Sometimes, unexpected taxes appear in a company’s financial statements at year-end. One such item may be the Special Business Tax (SBT) on loan interest.
A loan agreement may be informal
Even if you have not signed any loan agreements, this does not mean that such loans do not exist within the company. For example:
When registering a company with a registered capital of 4 million baht, it is not required to immediately deposit these funds into the company’s bank account — a director’s declaration confirming payment is sufficient.
If, by the end of the year, there are no funds in the account and no recorded expenses (such as for assets or real estate), the accountant may formalize a loan agreement from the company to the director with an interest rate, for example, 1% per annum.
SBT is applied именно to this interest amount.
Example calculation for a company with 4 million baht registered capital
Loan interest: 40,000 baht
SBT (3.3%): 40,000 × 3.3% = 1,320 baht
Treatment of interest for corporate income tax
Loan interest is included in the taxable base for corporate income tax. If the capital is relatively small — 4 million baht — the tax burden is minimal.
Example for a company with 30 million baht registered capital
If the capital exceeds 5 million baht, part of it must be deposited into the company’s account and confirmed with the Department of Business Development (DBD).
If there are no funds in the account at year-end and a loan at 1% has been formalized, the calculation will be as follows:
Interest: 300,000 baht
SBT (3.3%): 300,000 × 3.3% = 9,900 baht
Corporate income tax (20%) is calculated as:
(300,000 – 9,900) × 20% = 58,020 baht
Net profit after tax: 232,080 baht
Author: Alexandra Agapitova.
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