10% corporate tax rate for targeted businesses in special economic zones approved
On 13 January 2025, Thailand’s cabinet resolved in principle to approve a reduction of the corporate income tax rate to 10% in respect of profit generated from targeted businesses operated in Thailand’s special economic zones. The headline corporate tax rate is currently 20% so qualifying businesses should see their corporate tax bill reduced by half.
The reduced rate would apply for 10 consecutive accounting periods. The income eligible for the reduce rate must be generated from the production of goods in special economic zones or from providing services supplied and used in special economic zones.
For a company established on or after the effective date of the law, the business establishment in the special economic zone must be a permanent building. If the company was registered before the effective date of the law, the business establishment in the special economic zone must be a permanent building that is an extension or addition to the existing business establishment.
There are currently 10 special economic zones in the border areas of Thailand, namely Tak, Mukdahan, Sa Kaeo, Songkhla, Trat, Nong Khai, Narathiwat, Chiang Rai, Nakhon Phanom and Kanchanaburi.
To receive the right to pay tax at the rate of 10%, the qualifications will include:
- The taxpayer has notified the request to exercise the right according to the criteria, methods and conditions announced by the Director-General of the Revenue Department.
- Must not exercise the right to corporate income tax exemption under the law on investment promotion, whether in whole or in part.
- Must not exercise the right to receive the reduced corporate income tax rate for medium or small enterprises (SMEs) under Section 6 of the Royal Decree issued under the Revenue Code regarding the reduction of tax rates and tax exemptions (No. 530) B.E. 2554, which was amended by the Royal Decree issued under the Revenue Code on the reduction of tax rates and tax exemptions (No. 583) B.E. 2558, or the right to exempt corporate income tax for small or medium-sized enterprises (SMEs) according to Section 7 of the Royal Decree issued under the Revenue Code on the reduction of tax rates and tax exemptions (No. 530) B.E. 2554, which was amended by the Royal Decree issued under the Revenue Code on the reduction of tax rates and tax exemptions (No. 564) B.E. 2556.
- Must not exercise the right to receive reduced corporate income tax rates for businesses located in special economic development zones according to Section 4 of the Royal Decree issued under the Revenue Code regarding the reduction of tax rates (No. 591) B.E. 2558 or Section 4 of the Royal Decree issued under the Revenue Code on the reduction of tax rates (No. 693) B.E. 2563.
- Separate accounts must be prepared for businesses that do not receive tax benefits and businesses that receive tax benefits in special economic zones.
- The taxpayer must comply with the criteria, methods and conditions announced by the Director-General of the Revenue Department.
