Specific Business Tax
1. Persons Responsible for Paying Specific Business Tax
Persons responsible for paying specific business tax include business operators who are liable to pay this tax, regardless of whether the business is operated by:
- An individual
- A partnership that is not a legal entity
- An estate
- A general partnership
- A fund
- A private entity or operation by two or more individuals who are not a legal entity
- Government organizations, cooperatives, and other organizations designated by law as legal entities
If the business operator is located outside the Kingdom, the person responsible for the business operations, including employees, agents, or representatives with the authority to manage the business directly or indirectly within the Kingdom, shall also be jointly responsible for the tax payment along with the business operator mentioned above.
2. Activities Subject to Specific Business Tax
Activities that are subject to specific business tax include the following operations within the Kingdom, which are not exempt from specific business tax:
1. Banking operations under the Commercial Banking Law or specific laws.
2. Business operations in financing, securities, and credit foncier under the law governing the operation of financing businesses, securities businesses, and credit foncier businesses.
3. Life insurance operations under the Life Insurance Law.
4. Pawnshop operations under the Pawnshop Law.
5. Operations typically conducted by commercial banks, such as providing loans with guarantees, currency exchange, issuing or buying promissory notes, or remitting money abroad by various methods. In case there is doubt about whether a certain operation constitutes a typical commercial banking activity, the Director-General of the Revenue Department may refer the matter to the Tax Review Committee to define the scope and conditions of such activities. Once the Tax Review Committee has made a determination, the decision will be published in the Royal Gazette.
6. The sale of real estate for commercial purposes or profit, regardless of how the real estate was acquired, is governed by the criteria, procedures, and conditions outlined in the Royal Decree (No. 342) B.E. 2541 (effective from January 1, 1998), as follows:
The sale of real estate considered as being for commercial purposes or profit under the Royal Decree includes the sale of real estate that must be registered for rights and legal transactions as follows:
(1) The sale of real estate by those who are authorized to develop land according to the law governing land development control.
(2) The sale of condominium units by operators who are the applicants for the registration of condominiums according to the law governing condominiums.
(3) The sale of real estate in the form of buildings constructed for sale, including the sale of the land on which the buildings are situated.
(4) The sale of real estate that does not fall under (1), (2), or (3), specifically in cases where it is subdivided or separated for sale with the provision of roads or other public utilities, or where there is a promise to provide such utilities.
(5) The sale of real estate held by the seller for use in the specific business operations of a corporation, partnership, government agency, cooperative, or other organizations legally recognized as corporate entities.
(6) The sale of real estate that does not fall under (1), (2), (3), (4), or (5), which is carried out within five years from the date of acquisition of the real estate, except for:
(a) The sale or expropriation according to the law on expropriation of real estate.
(b) The sale of real estate acquired through inheritance.
(c) The sale of real estate used as a residence, which is an essential source, where the seller's name has been registered in the house registration under the law on civil registration for no less than one year from the date of acquisition of the real estate. In cases where the land and the building or structure under (c) were not acquired simultaneously, the five-year period referred to in (16) shall be calculated based on the acquisition period of the land or the building or structure acquired later.
(d) The transfer of ownership or possession rights of real estate without compensation to one's legitimate children, excluding adopted children.
(e) The transfer of ownership or possession rights of real estate by inheritance to legal heirs or testamentary beneficiaries who are legal heirs.
(f) The transfer of ownership or possession rights of real estate to government agencies or government organizations without compensation.
(g) The exchange of ownership or possession rights of real estate with government agencies or government organizations, but only in cases where the government agency or organization does not provide compensation other than the real estate exchanged.
Note Taxpayers who receive taxable income from the sale of real estate as described in (6), and have already had income tax withheld and paid the business tax, are exempt from including such income in the calculation of taxable income when filing the income tax return. This is to alleviate the tax burden on individuals as per the Royal Decree (No. 376, B.E. 2544).
(7) The sale of securities under the laws of the Securities and Exchange Act of Thailand in the stock market.
(8) The operation of other businesses as specified by the Royal Decree.
