Taxation in Thailand: Navigating Corporate Tax, Incentives, and International Treaties

Thailand remains a compelling investment destination due to its stable tax environment and economic transformation under the Thailand 4.0 strategy. In 2022, tax revenue reached 16.7 percent of GDP, up from 16.4 percent in 2021. However, collection eased to an estimated 15.5 percent in 2023, reflecting short-term fiscal pressures and transitional policy shifts.

Despite this dip, Thailand continues to maintain a pro-investment tax environment. The Revenue Department and the Board of Investment (BOI) oversee tax administration and investment promotion.

Thailand’s alignment with the OECD’s Base Erosion and Profit Shifting (BEPS) framework and implementation of the Multilateral Instrument (MLI) underscores its commitment to international tax standards.

Corporate income tax rules and rates in 2025

Thailand’s corporate income tax (CIT) system features progressive rates for SMEs, while most foreign-owned businesses fall under the standard flat rate:

• 0 percent tax on net profits up to THB 300,000
• 15 percent on profits between THB 300,001 and THB 3 million
• 20 percent on profits exceeding THB 3 million

Companies must file annual CIT returns within 150 days of the fiscal year-end and make a half-year prepayment eight months into the accounting year. Late filings are subject to fines ranging from THB 1,000 to THB 2,000, along with 1.5 percent monthly interest on underpaid taxes.

Since January 1, 2025, Thailand has implemented the OECD Global Minimum Tax (Pillar Two). A domestic top-up tax now applies to multinational enterprises with global consolidated revenue exceeding EUR 750 million, ensuring an effective minimum tax rate of 15 percent on income earned in Thailand.

Maximizing returns through BOI and regional incentives

Thailand’s BOI continues to offer a wide range of incentives for foreign investors. These include:

• Corporate income tax holidays of up to 13 years
• Import duty exemptions for machinery and raw materials
• Accelerated depreciation allowances
• Non-tax benefits, such as foreign land ownership rights and simplified work permit processing

The Eastern Economic Corridor (EEC), covering Chachoengsao, Chonburi, and Rayong, remains a hotspot for high-value projects.

By the end of 2024, the EEC hosted over 600 BOI-approved investment projects. Similar incentives are also available in Special Economic Zones (SEZs) and designated industrial parks for companies aligned with national priority sectors like clean energy, digital services, logistics, and advanced manufacturing.

Leveraging Thailand’s network of double taxation treaties

Thailand has entered into more than 60 double taxation agreements (DTAs), which significantly reduce cross-border tax exposure for foreign investors. Key benefits include:

• Dividend withholding tax reductions (typically from 10 percent to 5 percent)
• Interest withholding tax reductions (from 15 percent to 10 percent or lower)
• Royalty withholding tax reductions (from 15 percent to as low as 5 percent)

To access treaty benefits, companies must present a Certificate of Residence and comply with the Principal Purpose Test (PPT). Many treaties also include Most Favored Nation (MFN) clauses. Thailand has adopted these provisions through the MLI, aligning with global anti-abuse rules and enhancing treaty integrity.

Managing transfer pricing and cross-border tax risks

Thailand enforces robust transfer pricing (TP) requirements. Companies with annual revenue above THB 200 million must prepare TP documentation to support related-party transactions. Multinational groups with global consolidated revenue exceeding THB 28 billion must also submit Country-by-Country Reports (CbCR).

Non-compliance can lead to denied deductions, tax reassessments, and monetary penalties. Thailand offers Advanced Pricing Agreements (APAs) to provide certainty for complex intercompany pricing arrangements, although the process is time-intensive.

Investors should also evaluate exposure to Controlled Foreign Company (CFC) rules and thin capitalization risks, particularly when using shareholder loans or hybrid instruments.

Structuring investments for long-term efficiency

Foreign investors can improve their tax position through carefully planned corporate structures. The International Business Center (IBC) regime offers:

• Reduced CIT rates of 3–8 percent, depending on local expenditure
• Withholding tax exemptions on outbound dividends
• Flat 15 percent personal income tax for qualifying expatriate employees

To qualify, companies must meet substance and spending thresholds (e.g., THB 60 million annually). When paired with treaty-based withholding tax relief, IBCs provide an attractive structure for regional operations and profit repatriation.

Understanding VAT and payroll tax obligations in 2025

Thailand’s Value Added Tax (VAT) remains 7 percent through September 30, 2025, under Royal Decree No. 790. The government may consider reinstating the standard 10 percent rate thereafter, depending on fiscal policy objectives.

Businesses with annual revenue exceeding THB 1.8 million must register for VAT. Since February 18, 2025, VAT also applies to:

• Low-value imports (under THB 1,500) through e-commerce platforms
• Foreign digital services consumed in Thailand

To improve small business compliance, the Revenue Department is reviewing a flat 1 percent VAT option and a possible reduction in the registration threshold.

On the employment side, businesses must:

• Withhold personal income tax of up to 35 percent on salaries above THB 5 million
• Contribute 5 percent of monthly wages to the Social Security Fund, capped at THB 750
• Withhold tax on remitted offshore income, if brought into Thailand within the same calendar year

Compliance and audit readiness

Foreign-invested companies in Thailand must submit monthly VAT and withholding tax filings, annual corporate income tax returns, and maintain accounting records in the Thai language for a minimum of five years. Non-compliance may result in penalties, including fines of THB 2,000 per late VAT return, surcharges of up to 200 percent on unpaid VAT, and interest charges on underpaid corporate income tax.

In 2025, the Revenue Department has intensified audit activity, particularly focusing on BOI-approved firms, related-party transactions, and digital service providers. Voluntary disclosure programs remain available, allowing businesses to correct prior reporting errors while significantly reducing penalties and audit exposure.

Digital taxation and ESG incentives

Thailand continues to modernize its tax regime to reflect digital trends and global sustainability standards. E-invoicing is being gradually rolled out across large taxpayers, while enforcement of VAT on foreign digital platforms has tightened. Cryptocurrency gains are now classified as taxable investment income, with further guidance expected later in 2025.

To support long-term sustainability goals, the government is piloting ESG-linked tax incentives, targeting investments in:

• Renewable energy
• Sustainable agriculture
• Circular economy infrastructure
• Green logistics and transportation systems

These initiatives align tax policy with Thailand’s broader environmental and development priorities.

Structuring tax strategy with confidence in 2025

For foreign investors, the opportunity lies in structured planning, leveraging BOI and IBC regimes, optimizing cross-border tax positioning through Thailand’s treaty network, and staying compliant with domestic reporting and filing standards. With strategic foresight, investors can achieve long-term profitability and regulatory security in Southeast Asia’s second-largest economy.

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