If you are someone who is interested in having your own business, or you are planning to open up a new company, then not only you will need to be knowledgeable in businesses, but also you must understand what the various types of taxes entail. Your compliance to the law and regulations is vital to the business, and with good planning you will be able to save more costs. Today, we would like to show you more about the things related to corporate income tax. 

Current criteria for corporate income tax collection 

For the time being, business owners who have registered their business as limited partnership, company limited or other, must pay corporate income tax. The tax can be calculated from subtracting your revenue with your expense and costs. if you are left with a net profit, then you will refer to the 3 tax brackets applicable to corporate income tax as follows: 

  • For 0-300,000 Thai Baht in net profit, you will get tax exemption 
  • For 300,001-3,000,000 Thai Baht in net profit, you will pay 15% income tax 
  • For over 3,000,000 Thai Baht in net profit, you will pay 20% income tax

As you can see, the cap for Thai corporate income tax is set to be 20%. This means that any net profit going beyond the 3 million Baht bracket will be taxed at that rate. For example, if you have earned a net profit of 3,010,000 Thai Baht, the first 3,000,000 will be taxed at 15%, and another 10,000 of income will be taxed at the 20% bracket. You will need to do this calculations before paying your tax to the Thai Revenue Department. 

How should you decide whether to register as a legal entity? 

Another frequently asked question is if you as the sole owner of a business should register your business as a legal entity—will that be worth it in terms of tax? You can approach this by considering your personal convenience and related costs; normally, a natural person has to pay up to 25% to 35% on their net income of over 1,000,000 Thai Baht. 

Therefore, if you are more of a high-earning individual, registering your business as a legal entity will do more to significantly save your costs of taxes. However, that also means you have to also complete many required processes of paperwork, related fees, and some accounting. You will also still need to pay individual tax independently of that. So, let’s consider your options and choose what works best for you and your business. 

This is some information about corporate income tax that we would like new business and startup owners to be aware of and take into consideration. We believe that your adequate information and good planning can lead to your winning opportunities down the road. 

Are you still unsure about how to manage your personal and corporate income taxes more effectively, or get most benefits from applicable tax reductions? Actio will help you demystify your taxes and ensure your optimal tax benefits. You can learn more about our services here: Accountancy