Specific Business Tax Assessment in Thailand

 

Will your business in Thailand need to pay Specific Business Tax in Thailand this month? Yes, SBT filing must be done monthly; if you miss any, you will be subjected to heavy penalties.

Therefore, without worrying about the consequences, read through our guide for complete information on SBT.

What is Specific Business Tax (SBT) in Thailand?

Specific Business Tax is a form of indirect tax that applies to businesses that are not subject to value-added tax (VAT). Businesses with an annual turnover exceeding 1.8 million Thai Baht must pay VAT. Additionally, your business must have a value-addition provision to be liable for VAT.

In 1992, the concept of “business tax” was eliminated. Instead, it was replaced by VAT and SBT or Specific Business Tax. This means, that if your business is not eligible for VAT, you need to pay SBT.

Therefore, after registering your company in Thailand, you must apply for tax registration. Corporate Income Tax registration is the mandatory one. Next, based on your business transaction volume, you should proceed with VAT or SBT registration. To ascertain this aspect, you must seek the support of a reliable accounting and tax firm in Thailand.

Nonetheless, your understanding of the aspects of SBT liability is crucial. Let us help you with some information comprehensively.

Is Your Business Eligible to Pay Specific Business Tax in Thailand?

The basic eligibility to have your tax identity as an SBT-registered business in your annual transaction volume. If your transaction volume is more than 1.8 million THB per annum, you need not worry about SBT. Then you will have to apply for VAT Registration in Thailand.

If not, you need to check the nature of your business. Please note that there are certain forms of businesses that enjoy exemption from the liability to pay SBT in Thailand. Following is the list of businesses that are liable to pay SBT:

• Banking, as defined by the law governing commercial banking or any other specific law.
• Finance, securities, and credit foncier activities, as defined by the governing law.
• Life insurance, as defined by the law governing life insurance.
• Pawnbroking, as defined by the law governing pawnshops.
• Regularly conducted business activities similar to commercial banks, such as the provision of loans, guarantees, currency exchange, issuance, purchase or sale of bills, or money transfers abroad by various means.
• Buying and selling of immovable property commercially or profitably, regardless of the acquisition method, but only by the rules, procedures, and conditions prescribed by a royal decree.
• The sale of securities on the securities market, as stipulated by the law governing the securities exchange of Thailand.
• Any other business as prescribed by a royal decree. You need to keep yourself updated on the regular updates issued by the Department of Business Development or the Thai Revenue Department to track such decrees. If you find this task to be daunting, you should hire a tax firm in Thailand.

Is the nature of your business listed above? If yes, you must go for Specific Business Tax Registration in Thailand. Check the process below.

Specific Business Tax (SBT) Registration in Thailand

Entities and individuals subject to Specific Business Tax (SBT) must register as SBT-registered entities or individuals within 30 days of starting operations. Registration should be done at the Area Revenue Office for businesses located in Bangkok or at the District Revenue Office for businesses located elsewhere.

If a taxpayer has multiple branches or offices, the registration application must be submitted to the Area or District Revenue Office where the headquarters is situated. For foreign operators, an agent designated by the operator is responsible for undertaking SBT registration on behalf of the foreign operator.

Registration Form for Specific Business Tax in Thailand

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Now that you know about the tax registration process, you must also be aware of the SBT tax base and rates. This will help you plan your business finances well!

Specific Business Tax (SBT) Base and Rates in Thailand

Type of Business	SBT Base	SBT Rates
Banking, finance, and similar business	– Interest, discounts, service fees, other fees, gross profits from purchase or sale of, or obtained from, negotiable instruments or other instruments of indebtedness. – Gross profits from currency exchange issue of negotiable instruments or other instruments of indebtedness or remittance of currency to foreign countries.	3%
Finance, securities, and credit foncier business	– Interest, discounts, service fees, other fees, gross profits from purchase or sale of, or obtained from, negotiable instruments or other instruments of indebtedness. – Gross profits from currency exchange issue of negotiable instruments or other instruments of indebtedness or remittance of currency to foreign countries.	3%
Life Insurance	Interest, Service Fees, and other Fees	2.5%
Pawn Brokerage	Interest, fees, remuneration from selling overdue property	2.5%
Businesses with regular transactions similar to commercial banks	– Interest, discounts, service fees, other fees, gross profits from purchase or sale of, or obtained from, negotiable instruments or other instruments of indebtedness. – Gross profits from currency exchange issue of negotiable instruments or other instruments of indebtedness or remittance of currency to foreign countries.	3%
Real Estate	Gross receipts	0.1%
Sale of securities in a securities market	Gross receipts	0.1% (exempted)

**Imposition of Local tax at the rate of 10 % on top of SBT. 

Filing and Paying Specific Business Tax (SBT) in Thailand

The SBT taxable period runs from the first to the last day of each calendar month. Companies must file their SBT return (Form ภธ. 40) monthly, regardless of whether or not they have earned any income during that period.

