On 28 Dec 2018, a Thailand International Business Center (IBC) Tax Structure was enacted under Thailand Tax Royal Decree (No. 674).

This International Business Center (IBC) tax structure is enacted pursuant to the Government's resolution to cease offering and replace the International Trading Center (ITC), the International Headquarters (IHQ), and also, Regional Operating Headquarters (ROH) Tax Structures.

The Structure

An IBC is a company incorporated under the laws of Thailand for the purpose of engaging in the following for affiliates in Thailand and foreign countries:

• Providing administrative and technical support services;
• Providing money management services; and/or
• Providing international trading services;

as approved by the Thailand Revenue Department.

The Tax Concessions

For 15 financial years from the date of approval by the Thailand Revenue Dept, an IBC complying with all the conditions is entitled to the following tax concessions:

Corporate Income Tax		On net profit derived from the provision of support services, money management services and royalty income received from affiliates in Thailand and in foreign countries, as follows:
		- 8% Corporate Income Tax when annual operating expenditure is 60 - 300 million Baht
		- 5% Corporate Income Tax when annual operating expenditure is 300 - 600 mIllion Baht
		- 3% Corporate Income Tax when annual operating expenditure is 600 million Baht or more
		On dividend income from affiliates in Thailand and in foreign countries:
		- Exemption from Corporate Income Tax
International Payments Withholding Tax		On interest payments to corporate entity lenders in foreign countries:
		- Exemption from Withholding Tax
Personal Withholding Tax		On salary payments to expatriate employees for the hire of labor in Thailand:
		- 15% Personal Withholding Tax
Profits Remittance Tax		On dividend payments to a corporate shareholder in a foreign country:
		- Exemption from Profits Remittance Tax
Specific Business Tax		On money management services income derived from affiliates in Thailand and foreign countries:
		- Exemption from Specific Business Tax

The Conditions

An IBC claiming the tax concessions under Royal Decree (No. 674) shall:

1. File an application with and receive the approval of the Revenue Dept for the IBC tax concessions;
   
2. Be a company established under the Thai law with paid up capital on the last day of each financial year of 10 million baht or more;
   
3. Have 10 or more employees with the necessary knowledge and skills for an International Business Center, or 5 or more such employees in the case of an IBC providing money management services only;
   
4. Have operating expenditure paid to recipients in Thailand that's at least 60 million Baht in each financial year; and​
   
5. Comply with the Revenue Department's additional rules, procedures and conditions.

Existing ROH and IHQ Companies

Royal Decree (No 674) ​also provides for existing Regional Operating Headquarters (ROH) and International Headquarters (IHQ) with the ability to terminate their ROH and IHQ registrations and apply for registration as an IBC without being penalized for terminating their ROH or IHQ registrations.

Caution

As a company claiming tax concessions in Thailand, it is likely that an IBC will be rigorously investigated by the Revenue Department tax audit officers and if they should find any of the rules have not been fully complied with, the IBC company could lose its entitlements to the tax concessions, and be required to pay back-taxes at the normal rates of tax plus penalty and surcharge.

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