The Royal Decree (No. 783) dated 5 June 2024 and the notification from the Director-General of the Thai Revenue Department on income tax (No. 446) dated 24 July 2024 provides a reduced corporate or personal income tax rate for certain business activities within Southern Economic Zoes or SEZs, including Narathivas, Pattani and Yala , Satun provinces or in certain areas of the Songkhla province (the Chana, Nathawee, Sabayoi, or Thepha Districts), during the period from 1 January 2024 to 31 December 2026.
Eligible companies or juristic partnerships operating in an SEZ can benefit from a reduced corporate income tax rate of 3% of net profits. This applies to income derived from manufacturing or sales of goods, or the provision of services within the SEZ.
Individuals with businesses operating in SEZ can be eligible to the reduced Personal Income Tax rate at 0.1% final tax on their assessable income derived from manufacturing or sales of goods, or from the provision of services within the SEZ. In addition, this income shall be excluded from their annual personal income tax return.
For sales of immovable property by individuals located within an SEZ, the withholding tax rate can be reduced to 0.1% of gross proceeds (in a case where the assessable income is subject to withholding tax at a rate greater than 0.1% under the Revenue Code) for assessable income derived from 1 January 2024 through 31 December 2026. Individuals who have tax on their income from sales of immovable property located in an SEZ withheld at the rate of 0.1% will not be required to include such assessable income as taxable income for personal income tax purposes, given that the individuals do not to request a refund or credit with respect to the tax withheld.
For the net profit calculation purpose, in the case of a company or partnership conducting business that generates income from operations located in the SEZ area as well as business income from other areas, the companies or juristic partnership must calculate the net profit for each business separately. In case where any expenses cannot be clearly distinguished for each business, the companies or juristic partnership shall allocate such expenses proportionally based on the average ratio of income between the business located in the SEZ area and other businesses. Regarding the income tax filing, the same identification number of taxpayer shall be used, but working papers which indicating the profit and loss for each business shall be attached separately.