Specific Business Tax Filing and Return Form in Thailand

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You must submit the SBT return and payment to the District Revenue Office within 15 days of the following month. If a taxpayer has multiple places of business, each business must file its return and make the payment separately. However, an exception may apply if the taxpayer has obtained approval from the Director-General.

After filling up the above form, you must submit the Form ภธ. 40 and pay taxes at the following locations:

Bangkok: Branch Area Revenue Office in which the business is located

• Other locations designated by the Director-General of the Revenue Department as the place for filing and paying tax

Other provinces

• Submit the return at the Branch Area Revenue Office at the location of your business.
• Other locations that the Director-General of the Revenue Department authorizes as the place for filing and paying taxes.

Financial institutions, life insurance, and real estate are examples of businesses that are subject to specific business tax in Thailand as they are not liable to pay VAT.

If you are a foreign investor in Thailand, we recommend engaging with Konrad Legal’s tax services for extra support and guidance when filing and submitting taxes in Thailand. Simply email us your requirements at officer@konradlegal.com and we will ensure that you maintain your tax compliance punctually.

BOI Thailand Incentives for Existing Businesses in Thailand

 

The Board of Investment (BOI) of Thailand is always keen to facilitate the process of business registration and continuity for investors in the kingdom. Irrespective of nationality, the apex body governing the business ecosystem of Thailand, is always focused on attracting investors, be it foreigners or Thai to contribute to the GDP of Thailand.

Most of our clients or readers believe that BOI facilitates the business registration process in Thailand for foreigners only. This is a myth!

BOI Thailand values business ideas and intentions with equal weightage without discriminating on the grounds of nationality, as long as the business is legal. Furthermore, the Board also prioritizes the launch of innovative projects with special privileges.

Let’s bust another myth! It’s true that BOI Thailand promotes new businesses, but do note that it never overlooks the existing ones. This recent announcement of BOI Thailand proves the point aptly.

On February 7, 2024, the Board of Investment (BOI) of Thailand released various investment incentive measures for companies that are already operating in Thailand. With the motive of social, local, and economic development, BOI Thailand announced certain programs for existing businesses.

Social and Local Development (BOI Announcement No. 1/2567)

To address the PM2.5 problem and encourage social, local, and environmental progress, the BOI offers a corporate income tax (CIT) exemption of up to 200% of the investment capital (excluding land and working capital costs). This measure aims to alleviate PM2.5 pollution and promote sustainable development.

Eligibility Requirements for BOI Incentive:

• The project must make a minimum investment of 5 million THB, excluding land and working capital costs, to support local organizations.
• To boost competitiveness, the project must have a strategy for working together with local organizations.

Retention and Expansion Program (BOI Announcement No. 2/2567)

Within the past 15 years from 2009 to 2023, existing promoted individuals or businesses with at least three promoted investment projects under the same juristic person, with a combined investment value of THB 10 billion (excluding land and working capital costs) at the project approval stage, are eligible for BOI incentives to encourage ongoing investment in Thailand.

Eligible business expansion projects requiring an investment of at least THB 500 million will receive incentives, including an additional three-year CIT exemption for projects in Groups A1+, which can last up to 13 years, and up to eight years for projects in Groups A3, A4, and B.

Relocation Program (BOI Announcement No. 3/2567)

Intending to attract integrated business entities, the Board of Investment (BOI) offers incentives to companies that establish their manufacturing operations, regional headquarters, and research and development facilities all within Thailand.

Incentives for Manufacturing Projects in Thailand

1. Additional three-year Corporate Income Tax (CIT) exemption on the net profit from investment in manufacturing activities for applicants of such projects operating regional headquarters businesses in Thailand. This exemption can be claimed for a total of eight years.

2. Additional five-year CIT exemption on the net profit from investment in manufacturing activities for applicants of such projects that operate regional headquarters businesses and establish an R&D center in Thailand. This exemption can also be claimed for a total of eight years.

Investment Stimulation Measure for Economic Recovery (BOI Announcement No. 4/2567)

To stimulate large-scale investments in specified sectors and accelerate Thailand's economic recovery, the Board of Investment (BOI) offers an additional 50% corporate income tax (CIT) reduction on net profits generated from investments in Groups A1, A2, A3, and A4 for five years after the end of the CIT exemption period.

