SMEs And SMEs Tax Rate in Thailand

Since the 1997 economic crisis, Small and Medium Enterprises (SMEs) have been viewed as one of the most important engines for long-term economic growth. Recognizing the importance and potential of SMEs, the government has put in place a set of policies aimed at promoting their growth by addressing issues such as marketing, human resources and management, technology, infrastructure and laws, and financing.

What does Thai law say about SMEs?

Despite the existence of legislation such as the SMALL AND MEDIUM ENTERPRISE PROMOTION ACT, B.E. 2543 (2000), which was enacted in 2000, there is no direct definition of “SMEs” under this or other statutes.

The current popular understanding of the kind of SMEs is based on the royal decree addressing the reduction of tax rate (no. 603), B.C. 2559 (2016), which reduces the general corporate tax rate to a lower and progressive rate for companies with paid-up capital of not more than 5 million Baht in a fiscal year and total gross revenue of not more than 30,000,000 Baht in the same year. We may claim that the SME status is determined by the quantity of paid-up capital or total income at the end of the fiscal year.

SMEs pay a lower tax rate than non-SMEs.

Thailand’s general corporate tax rate is a set rate of 20% on net profit. The rate for small and medium-sized businesses will be computed using the progressive regime as follows:

• The net profit ranges from 0 to 300,000 Baht, with a 0% tax rate. 
• The net profit ranges from 300,001-3,000,000 Baht, with a 15% tax rate; and  
• The net profit ranges from 3,000,001 Baht onwards, with a 20%tax rate

Please keep in mind that if your company’s paid-up capital or gross revenue has triggered the non-SMEs point in any fiscal year, your company will remain a non-SME indefinitely, even if you opt to reduce the registered capital or the firm’s revenue is less than 5 million Baht in the next year.

Krirkrit & Associates Lawyers is the legal specialist provider of transactional legal and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property transactions and developments. The corporate and investment laws and Thailand’s regulatory framework are the main focus of the investment law firm.