If you run a foreign-owned company in Thailand or you are about to set one up Thai tax law will touch almost every payment your business makes. Corporate income tax on your profits, withholding tax on invoices you pay, VAT on what you sell, and a second layer of tax the moment money moves across the border. Most foreign companies do not get into trouble because the rates are high; they get into trouble because obligations arise monthly, at the transaction level, and penalties accrue automatically. This guide explains the parts of Thailand’s tax system that matter most to international businesses in 2026, and where an experienced tax lawyer in Thailand earns their fee.
Key Facts at a Glance
| Tax | Rate (2026) | Notes |
| Corporate income tax (CIT) | 20% of net profit | Reduced progressive rates for qualifying SMEs |
| VAT | 7% (extended to 30 Sep 2026) | Statutory rate is 10%; registration threshold THB 1.8M |
| Withholding tax, cross-border | 15% (services, royalties, interest); 10% (dividends) | Often reduced under a double tax treaty |
| Branch profit remittance tax | 10% | On profits a branch sends to its head office |
| Annual CIT filing (PND.50) | Within 150 days of year end | Plus a half-year return (PND.51) |
| Transfer pricing disclosure | Revenue ≥ THB 200 million | Filed with the annual return; THB 200,000 fine for non-compliance |
Who This Applies To
Thai tax rules apply differently depending on how you are structured. A company incorporated in Thailand including one that is majority foreign-owned is taxed on its worldwide income. A foreign company carrying on business in Thailand through a branch, office, employee, or agent is taxed only on profits arising from its Thai activities. And a foreign company with no presence in Thailand at all can still face Thai tax: withholding tax is deducted at source from Thai payments it receives for services, royalties, interest, and dividends.
This guide is written for the first two categories foreign-owned Thai companies and branches plus overseas head offices receiving payments from Thailand. If you are still choosing a structure, the tax treatment of a branch versus a subsidiary should be part of that decision, not an afterthought.
The Thai Tax Framework: What You Are Dealing With
Thai taxation is governed primarily by the Revenue Code and administered by the Revenue Department. The taxes a typical foreign-owned business encounters are corporate income tax, value added tax, withholding tax, specific business tax (for certain financial and property transactions), and stamp duty. Customs duties and excise tax apply to importers and specific sectors.
Two structural features catch foreign companies off guard. First, much of Thai tax compliance is monthly, not annual withholding tax and VAT returns are due every month, with tight deadlines. Second, the Revenue Department collects a large share of tax at source: your company acts as the collection agent whenever it pays salaries, service fees, rent, or cross-border invoices, and it is your company that is liable if the withholding is wrong.
Corporate Income Tax for Foreign-Owned Companies
The standard corporate income tax rate is 20% of net profit. Companies with paid-up capital of no more than THB 5 million and annual income of no more than THB 30 million qualify for SME rates: 0% on the first THB 300,000 of net profit, 15% up to THB 3 million, and 20% above that. Note that most foreign-owned companies exceed the capital threshold. A branch of a foreign company pays the same 20% on its Thai-source profits, plus a 10% profit remittance tax when it sends after-tax profits to its head office. A subsidiary paying dividends to its foreign parent instead triggers 10% dividend withholding tax. The overall burden looks similar on paper, but treaty relief, timing, and the deductibility of head-office charges differ this is one of the questions to model properly before you incorporate.
The annual return (PND.50) is due within 150 days of the accounting year end, together with audited financial statements. A half-year return (PND.51) is due two months after the first six months, based on a projection of the full-year profit underestimate the projection by more than 25% without reasonable cause and a surcharge applies.
Withholding Tax: The Trap Most Foreign Companies Miss
Withholding tax generates more disputes and penalties for foreign-owned companies than any other Thai tax. Every time your Thai company pays for services, rent, professional fees, or royalties, it must deduct tax at the correct rate, remit it to the Revenue Department by the 7th of the following month, and issue a withholding certificate to the payee. Domestic rates range from 1% to 5% depending on the payment type; the deducted amounts are credits against the recipient’s own tax.
Cross-border payments carry higher stakes. When a Thai company pays a foreign company that is not carrying on business in Thailand, the default rates are 15% on service fees, royalties, and interest, and 10% on dividends and these are final taxes. The common failure modes are paying an overseas head office or supplier gross (no withholding at all), applying a treaty rate without holding the documentation to support it, or misclassifying a payment management fees, technical services, and royalties are taxed differently under many treaties, and the Revenue Department reviews these classifications closely in audits.
Double Tax Treaties: Reducing the Burden
Thailand has income tax treaties with more than 60 countries, including the United States, the United Kingdom, France, Singapore, and Hong Kong. Treaties can reduce withholding rates on dividends, interest, and royalties, and importantly for service businesses many treaties exempt pure service fees from Thai withholding tax altogether if the foreign provider has no permanent establishment in Thailand.
Treaty relief is not automatic. The paying Thai company must hold evidence that the recipient qualifies typically a certificate of tax residence from the recipient’s home tax authority and the payment must be correctly characterised under the treaty. Where tax was over-withheld, a refund can be claimed from the Revenue Department, but the process is slow and documentation-heavy. It is far cheaper to get the classification right before the payment is made.
