Tax exemption for Thailand BOI companies’ profits and dividends

Our Thailand BOI software business  was set up by Thai Lawyers Ltd. We want to know if the BOI company makes a profit of 4 M Baht and we draw a dividend of 1 million Baht to ourselves at end of year 1, do we have to pay any tax on the 4 million Baht? From what I understood as a BOI company, I am exempt from any Dividend Tax? Is this correct? Should we draw salaries or dividend form our Thailand BOI company?

Regarding your Thailand BOI company doing software business, you have 5 year tax exemption only when the BOI company has spent 1.5 M in IT personnel expense per year and you have filed a form to open the operation with the Board of Investment. Then after that, when the company makes profit, you will have to file some forms to ask the BOI for the corporate tax exemption (you have to do it each year that you want the tax exemption). Now once your company gets the tax exemption, and you pay dividends to the shareholders according to the percentage of shareholding in the BOI company, your dividend income to yourselves is also tax exempt. Please note that your 5 year tax holiday lasts only until 5 years from the date of the first invoice.

Now for you income tax if you draw 1.2M salary per year,

  • For 2015, if you start working July 2015, you will have worked only 6 months for 2015, so you will pay tax about 29,000 Baht for the year (or 4,833 per month).
  • For 2016 onward, your personal income tax will be about Baht 142,500 per year.

So in your case, you need to draw at least 50K per month because you need to show a salary for your work permit. The rest you can wait to draw as dividend.