It is specified that businesses engaged in the purchase and repurchase of securities authorized by the Securities and Exchange Commission under the Securities and Exchange Act are subject to business tax. This is because the activity of buying or repurchasing securities, with contracts or repurchase agreements, has other characteristics that are subject to business tax (Royal Decree No. 350, B.E. 2524).
It is specified that factoring businesses are subject to business tax, as the nature of such businesses is similar to money lending, which is typically conducted by commercial banks (Royal Decree No. 358, B.E. 2542).
The term "factoring business" refers to a business in which the seller of goods or service provider agrees to transfer the assets receivable from the payment of debts arising from the sale of goods or provision of services between themselves and their debtor to the factoring business operator. The factoring business operator agrees to provide credit, which includes lending and advancing payments to the seller of goods or service provider, and undertake one or more of the following actions.
(a) Maintain an account of receivables to be collected from debts.
(b) Collect the receivables from debts.
(c) Assume responsibility for the debt if the debtor of the seller of goods or service provider defaults.
3. Businesses Exempt from Specific Business Tax
The following businesses are exempt from specific business tax:
1. Activities of the Bank of Thailand, Government Savings Bank, Government Housing Bank, and Bank for Agriculture and Agricultural Cooperatives.
2. Activities of the Industrial Finance Corporation of Thailand.
3. Activities of savings cooperatives, specifically lending to members or to other savings cooperatives.
4. Activities of the Provident Fund under the law governing Provident Funds.
5. Activities of the National Housing Authority, specifically the sale or lease-to-own of real estate.
6. Pawning activities of ministries, bureaus, departments, and local government authorities.
7. Securities trading activities under the laws governing the Stock Exchange of Thailand in the securities market.
8. Activities of the Small Industrial Finance Corporation.
9. Activities of the Small Industrial Credit Guarantee Corporation.
10. Activities of the Export-Import Bank of Thailand.
11. Activities of the Environmental Fund under the law promoting and preserving the national environmental quality.
12. Activities of the Financial Institution Reform Fund.
13. Activities of the Financial Institution Asset Management Corporation.
14. Activities of special purpose legal entities in relation to the conversion of assets into securities in the following cases:
(1) Activities arising from the transfer of assets from a company, partnership, or other legal entities, or the transfer of such assets back to the company, partnership, or other legal entities.
(2) Activities that have been transferred from the transferor who is exempt from business tax under Section 91/3 of the Revenue Code.
15. Activities of a company, partnership, or other legal entity in relation to the conversion of assets into securities, specifically arising from the transfer of assets to a special purpose legal entity, or the receipt of such assets back from the special purpose legal entity.
16. Activities of real estate mutual funds, real estate funds to resolve financial institution system problems, and mutual funds established to resolve financial institution system problems under the laws governing securities and the securities market, specifically activities conducted in the ordinary course of business similar to commercial banking, and the sale of real estate as a business or for profit.
17. Activities of the Secondary Mortgage Corporation.
18. Activities of the National Housing Authority, specifically the provision of loans under the urban poverty alleviation project.
19. Activities of cooperative societies of the service type, specifically those involved in providing housing for members, under the following conditions:
(1) The cooperative must be a member of the urban poverty alleviation project of the National Housing Authority and must have received a loan under the project.
(2) The cooperative must use the received funds to purchase real estate for resale to its members.
20. The business of financial institutions under the law on asset management companies, specifically in the case where:
(1) The financial institution holds more than 50% of the total voting shares in the asset management company, or if the financial institution holds 50% or less of the voting shares in the asset management company, there must be another legal entity holding more than 50% of the total voting shares in the asset management company along with the financial institution.
(2) The income received from the asset management company due to providing loans to the asset management company for the purchase or transfer of non-performing assets from the financial institution, or from another financial institution where the first financial institution holds more than 50% of the total voting shares, or providing loans to the asset management company for managing the non-performing assets purchased or transferred from the financial institution, or from another financial institution where the first financial institution holds more than 50% of the total voting shares.
21. The business of selling real estate for trade or profit due to:
(1) The redemption of real estate from a sale with a buy-back agreement, or the redemption of real estate from a sale with a buy-back agreement by placing assets with a trust office within the specified period in the contract or within the period prescribed by law.
