The five tax traps of a factory's first year in Thailand

01Filing rhythm and input invoices: do not carry over habits from home

Tax problems in the first year are rarely a big decision gone wrong. They are usually rhythm and detail: something that should be done monthly gets done annually, an obligation that splits in two gets handled once, an incentive that has to land in a tax return stops at the certificate. Nearly every Chinese-invested company setting up a factory in Thailand has hit at least one of the five below.

Companies used to filing at home work to an annual reconciliation. In Thailand, withholding tax (the PND series) and VAT (PP.30) are filed month by month, each with its own deadline. The deadlines themselves follow the Revenue Department rules in force, so check them there.

• Trap 1 — losing the monthly rhythm. Surcharges and penalties build up month on month, and the whole bill arrives at once when you catch up. What to do: build the full-year filing calendar in your first month on the ground, and put a name against every form and every deadline. What a Thai company files in a year, and when.
• Trap 3 — input invoices that do not qualify. Input credit and refunds are given on a proper tax invoice carrying the required particulars; an ordinary receipt does not count. The damage shows up in bulk — at the refund application, or under audit, months of input tax is struck out at once. What to do: check every invoice in the month you receive it and send a defective one straight back to be reissued. Do not stockpile them.

02Cross-border payments: one payment, two obligations

When the Thai company pays a service fee, a royalty or similar to an overseas parent or supplier, two separate obligations attach to that single payment: withholding income tax on it and filing that, and self-accounting for VAT on the service bought from abroad.

Trap 2 is doing one and forgetting the other. The two go on different forms. Miss either and the back tax and the penalty both land on the Thai company. What to do: put every cross-border payment through a tax determination first — what the payment is for, whether a tax treaty applies — and arrange the payment after that, not the other way round. How withholding on payments to overseas providers works.

03BOI exemption: holding the certificate is not the same as paying no tax

Trap 4 is assuming that once the certificate is approved the exemption runs by itself. It does not. It lands only when both ends agree: at the BOI end you register and reconcile the exempt amount year by year, and the tax is actually forgiven at the Revenue Department end, where the BOI exemption schedule has to be completed correctly in the annual corporate income tax return (PND.50). Leave it out and none of the allowance on the certificate gets used.

Three numbers to check. The first date of revenue, the exemption cap and the amount used to date must match exactly at the BOI end and at the Revenue Department end. The exemption period runs from the first date of revenue from the promoted activity, not from the date the certificate was issued. If any one of the three does not tie, the exposure surfaces all at once at a later reconciliation.

04Registration: the capital and nominee problems are planted on day one

Trap 5 is planted on the day you register, and the rule changed in August 2026. The instrument in force is DBD Central Registrar Order No. 2/2569, effective 1 August 2026; its clause 1(1) expressly revokes the earlier Order No. 2/2568, which a good deal of published material still cites. It applies to incorporation registrations only, and only in two situations: there are foreign partners or shareholders but the foreign contribution totals less than 50 percent of the contributions or the registered capital; or the company has no foreign shareholder but a foreign national is an authorised or jointly authorised signing director. An incorporation in which foreign holdings reach 50 percent or more, a wholly foreign-owned company included, falls outside both — though that only means this order does not apply; whether any requirement outside it does is a separate question.

Where it does apply, the filing has to include the prescribed investment explanation form, together with a bank statement for each Thai shareholder's account used to pay for the shares, covering the three months counted back from the date of payment and showing a withdrawal or transfer that matches the amount and the date, and a statement for the account of the director or managing partner who received the money, showing receipt from every shareholder. The order adds one further requirement: for a company incorporated after it took effect, an application made within one year of the incorporation date to make a foreign national a partner or an authorised signing director also calls for an amendment investment explanation form and a statement showing the incorporation capital was received in full.

Nominee arrangements separately draw enforcement under the anti-money-laundering law: a finding of an unlawful nominee arrangement can go as far as dissolution of the company and personal criminal liability for the persons responsible, and BOI promoted status is not an exemption. Provisional seizure under that law is decided by the Transaction Committee under section 48, for not more than 90 days, and is not a power exercised by the DBD. What to do: fund the shareholding for real from day one and keep the bank records. Note as well that, according to law firm briefings, counter filing for company registration stopped on 1 July 2026 and everything goes through the online system, with identity verification of foreign directors only through the DBD's own channel — allow at least two weeks for it. Where the line falls on Thai nominee shareholders.

05What the five have in common

None of the five is hard on its own. The difficulty is that the first year is thin on people and dense with obligations, and every item you drop costs real money.

These are general rules. Your own exposure depends on the conditions on your certificate, the state of your books and how your contracts are written — individual cases have to be worked through point by point by our advisers, against your certificate, your accounts and your cross-border contracts. Thai rules change often; check the latest official announcement before you act.