Taxes for 2013: Calculation and Payment

What should taxpayers expect in 2014 when paying taxes for the previous year? The government continues to introduce changes aimed at simplifying life for entrepreneurs.

In this article, we will not cover VAT, as the reduced rate of 7% (compared to the statutory 10%) remains unchanged. However, corporate income tax and personal income tax deserve closer attention.

Corporate Income Tax

Let’s review recent trends in tax legislation. Just two years ago, the maximum tax rate was 30%. In 2012, it decreased to 23%, and in 2013 it was further reduced to 20%.

One of the reasons for this reduction was the planned formation of the ASEAN Economic Community in 2015. Maintaining a 30% rate would have made Thailand the highest-tax jurisdiction in the region (for comparison: Singapore — 17%, Cambodia — 20%, Malaysia, Indonesia, Vietnam — 25%). The reduction also partially компенсирует increased business costs due to higher minimum wages.

Another important change in 2013 concerns small and medium-sized enterprises (SMEs), defined as companies with:

Registered capital not exceeding 5 million baht
Annual revenue not exceeding 30 million baht

These companies are taxed on a progressive scale. The tax-free threshold increased from 150,000 to 300,000 baht.

Progressive Tax Rates for SMEs (2013)

0 – 300,000 baht → 0%
300,001 – 1,000,000 baht → 15%
Above 1,000,000 baht → 20%

As a result, SMEs benefit from tax savings of up to 22,500 baht due to the increased tax-free threshold.

Personal Income Tax

Personal income tax rates were also revised in favor of taxpayers. The tax-free threshold remains at 150,000 baht, while the maximum rate was reduced from 37% to 35%.

Updated Tax Rates (from 2013)

0 – 150,000 → 0%
150,001 – 300,000 → 5%
300,001 – 500,000 → 10%
500,001 – 750,000 → 15%
750,001 – 1,000,000 → 20%
1,000,001 – 2,000,000 → 25%
2,000,001 – 4,000,000 → 30%
Above 4,000,000 → 35%

Example Calculation

For a foreign employee earning 35,000 baht per month:

Annual income: 420,000 baht
Standard deduction (40%, max 60,000): 60,000 baht
Personal allowance: 30,000 baht
Taxable income: 330,000 baht

Calculation:

150,000 → 0% = 0
150,000 → 5% = 7,500 baht
30,000 → 10% = 3,000 baht

Total annual tax: 10,500 baht
Monthly tax: 875 baht

Key Takeaway

For employees whose income tax was withheld under the old rates, these changes may result in a tax credit, meaning they are entitled to a refund of overpaid taxes from the government.