For US-parented groups there is a further point: the US–Thai Treaty of Amity governs ownership rights, not tax, but it is frequently paired with the US–Thailand double tax treaty in structuring decisions. If your group qualifies under the Treaty of Amity, the tax analysis should be done alongside the corporate structuring, not after it.
VAT Registration and Compliance
Thailand’s VAT rate is 7% the statutory rate is 10%, but the reduction has been extended annually for decades, most recently by Royal Decree No. 799 through to 30 September 2026. Registration is mandatory once annual revenue exceeds THB 1.8 million, which in practice means almost every trading company must register at or shortly after incorporation. Exports of goods and services are zero-rated; certain activities, including leasing of immovable property, are exempt.
Registered businesses file monthly VAT returns (PP.30) by the 15th of the following month, offsetting input tax against output tax. Two points matter specifically for foreign businesses. First, when a Thai company pays for services performed abroad but used in Thailand, it must self-assess 7% VAT under the reverse-charge mechanism (PP.36) a filing many newly established companies simply miss. Second, foreign digital service providers earning over THB 1.8 million from non-VAT-registered Thai customers must register under Thailand’s e-service VAT regime and remit VAT directly, without input tax deduction.
Tax Incentives Worth Knowing
The Board of Investment (BOI) offers the most significant relief available: promoted projects can receive corporate income tax exemptions of up to eight years or more, exemption of import duties on machinery, and permission for 100% foreign ownership. Enhanced deductions also exist under the Revenue Code, including a 200% deduction for qualifying research and development expenditure. Whether your activity qualifies for BOI promotion and whether the compliance obligations that come with it are worth the exemption deserves a dedicated analysis; we cover the BOI regime in a separate guide.
What Foreign Companies Specifically Need to Know
Transfer pricing
Companies with annual revenue of THB 200 million or more that transact with related parties must file a transfer pricing disclosure form with the annual tax return, and must be able to produce full transfer pricing documentation in Thai within 60 days of a request. The fine for failing to file or filing incorrectly is THB 200,000 per occurrence, separate from any tax adjustment. Companies below the threshold are not off the hook: all related-party dealings must be at arm’s length, and the Revenue Department can and does adjust pricing on intercompany management fees, royalties, and loans.
The global minimum tax
Thailand implemented the OECD Pillar Two rules through an Emergency Decree on Top-up Tax, effective for fiscal years beginning on or after 1 January 2025. Groups with consolidated global revenue of EUR 750 million or more face a 15% minimum effective rate in Thailand which directly affects the value of BOI tax holidays for large multinationals. In-scope Thai entities must notify the Revenue Department within 15 months of the fiscal year end.
Audit triggers and penalties
Common audit triggers include recurring losses alongside continued operations, large or fluctuating intercompany charges, VAT refund claims, and inconsistencies between withholding tax filings and expense records. Penalties are mechanical: a surcharge of 1.5% per month on unpaid tax, plus penalties of up to 100% of the shortfall (200% in cases of no return filed), reducible on voluntary disclosure. Because surcharges run monthly, discovering a two-year-old withholding error is materially more expensive than a two-month-old one early review pays for itself.
Frequently Asked Questions
What is the corporate tax rate in Thailand for foreign-owned companies?
20% of net profit. Reduced SME rates (0% and 15% bands) exist but require paid-up capital of THB 5 million or less and revenue of THB 30 million or less thresholds most foreign-owned companies exceed.
Do I need to register for VAT in Thailand?
Yes, once annual revenue exceeds THB 1.8 million which almost every operating company reaches. The current rate is 7%, extended through 30 September 2026. Monthly returns are due by the 15th of the following month.
What withholding tax applies when my Thai company pays its foreign parent?
Dividends carry 10% withholding tax; royalties, interest, and service fees carry 15% by default. An applicable double tax treaty can reduce these rates or, for service fees, eliminate withholding entirely where the parent has no permanent establishment in Thailand.
How do I claim reduced rates under a tax treaty?
The Thai payer applies the treaty rate at source, supported by a certificate of tax residence for the recipient and a correct characterisation of the payment. If tax has already been over-withheld, a refund claim can be filed with the Revenue Department, though refunds take time and invite scrutiny.
When do Thai transfer pricing rules apply to my company?
The disclosure form and documentation requirements apply from THB 200 million in annual revenue, but the arm’s-length principle applies to all related-party transactions regardless of size. Documentation must be producible in Thai within 60 days of a Revenue Department request.
Get Tax Legal Advice from Narai Partners
Thai tax law rewards businesses that structure correctly at the start and review regularly and it penalises, month by month, those that do not. Narai Partners’ tax practice advises foreign companies on corporate tax structuring, withholding tax and treaty relief, VAT compliance, transfer pricing, and disputes with the Revenue Department. You work directly with partner-level lawyers who understand both the Thai Revenue Code and the expectations of an international head office.
Book an online consultation to review your Thai tax position, or contact our Bangkok office to speak with our tax team.
This article is general information, not legal advice for your situation. Thai rules change often: contact us before acting on it.