(2) The sale of real estate after redeeming it from a sale with a buy-back agreement, where the total period including the time before the sale with a buy-back agreement, the period during the buy-back, and the period after the buy-back exceeds five years.
22. The business of state enterprises concerning income received from the sale of real estate due to the conversion of part or all of the capital into shares in the form of a limited company or public limited company under the law on state enterprise capital.
23. The business of the Community Organization Development Institute (Public Organization), specifically activities conducted in the normal manner of commercial banks.
24. The business of the Student Loan Fund under the law on the Student Loan Fund.
25. The revolving fund for the development of private schools under the Office of the Private Education Commission.
26. The business of the Government Pension Fund under the law on the Government Pension Fund, effective from the date the law on the Government Pension Fund comes into force.
27. The business of real estate and receivables mutual funds established under the law on securities and the securities exchange, specifically activities conducted in the normal manner of commercial banks and the sale of real estate for trade or profit.
28. The business of the Land Reform for Agriculture Office, specifically activities conducted in the normal manner of commercial banks and the sale of real estate for trade or profit, effective from January 1, 1992 onward.
29. The business of the Islamic Bank of Thailand, specifically the transfer of ownership of real estate to the transferee due to the lease-purchase of real estate by the Islamic Bank of Thailand.
30. The business of the Small and Medium Enterprise Development Bank of Thailand under the law on the Small and Medium Enterprise Development Bank of Thailand, effective from December 20, 2002 onward.
31. The business of selling forward contracts under the law on the forward sale of agricultural products in the Thailand Futures Exchange, effective from May 28, 2004 onward.
32. The business of selling forward contracts under the law on forward contracts in the futures trading center, effective from the date the futures trading center begins operating and trading forward contracts.
33. The business of the Office of Economic Cooperation with Neighboring Countries (Public Organization), specifically the provision of loans to the governments of neighboring countries, state enterprises, or government financial institutions of neighboring countries under the Royal Decree establishing the Office of Economic Cooperation with Neighboring Countries (Public Organization), B.E. 2548 (2005).
34. The business of the Deposit Protection Agency under the law on the Deposit Protection Agency.
35. The transfer of real estate resulting from the separation of life insurance business and non-life insurance business according to Section 127, paragraph two, of the Life Insurance Act, B.E. 2535 (1992) or according to Section 121, paragraph two, of the Non-Life Insurance Act, B.E. 2535 (1992).
36. The sale of real estate by the Real Estate Credit Management Organization or a limited company established by a financial institution under the Royal Decree establishing the Real Estate Credit Management Organization, B.E. 2540 (1997), for managing real estate credit with the approval of the Bank of Thailand.
37. The sale of real estate by a business operator to the organization or limited company as mentioned in point 36.
4. Tax Base and Tax Rates
The tax base for businesses subject to specific business tax includes the gross revenue before any deductions, which the business operator receives or is entitled to receive as a result of conducting the business.
"Revenue" means money, property, compensation, or any benefit of value that the business operator receives or is entitled to receive, whether within or outside the Kingdom, resulting from the conduct of the business.
Businesses subject to specific business tax must pay tax based on the tax base, which includes the revenue from each type of business, multiplied by the applicable tax rate. In addition, local tax of 10% of the specific business tax amount must also be paid.
| Business | Tax Base | Tax Rate (%) |
|---|---|---|
| 1. Banking business, financial businesses, securities businesses, credit foncier businesses, and businesses similar to commercial banks | - Interest, discount, fees, service charges, or profits before expenses from buying or selling bills of exchange or debt instruments | 3.0 |
| - Profits before expenses from currency exchange or buying/selling foreign exchange, issuing bills of exchange, or remitting money abroad | 3.0 | |
| 2. Life insurance business | - Interest, fees, service charges | 2.5 |
| 3. Pawn shop business | - Interest, fees | 2.5 |
| - Interest, fees | 2.5 | |
| 4. Real estate business | - Revenue before any deductions | 0.1 |
| 5. Securities trading in the stock market | - Revenue before any deductions | 0.1 (except) |
| 6. Purchase and repurchase of securities authorized by the Securities and Exchange Commission | - Profits before any deductions from the sale of repurchased securities, excluding interest, dividends, or any benefits derived from the securities | 3.0 |
| 7. Factoring business | - Interest, discount, fees, or service charges | 3.0 |
| 8. Business under Royal Decree No. 469 | - Interest, discount, fees, or service charges | 0.01 |
| - Profits before any deductions from currency exchange or buying/selling foreign currency | 0.01 | |
| - Profits before any deductions from the sale of repurchased securities | 0.01 |
Note The tax rate for real estate transactions is reduced and maintained at a rate of 0.1% for the registration of rights and legal acts carried out within one year from the date the Royal Decree takes effect (from March 29, 2008, to March 28, 2009, under Royal Decree (No. 472) B.E. 2551).
