Royal Decree Numbers 530 and 531 have reduced the corporate income tax rate for companies, juristic partnerships and listed companies effective from 21 December 2011 and which are detailed below.
1. Companies and juristic partnerships in general will be entitled to the reduction of their corporate income tax for three consecutive accounting periods as follows:
- 23% for the first accounting period starting on or from 1 January 2012; and,
- 20% for the subsequent two accounting periods starting on or from 1 January 2013.
|
Net Profit |
2011 |
2012 |
2013 |
2014 |
|
On all net profits |
30% |
23% |
20% |
20% |
2. Companies and juristic partnerships with paid up capital at the end of the given accounting period of not exceeding THB 5 million plus revenue from sale of goods or services not exceeding THB 30 million (Small and Medium Enterprises) will be entitled to the following:
- Exemption from corporate income tax for net taxable profit not exceeding THB 150,000.
- For net taxable profit over THB 150,000 but not exceeding THB 1 million, the corporate income tax rate will be reduced to 15% for accounting periods starting on or from 1 January 2012 onwards.
- For net taxable profit over THB 1 million, the corporate income tax rate will be reduced to 23% for the first accounting period starting on or from 1 January 2012 and 20% for the accounting period starting from 1 January 2013 onwards.
|
Net Profit |
2011 |
2012 |
2013 |
|
Up to 150,000 |
Exempt |
Exempt |
Exempt |
|
150,001 – 1 million |
15% |
15% |
15% |
|
1 million – 3 million |
25% |
23% |
20% |
|
Over 3 million |
30% |
23% |
20% |
3.The tax rate for companies that were listed on the Stock Exchange of Thailand market as at 31 December 2009 that are currently subject to corporate income tax at the rate of 25% will be reduced as follows:-
- 23% for the first accounting period starting on or from 1 January 2012; and,
- 20% for the subsequent two accounting periods starting on or from 1 January 2013.
|
Net Profit |
2011 |
2012 |
2013 |
2014 |
|
Up to 300 million |
25% |
23% |
20% |
20% |
|
Over 300 million |
30% |
23% |
20% |
20% |
4. Companies listed on the Market for Alternative Investments (MAI) will still be entitled to a reduction of the corporate income tax rate to 25% under Royal Decree Number 467 for their net taxable profits not exceeding THB 50 million for the accounting period starting on or from 1 January 2011.
|
Net Profit |
2011* |
2012 |
2013 |
2014 |
|
Up to 50 million |
25% |
23% |
20% |
20% |
|
Over 50 million |
30% |
23% |
20% |
20% |
*Remark: The tax rate of 20% will still apply to companies entitled to the 20% rate in 2011.
Social Security – Ministerial Regulation
In accordance with the Ministerial Regulation Prescribing the Rate of Contributions to the Social Security Fund B.E. 2555 dated 6 January 2012, and effective from 1 January 2012, the contribution rate contributed by the employer and the insured person shall be decreased from 5% to the following rates:-
- From January to June 2012, at the rate of 3% of wage as follows:-
– Contribution for compensation benefit in case of injury or illness, child birth, disability and death shall be 0.5% of wage contributed by each party.
– Contribution for compensation benefit in case of child support and old age shall be 2.0% of wage contributed by each party.
– Contribution for compensation benefit in case of unemployment shall be at the same rate, i.e. 0.5% of wage contributed by each party.
- From July to December 2012, at the rate of 4% of wage as follows:-
– Contribution for compensation benefit in case of injury or illness, maternity, disability, and death shall be 0.5% of wage contributed by each party.
– Contribution for compensation benefit in case of child support and old age shall be 3.0% of wage contributed by each party.
– Contribution for compensation benefit in case of unemployment shall be at the same rate, i.e. 5% of wage contributed by each party.
For the contribution to the social security fund from January 2013 onwards the contribution by each party shall be at the same rate, i.e. 5% of wage.
Ministerial Regulation Prescribing the Rate of Contributions to the Social Security Fund B.E. 2555
By virtue of the provisions of Section 7 of the Social Security Act B.E. 2533 and Section 46 paragraphs one and two of the Social Security Act B.E. 2533, amended by the Social Security Act (No.3) B.E. 2542 in which part of the law relates to limitation of rights and freedom of persons, Section 29 in accordance with Sections 33, 41 and 43 of the Constitution of the Kingdom of Thailand, provided that the limitation therefore is feasible by the virtue of the provisions of the law. The Minister of Labor has issued the following Ministerial Regulation:-
- This Ministerial Regulation shall become effective from 1 January 2012.
- The Ministerial Regulation Prescribing the Rate of Contributions to the Social Security Fund B.E. 2552 shall be repealed.
