The Thai government is keen to increase the nation’s competitiveness in relation to other countries in the region with the ASEAN Economic Community to be enforced in January 2015. As a result, the tax benefits of company registration Thailand are better than ever. For a start, the nation’s corporate tax rate was cut from 30% to 23% on 1 January 2012. From 1 January 2013, this rate will be cut again, this time to 20%. Small and medium enterprises (SME) will also benefit with a tax privilege afforded to them on their first 1 million baht of profits.
What Tax Privileges Are Available? If you are interested in company registration Thailand for your SME, you will be exempt from tax up to the first 150,000 baht. The tax rate is just 15% for all profits up to 1 million baht while your company will be subject to the corporate tax rate mentioned above once your profits go above 1 million baht. In Thailand, the above tax privileges only apply to juristic partnerships or companies with a paid up capital of less than 5 million baht. Income from goods and services sold during the accounting period must be not greater than 30 million baht.
How Does Thailand Compare With Other Nations In Terms Of Tax Rates? If you are interested in company registration Thailand, you may actually be disappointed with the personal income tax levels. However, Thailand is one of the best countries in the world when it comes to saving money on VAT and its corporate tax rate is very competitive. When it comes to personal income tax, Thailand’s rate is currently at 37%, 4.5% above the global average. However, these statistics only relate to the highest applicable tax rate which could be construed as being unfair on Thailand. You only pay 37% personal income tax if you earn more than 4 million baht a year and employees earning 150,000 baht a year don’t have to pay any tax.
Thailand’s maximum corporate tax rate has fallen from 30% to 23% as mentioned above and will fall to 20% in 2013. This puts it well below the global average of around 27% and almost on a par with Hong Kong’s 17.5% corporate tax rate. When it comes to company registration Thailand, the extremely low rate of VAT is one of the main attractions. While there are a few nations such as Hong Kong with 0% VAT/GST, Thailand’s rate of 7% is way below what you would pay in most Western nations. Interestingly, by law, Thailand’s VAT rate is actually 10% but was reduced to 7% during the 1997 crisis and will remain at that level until the Thai Government decides otherwise.
If you would like to expand your operation and are sick of paying high tax rates, company registration in Thailand could be your path towards new success. The entire registration process can be taken care of by a legal team so you can kick back, relax and enjoy the tax benefits of doing business in Thailand.