5. Obligations of Business Operators Subject to Specific Business Tax
Business operators subject to specific business tax are required to perform the following duties:
1. Duty to Register for Specific Business Tax
Business operators liable for specific business tax must submit an application for registration within 30 days from the commencement of their business operations using the specific business tax registration form.
How to Register for Specific Business Tax
1.1 Application Form for Specific Business Tax Registration (Form Ph.T.01) The application form used for specific business tax registration is Form Ph.T.01. Business operators can obtain the application form at any district tax office or regional revenue office.
1.2 Completing the Application Form for Specific Business Tax Registration When submitting an application for specific business tax registration, business operators must complete the application form Ph.T.01 in triplicate. All three copies must contain accurate and consistent information. The operator must provide the relevant status of their business activities as follows:
(1) Name of the Business Operator
For individual business operators, enter their full name, address, date of birth, national ID number, and tax identification number.
For business operators that are legal entities, enter the name of the legal entity as registered in the partnership or company registration certificate issued by the Department of Business Development, Ministry of Commerce, along with the English name (if any), registration number, registration date, business address, accounting period, and tax identification number of the legal entity.
(2) Name and Location of the Business Establishment
For the name and location of the head office, the business operator must enter the name of the establishment, whether it is an individual or a legal entity (if applicable), including the trade name and the address of the establishment or head office. If there are multiple branches, the number of branches must be specified, along with the details of each branch's name and location, which should be written on the back of the form (Form Phor.Tor.01).
(3) Start Date of Business Operations
Please enter the date when the business officially starts operating, along with details about capital, revenue, employees, and rental expenses for the business premises.
(4) Type of Business Operations
The business operator should select and mark the appropriate category of business operation as applicable.
(5) Attachments
Please specify the number of documents attached with the Phor.Tor.01 form, which must match the number of documents indicated on the back of the Phor.Tor.01 form.
(6) Signature of the Business Operator and Company Seal
For individuals, partnerships, general partnerships, or heirs, the authorized signatory is the owner, director, manager, as stated in section (1), or someone authorized by them.
For legal entities, the authorized signatory includes those who have the authority to act on behalf of the entity, such as directors, shareholders, managers, or someone authorized by them, along with the company seal (if applicable).
1.3 Documents to be Attached with the Application for Registration of Specific Business Tax
(1) A copy or photo of the house registration certificate and/or proof of actual residence, a photo of the applicant's ID card, and the taxpayer identification card of the applicant and/or the authorized representative's ID card.
(2) A copy or photo of the lease agreement for the business premises (in case of renting) or a letter of consent to operate (if the premises belong to another party but are not leased), along with a copy or photo of the house registration certificate for the business location.
(3) A copy or photo of the partnership agreement (in the case of a general partnership or a group of persons).
(4) A copy or photo of the certificate from the Registrar of Partnerships and Companies, Ministry of Commerce (in the case of a company or legal entity partnership established under Thai law), along with a copy of the Memorandum of Association and Articles of Association (in the case of a limited company subject to Thai law), and a copy or photo of the commercial registration certificate.
(5) A photo of the ID card of the managing director or managing partner in the case of a company or legal entity partnership.
(6) A map or a photo of the business premises.
(7) Other documents (if any), such as a power of attorney in the case where the business operator authorizes someone else to register the specific business tax on their behalf.
1.4 Deadline for Registration of Specific Business Tax Business operators who are required to pay specific business tax must submit an application for tax registration within 30 days from the start date of business operations.