- The Government, employer and insured person in accordance with Section 33 shall contribute the contribution to the social security fund for benefit in case of injury or illness, disability, death, child birth, child support and old age as follows:
- From 1 January 2012 to 30 June 2012 at the rate as prescribed in List A.
- From 1 July 2012 to 31 December 2012 at the rate as prescribed in List B.
- From 1 January 2013 onwards at the rate as prescribed in List C.
Contribution Rate, List A
-
Rate of Contributions as percentage of wage of insured person
- Contribution for compensation benefit in case of injury or illness, disability, death and child birth.
- Government – 0.5 %
- Employer – 0.5 %
- Insured person – 0.5 %
- Contribution for compensation benefit in case of child support and old age.
- Government – 2 %
- Employer – 2 %
- Insured person – 2 %
Contribution Rate, List B
-
Rate of Contributions as percentage of wage of insured person
- Contribution for compensation benefit in case of injury or illness, disability, death and child birth.
- Government – 0.5 %
- Employer – 0.5 %
- Insured person – 0.5 %
- Contribution for compensation benefit in case of child support and old age.
- Government – 2 %
- Employer – 3 %
- Insured person – 3 %
Contribution Rate, List C
-
Rate of Contributions as percentage of wage of insured person
- Contribution for compensation benefit in case of injury or illness, disability, death and child birth.
- Government – 1.5 %
- Employer – 1.5 %
- Insured person – 1.5 %
- Contribution for compensation benefit in case of child support and old age.
- Government – 1 %
- Employer – 3 %
- Insured person – 3 %
BOI Flood Relief Measures
The Board of Investment of Thailand (BOI) has announced flood relief measures in January 2012 as detailed below:-
Measures to Minimize Business Interruption
- The temporary relocation of factories elsewhere to continue their production for a period of 6 months from the application submission date may be allowed and the temporary relocation period may be extended if necessary.
- The outsourcing of manufacturing processes may be allowed either partially or wholly on a temporary basis.
- The relevant authorities (the BOI, the Ministry of Labor and the Immigration Bureau) will assist and facilitate companies to bring in foreign experts and technicians to rehabilitate the factories.
Measures to Reduce Tax Burdens
- The importation of machinery for replacement is entitled to be duty-free, provided that the application must be submitted by the end of June 2012.
- Imported raw materials damaged by the flooding can be counted as part of the waste allowance without any tax burden.
- Additional years of corporate income tax holiday are offered to BOI-promoted companies directly affected by the recent flooding that are still running during their tax holidays.
- Industrial estates that invest in flood prevention systems are also offered an 8-year tax holiday with the corporate income tax exemption ceiling being 200% of their investment but this does not include land cost and working capital.
Tax Incentives for Directly Flood-Affected Companies
The BOI has officially announced that tax incentives measures for the BOI-promoted companies directly affected by the flood. (Announcement No. 1/2555 dated 23 February 2012).
Details of the tax incentives are as follows:-
Eligibility
- Existing BOI-promoted projects directly affected by floods.
- Have not exercised all of Thai unused corporate tax exemption Periods to date.
Incentives
- Projects subject to a corporate income tax exemption cap
|
Remaining at original province |
8-year corporate income tax exemption (subject to 150% cap on new investment * + remaining unused cap) |
|
Relocation to another province |
8-year corporate income tax exemption (subject to 100% cap on new investment * + remaining unused cap) |
*All fixed assets (except land) including repairs to existing machinery and replacement of machinery previously imported under the BOI scheme
- Projects not subject to a corporate income tax exemption cap
Companies may choose to exercise option 1 above or the following scheme.
- The promoted projects may choose to receive an additional corporate income tax exemption of up to 3 years in addition to the remaining unused tax exemption period, provided however that the total tax exemption period shall not exceed 8 years in any case.
- Additionally, the promoted projects having more than 5-years remaining unused tax exemptions will also be entitled to additional incentives as tabled below.
|
Remaining Corporate Income Tax Exemption Period |
Additional Years of Corporate Income Tax Exemption to be Granted |
|
> 5-6 years |
2-year 50% tax reduction |
|
> 6-7 years |
4-year 50% tax reduction |
|
> 7 years |
5-year 50% tax reduction |
Tax Incentives for Industrial Estates
The tax incentives for industrial estates have also been provided by the BOI as follows:-
Conditions
- All industrial estates/zones
- Invest in flood-prevention infrastructure and system
- Service fees charged to operators must be fair price.
Incentives
- 8-year corporate income tax exemption with cap of 200% of investment excluding costs of land and working capital
Further, the BOI has also announced measures in respect of machinery and raw and essential materials damaged by the flood, which will be explored in our next edition.
Author of Previous three (3) Articles: Pardorn Suchiva, Legal Director, RSM Advisory (Thailand) Limited