Taxation in Thailand: A Comprehensive Overview

Key Points Summary

This article provides a comprehensive overview of taxation in Thailand, covering double taxation agreements (DTAs), permanent establishments, taxes covered, exemptions, mutual agreement procedures, and value-added tax (VAT).

Double Taxation Agreements

• Applicability: DTAs apply to individuals and juristic persons to mitigate the impact of double taxation.
• Qualification Criteria: To qualify for treaty benefits, an individual must stay in Thailand for at least 180 days during a tax year or be a legal entity incorporated under the Civil and Commercial Code of Thailand.
• Covered Income Taxes: The agreement covers income taxes, such as personal income tax, corporate income tax, and petroleum income tax.

Permanent Establishments

• Definition: A permanent establishment is a fixed place of business where substantial business operations take place.
• Exclusions: Activities that are purely ancillary or related to storage and display, among others, are generally not considered permanent establishments for tax purposes.

Value-Added Tax (VAT)

• Implementation: VAT is an indirect tax implemented in Thailand since 1992.
• Levy: VAT is levied on the value added at various stages of production and distribution within the economy.
• Rate: The prevailing VAT rate in Thailand stands at 7%.
• Exemptions: Certain transactions, such as export of goods, services provided outside Thailand, and international transport services, are exempt from VAT.

Mutual Agreement Procedure

• Initiation: A taxpayer can initiate a mutual agreement procedure (MAP) by submitting a written request to the Revenue Department.
• Requirements: The MAP request should include comprehensive information about the facts and circumstances of the case, as well as any additional supporting documents.