To qualify, projects must have an actual investment of at least 1 billion Thai baht (excluding land and working capital costs) within 12 months of receiving the investment promotion certificate.

The Bottomline

Although these BOI announcements appear to be focusing only on existing projects, yet, if your new project holds the potential to support the social, local, and economic development of Thailand, it will also be eligible for various BOI incentives. Any business idea that holds the following values will be eligible for BOI Promotions in Thailand:

1. You or your business has a plan to contribute to local employment in Thailand.
2. Your company has the potential to significantly contribute to the Thai economy's growth.
3. Your business deals in or executes innovative and creative projects that can add value to the existing Thai ecosystem.
4. Your project seeks the involvement of highly skilled workers, Thai or foreigners, to generate the expected and elite output.

With time, BOI keeps on enhancing its promotion policies to extend greater support to foreign investors and businesses. However, as of 2024, the following industries assure great return on investment with a strong probability of obtaining BOI Thailand promotion:

• Starting a Manufacturing Company in Thailand
• Incorporate a Food Production Plant in Thailand
• Getting Involved in the Future of the Food Industry in Thailand
• Start a Food Business of any type in Thailand
• Setting up E-commerce Business in Thailand

Please note that BOI Promotions for Foreign Investors in Thailand are not restricted to the above businesses only. You can apply your unique business idea at any time and start your business in Thailand. To apply for BOI Thailand Promotions, you will need local support to have the perfect and accurate answer to the following questions:

1. What are the steps of getting a BOI Thailand Promotions Certificate?
2. What to do before and after registering your BOI Company in Thailand?

To get answers to such or more complicated questions, you must consult with a leading corporate law firm in Thailand with experience in BOI Company Registration.

For direct support, feel free to email us at officer@konradlegal.com.

What Licenses Are Needed to do Business in Thailand?

 

Rapidly evolving as the business hub of Southeast Asia, Thailand is becoming one of the most preferable destinations to attract foreign direct investment. If you are planning to register your company in Thailand, then you must go through this article. This article will guide you comprehensively on the requirements of respective licenses to do business in Thailand.

We all know that simply registering a company can never serve your purpose of operating the same. To operate you will need relevant permits and licenses. In Thailand, the regulations are pretty stringent and non-adherence can lead to severe penalties. This article will serve well as your guide to knowing about the licenses that may be mandatory for your upcoming business in Thailand.

Do You Need a Business License in Thailand?

First of all, you must know whether the type of company or business you are going to set up in Thailand needs a business license or not. To ascertain these facts, check out the following pointer:

1. Will you set up a company in Thailand or a branch or representative office of your existing business?
2. What will be the “nature of business” and in which industry will you be doing it?
3. Are you going to bring in foreign nationals to Thailand as your employees?
4. Is your business eligible for relaxation under any bilateral treaty between your nation and Thailand?
5. Have you checked about the Board of Investment Promotions in Thailand? Is your business eligible for any BOI Privileges?

Depending on your answers to the above questions, you can ascertain whether you need a business license in Thailand or not. However, it is always wise to consult with a reliable corporate law firm in Thailand to reach this decision. Remember that this is a statutory requirement and you must make an informed decision to prevent any type of penalties or fines in the future.

To make the process simpler, we have answered these questions comprehensively. This will help you have a basic understanding before you speak with any corporate lawyer in Thailand.

License Requirement based on your Business Structure in Thailand

Foreign investors can incorporate 6 types of business structures in Thailand. You should select a business structure that complies well with the nature and purpose of your business in Thailand.

For your information, almost all types of businesses in Thailand need a Foreign Business License. Foreign Investors must apply for a Foreign Business License in Thailand to start their business in Thailand as various business verticals are restricted for foreigners in Thailand.

However, if you are planning to start a representative office in Thailand, you need not apply for a Foreign Business License in Thailand. Furthermore, there are requirements based on the nature and industry of your business in Thailand that ascertain your license requirements.

Your Business Nature and Industry Finalizes Your License Requirements in Thailand

As talked about in the previous section, a Foreign Business License is mandatory for almost 99.9% foreign investors, unless, they plan to start their representative office. However, the nature and industry of your business invoke certain license requirements as follows:

Medical License

Starting a medical company in Thailand necessitates obtaining specific licenses. The type of license needed depends on the activities undertaken in the medical field.

If you plan to operate a service business like a rehabilitation center or nursing home, you must acquire a medical service business license from the Department of Health Service Support.

