Which Business Expenses Are Not Tax-Deductible in Thailand?

October 19, 2026 Posted by ASEAN Briefing Written by Ayman Falak Medina Reading Time: 3 minutes

Thailand disallows certain expenses when calculating corporate income tax, including personal expenditure, unsupported payments, and most accounting provisions. Foreign-owned companies must also account for statutory deduction limits and restrictions on payments to overseas related parties.

Which business expenses are not tax-deductible in Thailand?

Section 65 Ter of Thailand’s Revenue Code identifies expenses that cannot be deducted from taxable profits, even if recorded in a company’s financial statements.

Expense category	Tax treatment
Personal and non-business expenses	Costs unrelated to business operations are generally non-deductible.
Corporate income tax and tax penalties	Corporate income tax and applicable tax fines and surcharges are non-deductible. Other penalties require separate assessment under the relevant tax rules.
Unsupported expenses	Expenses that cannot be substantiated or whose recipients cannot be identified may be disallowed, subject to applicable rules.
Capital expenditure	Asset acquisitions and improvements generally must be capitalized and may qualify for depreciation.
Excessive expenses	Expenses exceeding reasonable commercial values may be disallowed.
Provisions and reserves	Most accounting provisions and reserves are non-deductible unless an exception applies.

Routine equipment repairs may qualify as deductible expenses, whereas improvements that substantially increase an asset’s value or extend its useful life generally must be capitalized.

Which business expenses are subject to deduction limits in Thailand?

Entertainment and hospitality expenses

Qualifying business entertainment expenses are generally deductible up to 0.3 percent of gross revenue or paid-up capital, whichever is higher, subject to a maximum of THB 10 million (US$308,000).

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The expenses must relate to business activities, receive the required management approval, and be supported by appropriate records. Certain gifts provided during business entertainment are also subject to a THB 2,000 per-person, per-occasion limit.

Passenger vehicle expenses

Depreciation deductions for qualifying passenger vehicles are generally restricted to a vehicle cost of THB 1 million (US$30,800).

A company purchasing a passenger vehicle for THB 1.5 million (US$46,200), for instance, generally calculates tax depreciation using the THB 1 million ceiling rather than the full purchase price.

Leasing expenses for qualifying passenger vehicles are generally subject to a deduction ceiling of THB 36,000 (US$1,108) per month or THB 1,200 (US$37) per day. These ceilings include VAT.

The restrictions depend on vehicle classification, with exceptions for certain businesses, including qualifying vehicle rental operations.

Charitable donations

Qualifying donations for public benefit purposes are generally deductible up to 2 percent of net profits. A separate 2 percent limit applies to eligible education and sports donations, while certain approved contributions may qualify for enhanced deductions.

From January 1, 2026, donations to temples, qualifying charitable organizations, hospitals, and educational institutions must be recorded through Thailand’s e-Donation system to qualify for tax deductions. Paper donation receipts alone are no longer sufficient for donations covered by this requirement.

Are payments to foreign parent companies tax-deductible?

Foreign-owned companies in Thailand may deduct qualifying management fees, interest, royalties, and other payments to overseas related parties, provided the expenses satisfy the applicable tax requirements.

Management and shared service fees may be deductible if the services benefit the Thai company and the charges are commercially justified. A Thai subsidiary paying its Singapore headquarters for regional accounting services, for instance, should retain contracts, invoices, evidence of work performed, and the basis used to allocate costs.

The Revenue Department may reject charges that duplicate existing services, relate exclusively to the foreign parent company’s activities, or cannot be adequately substantiated.

Interest on intercompany loans and royalties for intellectual property may also qualify as deductible expenses, subject to the underlying transaction, applicable tax rules, and arm’s-length pricing requirements.

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These payments may create separate withholding tax obligations even where the expenses qualify for corporate income tax deductions.

For foreign branch offices, allocated head-office expenses must benefit the Thai branch, follow a reasonable and consistent allocation method, and be supported by appropriate evidence. The same costs must not be deducted twice.

What happens if the Thai Revenue Department disallows an expense?

When the Thai Revenue Department rejects an expense deduction, the amount may be added back to taxable profits.

A company reporting taxable profits of THB 10 million (US$308,000) that incorrectly deducts THB 2 million (US$61,600) in expenses could have its taxable profits increased to THB 12 million (US$369,600).

At the standard corporate income tax rate of 20 percent, the adjustment would produce an additional THB 400,000 (US$12,300) in tax, excluding applicable penalties and surcharges.

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The Revenue Department may request invoices, contracts, payment records, and other supporting evidence. Companies can challenge an assessment through the applicable objection and appeal procedures.

Contact Dezan Shira & Associates for corporate tax compliance in Thailand

Dezan Shira & Associates helps foreign-owned companies assess expense deductibility and resolve corporate income tax compliance issues in Thailand. For assistance with your company’s tax obligations, contact our specialists.

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