Why Must SME Owners Understand Taxes?
Understanding the taxes your business must pay is one of the most critical aspects of running an SME in Thailand. Poor tax planning can lead to overpayment or, worse, an audit from the Revenue Department. Here are the 5 taxes every SME owner must know.
1. Corporate Income Tax (CIT)
CIT is the tax collected on your company's net profit.
- Tax Rates:
- SMEs (registered capital up to 5 million baht + revenue up to 30 million baht/year): - Profit 0-300,000 baht: Exempt - Profit 300,001-3,000,000 baht: 15% - Profit over 3,000,000 baht: 20%
- General companies: 20% of net profit
- What You Need to Do:
- File PND.50 (annual) within 150 days after fiscal year-end
- File PND.51 (half-year) within 2 months after the first 6 months
2. Value Added Tax (VAT)
VAT is collected on the value of goods or services at the rate of 7% (including local tax).
- Who Must Register for VAT?
- Businesses with revenue exceeding 1.8 million baht/year must register
- Businesses below the threshold can choose to register to claim input tax credits
- What You Need to Do:
- Issue tax invoices for every sale of goods/services
- File PP.30 monthly (by the 15th of the following month)
- Maintain organized records of input tax invoices
3. Withholding Tax (WHT)
WHT is the tax that the payer must deduct at the time of payment and remit to the Revenue Department.
- Common Rates:
- Service fees: 3%
- Rent: 5%
- Advertising: 2%
- Contract work: 3%
- Transportation: 1%
- What You Need to Do:
- Withhold tax on every payment (from 1,000 baht upward)
- Issue withholding tax certificates to payees
- Remit tax by the 7th of the following month
4. Personal Income Tax
Even as a company owner, you must pay personal income tax on salary and bonuses received from the company.
- Planning Points:
- Set director compensation appropriately — too high means high personal tax, too low means fewer company deductions
- Consider dividends (10% tax) instead of salary (up to 35% tax)
- Maximize deductions: provident fund, SSF, RMF, life insurance
5. Social Security Contributions
Every business with employees must register for social security and make monthly contributions.
- Contribution Rates:
- Employer: 5% of wages (max 750 baht/month/person)
- Employee: 5% of wages (max 750 baht/month/person)
- Maximum wage base: 15,000 baht/month
- What You Need to Do:
- Register as an employer within 30 days of hiring the first employee
- Submit contributions by the 15th of the following month
- Report employee entries and exits within the required timeframe
Summary — Plan Your Taxes from the Start
- Knowing these 5 taxes from the beginning of your business will help you:
- Save taxes legally
- Avoid Revenue Department audits
- Plan your business finances more accurately
If you want expert tax planning that truly understands SME businesses, get a free consultation today.