic and foreign-invested enterprises as soon as possible so that everyone can Stand on the same starting line.

In addition, my country's personal income tax currently adopts a nine-level progressive tax rate, and many new income items are not included in the scope of personal income tax. Therefore, the scope of personal income taxation should be gradually expanded, a moderate excess progressive tax rate should be implemented, the progressive tax rate levels should be reduced, a standardized and strict personal income monitoring and taxpayer self-declaration tax system should be established, and the withholding and payment system should be improved.

(5) Some current preferential tax policies lack uniformity, do not comply with the principle of fairness, and change frequently, with poor stability and low transparency, which is not conducive to operation and execution. Preferential tax policies should be standardized, separate legislation should be adopted, the transparency and standardization of policies should be enhanced, and a tax environment for fair competition should be created. Guided by national industrial policies, we will shift from regional and direct preferential treatment to industrial preferential and indirect preferential treatment. Through preferential measures, we will encourage investment in small and medium-sized enterprises, advanced technology enterprises, knowledge economy industries, and energy and resource industries, and encourage comprehensive utilization of resources. The purpose of investment in ecological and environmental protection projects.