Thailand Corporate Tax History: From RD 467 to RD 530
Thailand corporate tax history shows a steady downward trend in rates since 2007 — but the most recent 2011 cuts came with a critical catch: most of them were never made permanent.
After the 2011 elections in Thailand, there was little discussion about the new government’s plan to reduce the corporate income tax rate (“CITR”). Attention focused mostly on the potential negative impact of the proposed minimum wage increase on Thai businesses. Meanwhile, the new government went ahead and reduced the CITR significantly — and surprisingly, relatively few people seem to have been aware of it at the time.
Pursuant to Title II, Chapter 3, Schedule 2(a) of the
Revenue Code (“RC”), the CITR on profit for Thai companies is 30%. However, under Title I, Section 3(1) of the RC, this rate may be reduced for some or all companies by way of the Cabinet issuing a “Royal Decree” (“RD”).
Under RD 471 (2008), the CITR for “small to medium enterprises” (“SMEs”) — then defined as companies whose total capitalization was THB 5,000,000 or less on the last day of the tax year — was exempted for income not exceeding THB 150,000, and further reduced to 15% for taxable income between THB 150,001 and THB 1,000,000, and to 25% for taxable income from THB 1,000,001 to THB 3,000,000. Separately, under RD 467 (2007), the CITR for companies listed on the Stock Exchange of Thailand (“SET”) on the “market for alternative investment” (“MAI”) was reduced to 20%, while the CITR for all other SET-listed companies was reduced to 25%.
On 14 December 2011, the Cabinet issued RD 530, as published by Thailand’s
Revenue Department, which repealed and replaced RD 471. We cover the full details of that updated structure
here.
What’s often overlooked is that these CITR reductions, while clearly welcomed by the business community, were not made permanent across the board. While the SME reductions under RD 530 are permanent, the reductions for all other (non-MAI-listed) companies were only guaranteed for three consecutive accounting periods.
The most commonly stated rationale for the CITR reductions was to make Thailand’s business environment more competitive with its neighbors, and to “compensate” Thai companies for the coming minimum wage increase. But since the reductions were not made permanent for most “normal” companies, any extension would require the political will of whatever Cabinet was in office once the three-year window expired — making the long-term rate genuinely uncertain for businesses planning beyond that horizon. This piece of Thailand corporate tax history is a useful reminder that headline-grabbing tax cuts don’t always come with lasting certainty attached.
