Thailand Foreign Company 5% Corporate Tax
Section 71(1) of Thailand's tax code prescribes a payment of corporate income tax at 5% of gross revenue before deduction of expenses, and some foreign companies have asked Sherrings whether they can pay this 5% rate of tax in Thailand.
The method of paying tax prescribed under Section 71(1) is available only if net profit for a foreign company carrying on business in Thailand is unable to be ascertained.
And Section 71(1) also contains a few additional words that need to be particularly noted, which are, "the assessment officer has the power to assess tax at the rate of 5%".
That is, as Section 71(1) provides the "power" to the assessment officer to assess tax at the rate of 5%, if a foreign company wants to pay tax at this rate under Section 71(1), the foreign company must firstly apply to the Revenue Department officers for them to exercise their power.
But a search of the Revenue Department's Tax Rulings that have been issued in relation to this matter indicates that receiving the blessing of the Revenue Department is very difficult, if not impossible. Over the years, many foreign companies have tried, but have failed.
The more-likely-than-not propositions that can be ascertained from the Tax Rulings are:
This Tax Insight is general information only. It should not be used to determine any particular matter without consulting with an experienced Thailand tax advisor.