In the calculation of CIT of a company carrying on business in Thailand, it is calculated from the company's net profit on the accrual basis. A company shall take into account all revenue arising from or in consequence of the business carried on in an accounting period and deducting therefrom all expenses in accordance with the condition prescribed by the Revenue Code. As for dividend income, one-half of the dividends received by Thai companies from any other Thai companies may be excluded from the taxable income. However, the full amount may be excluded from taxable income if the recipient is a company listed in the Stock Exchange of Thailand or the recipient owns at least 25% of the distributing company's capital interest, provided that the distributing company does not own a direct or indirect capital interest in the recipient company. The exclusion of dividends is applied only if the shares are acquired not less than 3 months before receiving the dividends and are not disposed of within 3 months after receiving the dividends.
In calculating CIT, deductible expenses are as follows:
1. Ordinary and necessary expenses. However, the deductible amount of the following expenses is allowed at a special rate:
- 200% deduction of Research and Development expense,
- 200% deduction of job training expense,
- 200% deduction of expenditure on the provision of equipment for the disabled;
2. Interest, except interest on capital reserves or funds of the company;
3. Taxes, except for Corporate Income Tax and Value Added Tax paid to the Thai government;
4. Net losses carried forward from the last five accounting periods;
5. Bad debts;
6. Wear and tear;
7. Donations of up to 2% of net profits;
8. Provident fund contributions;
9. Entertainment expenses up to 0.3% of gross receipt but not exceeding 10 million baht;
10. Further tax deduction for donations made to public education institutions, and also for any expenses used for the maintenance of public parks, public playgrounds, and/or sports grounds;
11. Depreciation: Provided that in no case shall the deduction exceed the following percentage of cost as shown below. However, if a company adopts an accounting method, which the depreciation rates vary from year to year, the company is allowed to do so provided that the number of years over which an asset depreciated shall not be less than 100 divided by the percentage prescribed below.
Types of Assets Depreciation Rates
1. Building
1.1 Durable building
1.2 Temporary building
5 %
100 %
2. Cost of acquisition of depleted natural resources
5 %
3. Cost of acquisition of lease rights
3.1 no written lease agreement
3.2 written lease agreement containing no renewal clause or containing renewal clause but with a definite duration of renewal periods
10 %
100% divided by the original and renewable lease periods
4. Cost of acquisition of the right in a process, formula, goodwill, trademark, business license, patent, copyright or any other rights:
4.1 unlimited period of use
4.2 limited period of use
10 %
100% divided by number of years used
5. Other depreciation assets not mentioned in 1.-4. used in SME, which have value altogether not exceeding 500,000 baht, and are acquired before December 31, 2010
5.1 machinery used in R&D
5.2 machinery acquired before December 31, 2010
5.3 cash registering machine
5.4 passenger car or bus with no more than 10 passengers capacity
100 %
initial allowance of 40% on the date of acquisition and the residual can be depreciated at the rate in 5
initial allowance of 40% on the date of acquisition and the residual can be depreciated at the rate in 5
initial allowance of 40% on the date of acquisition and the residual can be depreciated at the rate in 5
depreciated at the rate in 5 but the depreciable valve is limited to one million baht
6. Computer and accessories
6.1 SMEs*
6.2 other business
initial allowance of 40% on the date of acquisition and the residual can be depreciated over 3 years
depreciated over 3 years
7. Computer programs
7.1 SMEs*
7.2 other business
initial allowance of 40% on the date of acquisition and the residual can be depreciated over 3 years
depreciated over 3 years
* SMEs refer to any Thai companies with fixed assets less than 200 million baht and number of employee not exceeding 200 people
12. The following items shall not be allowed as expenses in the calculation of net profits:
(1) Reserves except:
(2) Fund except provident fund under the rules, procedures and conditions prescribed by a Ministerial regulations.
(3) Expense for personal, gift, or charitable purpose except expense for public charity, or for public benefit
(4) Entertainment or service fees
(5) Capital expense or expense for the addition, change, expansion or improvement of an asset but not for repair in order to maintain its present condition.
(6) Fine and/or surcharge, criminal fine, income tax of a company or juristic partnership.
(7) The withdrawal of money without remuneration of a partner in a juristic partnership
(8) The part of salary of a shareholder or partner which is paid in excess of appropriate amount.
(9) Expense which is not actually incurred or expense which should have been paid in another accounting period except in the case where it cannot be entered in any accounting period, then it may be entered in the following accounting period.
(10) Remuneration for assets which a company or juristic partnership owns and uses.
(11) Interest paid to equity, reserves or funds of the company or juristic partnership itself.
(12) Damages claimable from an insurance or other protection contracts or loss from previous accounting periods except net loss carried forward for five years up to the present accounting period.
(13) Expense which is not for the purpose of making profits or for the business.
(14) Expense which is not for the purpose of business in Thailand.
(15) Cost of purchase of asset and expense related to the purchase or sale of asset, but only the amount in excess of normal cost and expense without reasonable cause.
(16) Value of lost or depleted natural resources due to the carrying on of business.
(17) Value of assets apart from devalued assets subject to Section 65 Bis.
(18) Expense which a payer cannot identify the recipient.
(19) Any expense payable from profits received after the end of an accounting period.
(20) Expense similar to those specified in (1) to (19) as will be prescribed by a Royal Decree.