Thailand Corporate Income Tax 2026: Key Deductions and Incentives
Corporate income taxation in Thailand is based on the concept of net profit, calculated in accordance with generally accepted accounting principles and adjusted according to statutory tax laws. The legal basis for corporate income tax is primarily the Revenue Code, as amended, together with Royal Decrees issued thereunder, Ministerial Regulations, Notification of the Director-General of the Revenue Department, and established administrative practice. The deductibility of expenses and the availability of tax incentives are therefore keys to determining a company’s effective tax burden.
This article examines the legal principles governing corporate income tax deductions and outlines key tax incentives available under Thai law.
Corporate Income Tax Provisions in Thailand
A. Corporate Income Tax Deductions
Under Thai tax law, an expense is deductible for corporate income tax purposes only if it satisfies various conditions under Section 65 bis and 65 ter of the Revenue Code In principle, the expense must be for the purpose of earning assessable income, being ordinary and necessary in the course of business, and not expressly prohibited by law. The burden of proof is with the taxpayer. It may be the case that an expense is recognized for accounting purposes, but disallowed for tax purposes if it fails to meet statutory requirements.
Deductible Expenses are as follows:
(i) Operating and Administrative Expenses (Section 65 bis of the Revenue Code), which means ordinary business expenses that are deductible, provided that they are incurred wholly and exclusively for business operations and reflect reasonable commercial practice.
(ii) Depreciation and Capital Allowances (Section 65 bis (2)), which means capital expenditures that will be recovered through depreciation allowances.
(iii) Interest and Financing Costs (Section 65 bis (4)), which means financial expenses that are deductible, provided that they are incurred for business purposes. However, Thai tax law imposes limitations, such as transfer pricing, substance over form and improper structuring, which may result in partial or total denial of deductions.
B. Corporate Income Tax Incentives
Thailand offers extensive tax incentives to promote investment, referred to as BOI Incentives, which are administered by the Board of Investment (BOI) under the Investment Promotion Act. These incentives may include corporate income tax exemptions or reductions, exemptions on import duties for machinery and raw materials, and additional deductions for approved expenses. BOI Incentives are conditional upon strict compliance with BOI certificates and BOI reporting obligations. Sector-specific incentives frequently apply to businesses engaged in technology, renewable energy, infrastructure development, and operations within targeted industrial zones.
Thailand also provides special tax regimes for small and medium-sized enterprises (SMEs). SMEs may benefit from reduced corporate income tax rates on net profits up to prescribed thresholds, subject to capital and revenue criteria. (Royal Decrees No.530, as amended)
The Thai government may issue Royal Decrees granting special deductions, such as double deductions for qualifying training or employee development costs, and increased deductions for research and development expenses. These incentives are temporarily used as economic growth measures.