1.5 Location for Registration of Specific Business Tax Business operators must submit the application for specific business tax registration using the Phor.Tor.01 form at the following locations:
(1) In Bangkok, the registration can be made at:
- The area tax office where the business is located, or
- The district office where the business is located.
(2) In other provinces, the registration can be made at:
- The district or sub-district revenue office where the business is located.
If the business operator has multiple business locations or no business location, the business operator must submit the Phor.Tor.01 form at the relevant agency based on the following areas:
(a) The area where the head office is located if the business operator has a head office.
(b) The area where one of the business locations is located, if the business operator does not have a head office.
(c) The area where the business operator’s residence is located, if the business operator only has one residence as the business location.
(d) The area where one of the residences (chosen by the business operator) is located.
If the business operator has multiple residences used as business locations, a business location refers to a place where the operator regularly conducts business, and this includes places used for production or storage of goods on a regular basis.
In the case where the business operator does not have a business location as mentioned in the previous paragraph, the operator’s residence will be considered the business location. If the business operator has multiple residences, the operator must choose one residence as the business location.
1.6 Specific Business Tax Registration Certificate
(1) Display of the Specific Business Tax Registration Certificate
Once the officer receives the application for specific business tax registration using the Phor.Tor.01 form along with all relevant documents, the officer will issue the specific business tax registration certificate, Phor.Tor.20. This will officially recognize the business operator as a registered operator under the law starting from the business start date (the actual date the business begins operating).
When issuing the specific business tax registration certificate, the officer will issue it based on the number of actual business locations as indicated in the Phor.Tor.01 form. For example, if the business operator has multiple locations or branches, separate certificates will be issued for each location or branch. The business operator must display the certificates in a visible and easily accessible place at each business location.
(2) Loss, Destruction, or Damage of the Specific Business Tax Registration Certificate
In the case that the specific business tax registration certificate is lost, destroyed, or damaged in an essential manner, the business operator must apply for a replacement certificate using the Phor.Tor.04 form at the registration office within 15 days from the date of becoming aware of the loss, destruction, or damage.
In the case of a damaged certificate, the damaged certificate must be submitted along with the Phor.Tor.04 form.
In the case of a lost or destroyed certificate, the business operator must report the loss or destruction to the local police station and obtain a certified copy of the daily log from the investigating officer, which must be submitted along with the Phor.Tor.04 form.
2. Amendments and Changes Related to the Business
Any changes related to specific business tax registration must be reported, including amendments to key registered information such as:
- Changing the business name, type of business, or types of goods or services.
- Opening additional business locations.
- Temporarily suspending business operations.
- Transferring part or all of the business.
- Merging of legal entities.
- Closing the business.
- Business operator's registration after death.
3. How to Report Changes in Specific Business Tax Registration
To report changes in specific business tax registration, the business operator must submit the change notification using the Phor.Tor.09 form, with 1 set of 3 copies, along with the relevant documents, including:
- A copy of the house registration certificate.
- A letter showing the change of name or surname.
- A copy of the certificate from the Registrar of Partnerships and Companies.
- An account of documents supporting the accounting records.
- The specific business tax registration certificate.
- A power of attorney (if not conducting the process personally), along with the ID cards of both the grantor and the authorized person.
- Other documents as required.
4. Location for Reporting Changes in Specific Business Tax Registration
The business operator must report the changes in specific business tax registration at the registration office where the business is registered, within the specified time frame, depending on the case.
5. Timeframe for Reporting Changes in Specific Business Tax Registration
5.1 Reporting changes in key registered information, such as changing the business name, type of business, or types of goods or services, must be done within 15 days from the date the change occurs.
5.2 Reporting the opening of an additional business location must be done at least 15 days before the new location is opened.
5.3 Reporting the closure of a business location must be done within 15 days from the date of closure, along with the return of the Phor.Tor.20 certificate for that location.
5.4 Reporting the relocation of a business.
5.4.1 In the case where the new business location is within the same registration area, the business operator must report the relocation at least 15 days before the move, along with the return of the Phor.Tor.20 certificate for the original location to the registration office where it was originally registered.
