Tax Incentives Offered to Qualifying SMEs

Thailand has an estimated 2.8 million small and medium size entities (SMEs), with many having multiple financial accounts and which use with the smallest one used in order to understate tax liability. Effective as of 1 January, 2016, SMEs and other companies with revenues not in excess of 500 million THB for the 2015 fiscal year are being encouraged to formally enter the tax system by registering for a single financial account with the Revenue Department between 15 January and 15 March 2016. Those SMEs which participate will benefit from an amnesty of sorts in that the Revenue Department will not assess tax or audit such SMEs’ previous financial statements for corporate income tax or VAT.

In addition, participating SMEs with paid up capital not exceeding 5 million THB and revenues not exceeding 30 million THB for the most recent fiscal year will be exempted from income tax for one year and subject to a reduced rate of 10% the following year (at present, the corporate income tax rate is 20%), as reported in the Bangkok Post.

As an additional incentive to register, SMEs that fail to do so will not be able to apply for commercial bank loans (as banks will require a tax record of the SME as a condition to any loan). According to Finance Minister Apisak Tantivorawong, “the measures will help create a level playing field for all businesses, and establish the tax base so that we might not have to increase tax rates in the near future”.  The Revenue Department reports to date that approximately 420,000 SMEs have registered under the program.

For more information on taxation in general, please see the knowledge section of our website here.