Key takeaways
- Surprise year-end tax usually comes from learning the numbers late, not from the tax rate
- Taxable profit is not the same as accounting profit, a half-year estimate that is too low carries extra cost, and withholding tax credits need complete supporting evidence
- In the example, the company must pay an additional THB 2.0 million when filing PND 50, and may face a further surcharge of THB 0.16 million for an underestimated forecast
You work hard all year, the books are closed, the auditor sends a draft, and only then does the owner learn that a large tax payment must be found within a few weeks, even though the cash has just been spent on inventory or used to repay debt. It is like eating at a buffet without reading the terms on the menu and then being shocked by the bill. Tax is not an item that arises at year-end. It arises every day the company makes a profit; it simply falls due later.
The CIT calendar owners should know
The standard corporate income tax rate is 20% of net taxable profit. Companies with paid-up capital of no more than THB 5 million and revenue from sales or services of no more than THB 30 million are subject to a stepped rate: the first THB 300,000 of net profit is exempt, the next portion up to THB 3 million is taxed at 15%, and the portion above THB 3 million is taxed at 20%, according to the criteria published by the Revenue Department for accounting periods from 2017 onwards. Before relying on this, check again that no change has been announced for your accounting period.
| Type | Deadline | What you need to understand |
|---|---|---|
| PND 51 | Within 2 months of the end of the first half of the accounting period | Generally, estimate the full-year profit and pay half of the tax |
| PND 50 | Within 150 days of the end of the accounting period | Calculate the actual tax for the full year, then deduct the tax already paid and the credits that can be used |
Online filing may have its own deadlines each year, so rely on the latest Revenue Department announcement. The conditions for filing the estimate may also differ for certain types of company from the general case.
Three points that throw the numbers off
1. Accounting profit is not the same as taxable profit
Some expenses appear in the financial statements but are not treated as deductible expenses under the law when calculating tax, for example expenses where the recipient cannot be identified, personal expenses, tax penalties and surcharges, entertainment expenses above the limit, and allowances that do not yet meet the tax conditions. If the documents are incomplete from early in the year, the problem is usually discovered only at closing, when it is hard to correct retroactively.
2. The half-year estimate is too low
If the estimated net profit falls short of the actual net profit by more than 25% without reasonable cause, Section 67 ter of the Revenue Code requires a surcharge of 20% of the underpaid tax. This money brings the business no benefit and is on top of the normal tax.
3. Withholding tax is not tracked
Tax withheld by customers can be claimed as a credit only if the company has the supporting evidence and the income falls in the correct period. If certificates are lost, the amounts do not match revenue, or nobody reconciles them, the cash actually payable will be higher than expected. In addition, if the company has accumulated losses, check whether they are still within the five accounting periods in which they can be used.
Example: tax that appears at year-end
This is a hypothetical example, and for ease of reading it does not deduct withholding tax credits when filing PND 51. The company pays tax at 20%. At mid-year it estimates full-year profit at THB 12 million, so it pays PND 51 = 12 × 20% ÷ 2 = THB 1.2 million. At year-end, actual accounting profit is THB 18 million, there are tax add-backs of THB 2 million, and usable withholding tax credits of THB 0.8 million.
| Item (THB million) | Amount |
|---|---|
| Accounting profit | 18.00 |
| Add: items not treated as deductible for tax | 2.00 |
| Net taxable profit | 20.00 |
| Tax at 20% | 4.00 |
| Less: PND 51 already paid | (1.20) |
| Less: withholding tax | (0.80) |
| Payable when filing PND 50 | 2.00 |
The estimate fell short by THB 8 million, which is 8 ÷ 20 = 40% of actual net profit, exceeding the 25% threshold. Without reasonable cause, the half-year tax that should have been paid is 20 × 20% ÷ 2 = THB 2.0 million, but only THB 1.2 million was paid, a shortfall of THB 0.8 million. The 20% surcharge is THB 0.16 million. The total cash to be prepared is therefore THB 2.16 million.
If the company had set aside a tax reserve each month based on the actual forecast, 4.0 ÷ 12 = THB 0.33 million per month, it would have set aside THB 4 million over the year, enough for the full year's tax. And once withholding tax credits are applied, that cash is released for use again.
If tax is paid late, a surcharge applies under Section 27 at 1.5% per month or part of a month. For example, THB 2 million overdue for 3 months gives a surcharge of about THB 0.09 million, before counting any penalties that may arise in other cases.
Proper tax planning means using the rights the law provides, completing the documentation and timing the cash. It does not mean booking expenses with no business substance, because the true cost of a retrospective assessment can exceed the tax you thought you had saved.
Next steps
- In the first month of the accounting period, set a target for taxable profit and the tax expected to be paid
- Close the books monthly and record tax add-back items in a single file
- Set tax money aside in a separate account every month, or whenever a large profit is recognised
- Before filing PND 51, review the full-year profit using actual first-half results and items already known for the second half, and keep evidence of the assumptions
- Reconcile withholding tax monthly against revenue and certificates
- Review accumulated losses and the date by which the right to use them expires
- For unusual items, consult the auditor and tax adviser at least one quarter before the accounting period closes