For medical manufacturing activities, if your factory has machinery totaling 50 or more horses or employs 50 or more people, you’ll need a Factory license from the Department of Industrial Works. If neither of these criteria is met, you should apply for a Business Establishment license from the Local Administration Organization.

Before conducting any clinical research, a Science Laboratory Capacity Certificate from the Department of Medical Science is mandatory.

Moreover, according to the Thai Drug Act Be 2510 (AD 1967), obtaining permission from the Food and Drug Administration (FDA) is essential before marketing medical equipment, pharmaceutical products, or medical food.

E-commerce License in Thailand

In Thailand, businesses that run one or more websites to sell goods or services must obtain an e-commerce license. The application can be submitted once the website is operational and requires the following details from the website owner:

• Name of the website
• Nature of goods or services sold on the website
• The date on which the website started operating (application should be made within 30 days from the start date)
• Method of payment for purchases
• Document evidencing the domain name registration or certification document from the service provider (ISP or web host)

Check out why you should start an e-commerce business in Thailand.

Licenses for Restaurants and Bars in Thailand

In Thailand, the licenses needed by a restaurant depend on the services it offers. However, some obligatory licenses are required by most restaurants.

These licenses include:

• Restaurant license: This license is a must for establishments with premises of at least 200 square meters. Thai eateries smaller than 200 square meters need a certification of notice.
• Liquor license: This license is required for restaurants serving alcoholic drinks on their premises.
• Music license: Restaurants with live music or any music playing on their premises must obtain this license.

All these licenses are granted for one year and must be renewed annually by the restaurant.

License for Financial Services Businesses in Thailand

In Thailand, companies aiming to provide financial services must secure specific licenses from the Bank of Thailand. These services include commercial banks, finance companies, credit finance companies, asset management companies, and e-payment channel services.

Furthermore, specialized financial institutions aligned with governmental policies fostering investment and economic growth within Thailand require additional authorization from the Ministry of Finance.

Import/export Licenses in Thailand

Certain import/export companies in Thailand require specific business permits based on the category of goods being traded. Specialized licenses are mandatory for importing controlled goods like food, medicines, and cosmetics from Thailand’s Food and Drugs Administration.

Additionally, a permit from the National Broadcasting Department is necessary for importing electronic devices like mobile phones. Finally, a customs paperless license from Thailand’s customs department is necessary for import/export companies to facilitate the movement of goods under their name.

License for Travel Agencies in Thailand

In Thailand, running a travel agency necessitates a Tourism Authority of Thailand-issued Tourism license. Without this license, there are prohibitions on arranging and selling tours and packages, booking accommodations, and distributing travel tickets.

The license is divided into three categories: inbound tourism (serving foreign visitors to Thailand), outbound tourism (catering to Thai travelers going abroad), and domestic tourism (serving Thai travelers within Thailand).

A majority of Thai ownership is necessary for travel agencies in Thailand, and a local director’s signature is mandatory to obtain the tourism license. Notably, there may be restrictions to the local director’s signing authority to matters directly related to the tourism license. This structure allows foreign shareholders to maintain control over other aspects of the business’s activities.

Education Business License in Thailand

When registering an education business in Thailand, a license and approval from the Ministry of Education or the Department of Social Welfare are essential prerequisites. The type of education offered by the business determines which authority must grant the approval.

Before starting an education business, you need to consider several key factors, such as the business premises and the legal structure of the company. Any deficiencies in addressing these elements correctly will lead to the rejection of the application for the required license.

Other Factors Confirming Requirements of License to do Businesses in Thailand

To bring in Foreign Workers to work for business in Thailand

Every foreign worker you bring into Thailand must hold a valid work permit to work for your company. It is your responsibility to facilitate the process of work permit issuance for your foreign employees. In the process, a valid commercial and business license is one of the mandatory documents for the same.  

Bilateral Trade Treaty between Thailand and native nation of Investor

The need for a foreign business license is to permit foreign investors to undertake business activities that are normally only for Thais. However, certain bilateral trade treaties expand the scope of availability of business verticals in Thailand to the respective natives. Therefore, it is always advisable to check if your nation holds a bilateral treaty with Thailand and check the permitted business categories.

Eligibility to obtain Board of Investment Promotion in Thailand

Although a Board of Investment promotion never exempts the requirements to obtain any relevant license, yet, there are discounts on licensing fees. Therefore, if your business becomes eligible for BOI Promotion in Thailand, check if you are getting these benefits or not. This will reduce your setup cost significantly.
Business licensing in Thailand covers a wide range of considerations. You must avail the consultation of some reputed corporate lawyer or law firm in Thailand. To set up an appointment with us, email us your license requirements at officer@konradlegal.com.