Understanding Royal Decree No. 384 Under the Thai Revenue Code

As Thai businesses expand overseas — particularly into Singapore, Hong Kong, and other regional hubs — one key tax question arises:

Will profits earned abroad be taxed again when brought back to Thailand?

The good news is that under Thailand’s Revenue Code (Royal Decree No. 384), Thai companies can receive dividends from foreign subsidiaries completely exempt from Thai Corporate Income Tax (CIT) — if certain conditions are met.

This creates a powerful and fully legal tax optimization opportunity for Thai groups expanding internationally.

The 100% Corporate Tax Exemption Rule

Dividends received by a Thai company from a foreign subsidiary are fully exempt from Thai Corporate Income Tax if:

1. Minimum Shareholding Requirement
   The Thai parent company holds at least 25% of the shares in the foreign subsidiary.
2. Minimum Holding Period
   The shares must be held for at least 6 months.
3. Minimum Foreign Tax Condition
   The foreign subsidiary must be subject to tax in its home country at a rate of at least 15%.

When these three conditions are satisfied, the dividend income received in Thailand is 100% exempt from Thai CIT.

Why This Matters for Thai Businesses

Thailand’s corporate income tax rate is 20%. Without this exemption, foreign dividends could be subject to additional Thai taxation.

Royal Decree No. 384 prevents this “double taxation” and allows Thai companies to:

• Repatriate overseas profits efficiently
• Avoid unnecessary group-level tax leakage
• Centralize regional profits under a Thai parent company
• Strengthen balance sheets with tax-free dividend income

For Thai service companies, holding companies, and regional operators, this exemption can significantly improve after-tax group returns.

Practical Example

Imagine a Thai company owns 100% of a Singapore subsidiary.

• The Singapore company earns profit and pays Singapore corporate tax (17%).
• Dividends are declared to the Thai parent.
• Because Singapore’s tax rate exceeds 15%, and the Thai parent owns more than 25% for over 6 months, the dividend received in Thailand is fully exempt from Thai corporate income tax.

Result:
Profits earned abroad are not taxed again in Thailand.

Strategic Planning Opportunities

This exemption makes Thailand an attractive location for:

• Regional holding company structures
• ASEAN expansion strategies
• Investment structures involving foreign subsidiaries
• Group-level profit consolidation

However, proper structuring is critical. Shareholding percentages, holding periods, and foreign tax compliance must be carefully managed to ensure eligibility.

Businesses should also consider withholding tax implications in the foreign jurisdiction and broader international tax rules when designing their structure.

Final Thoughts

Royal Decree No. 384 provides Thai companies with a clear and legitimate pathway to optimize cross-border tax efficiency.

For Thai businesses planning international expansion, understanding and properly applying this exemption can:

• Reduce overall tax burden
• Increase retained earnings
• Improve regional competitiveness
• Enhance long-term group profitability

With the right structure, Thailand can serve not just as your operating base — but as a tax-efficient regional headquarters.

You can now set up your foreign company from Thailand. Find out more at: https://unionspace.co.th/ASEAN-Business-Gateway