5.4.2 In the case where the new business location is in a different area, the business operator must report the relocation at least 15 days before the move and submit the Phor.Tor.09 form along with the return of the Phor.Tor.20 certificate for the original location to the registration office in the area where the new location is situated, at least 15 days before the new business location opens.
5.5 Reporting a temporary suspension of business operations for more than 30 consecutive days must be done within 15 days from the date the business operations are suspended.
5.6 Reporting the transfer of business (part or all of it).
5.6.1 The transferor must report the transfer at least 15 days before the transfer date. If it is a complete business transfer, the Phor.Tor.20 certificate must be returned along with the submission of the Phor.Tor.09 form.
5.6.2 The transferee of the business.
- If the transferee is a registered business operator, the transfer must be reported at least 15 days before receiving the business transfer by submitting the Phor.Tor.099 form at the registration office where the transferee is registered.
- If the transferee is not a business operator, the transfer must be reported at least 15 days before receiving the business transfer by submitting the Phor.Tor.01 form at the registration office in the area where the business location is situated.
5.7 Reporting Business Consolidation
5.7.1 The original legal entity must report the consolidation within 15 days from the date of consolidation, along with the return of the Phor.Tor.20 certificate for the original business location to the registration office where the transferee is registered.
5.7.2 The new legal entity must report the consolidation within 15 days from the date the new legal entity is registered by submitting the Phor.Tor.01 form at the registration office in the area where the business location is situated.
5.8 Reporting the cessation of business operations must be done within 15 days from the date the business ceases, along with the return of the Phor.Tor.20 certificate.
5.9 Reporting the death of a registered business operator who is an individual.
5.9.1 In the case of an heir who takes over the deceased’s business, the report must be made as soon as possible.
5.9.2 In the case of an heir who does not take over the deceased’s business, or who takes over but has not continued the business within 60 days or within the extended period granted by the Director-General of the Revenue Department, and no business manager or heir has requested the transfer of the deceased's business, the report must be made within 15 days from the date the business operator's registration ends or from the expiration of the operation period, along with the return of the Phor.Tor.20 certificate.
5.9.3 In the case of a business manager or heir who wishes to continue the deceased’s business and is a registered business operator, the report must be made at least 15 days before the business transfer, along with the return of the deceased’s Phor.Tor.20 certificate.
5.9.4 In the case of a business manager or heir who wishes to continue the deceased’s business but is not a registered business operator, the report must be made at least 15 days before the business transfer by submitting the Phor.Tor.01 form, along with the return of the deceased’s Phor.Tor.20 certificate.
6. Filing the Specific Business Tax Return
1. The persons responsible for filing the specific business tax return are:
1.1 Individuals who operate a business that is subject to specific business tax, and the business is not exempt from the specific business tax.
1.2 Persons responsible for managing the business within the Kingdom on behalf of a business operator who is located outside the Kingdom.
1.3 Employees, agents, or representatives who have the authority to manage the business on behalf of the operator, either directly or indirectly, and who are located within the Kingdom for a business operator based outside the Kingdom.
2. Forms Used
The specific business tax return form prescribed by the Director-General of the Revenue Department for filing the specific business tax return is the Phor.Tor.40 form.
3. Responsibility for Preparing the Report
Business operators who are liable for specific business tax must prepare a report showing income before deducting expenses that are subject to tax and income that is not required to be included for tax calculation. This report must be prepared according to the form specified by the Director-General of the Revenue Department and must be prepared for each business establishment. The entries in the report must be made within 3 working days from the date of receipt, unless the Director-General of the Revenue Department deems it appropriate for certain types of business or in specific cases. The Director-General may set other rules as necessary or appropriate for particular cases.
4. Responsibility for Retaining Reports and Documents
Business operators who are liable for specific business tax must keep and retain the reports along with the supporting documents or any documents as prescribed by the Director-General at the place where the report is prepared or at another location specified by the Director-General, for a period of no less than 5 years from the date the tax return was filed or the report was made, whichever is applicable.
5. Responsibility for Issuing Receipts
Business operators subject to specific business tax who receive payment or price from the sale of goods or services, or from any business transactions, totaling over 100 Baht each time, must issue a receipt to the payer or person making the payment immediately each time payment is received, whether a request for the receipt has been made or not.