Petroleum Income Tax (PT) is a direct tax, levied annually on net profits of a petroleum taxpayer who is carrying out the business of petroleum exploration and production, and the disposal of profits outside of Thailand. The Petroleum Income Tax rules and regulations are covered under the Petroleum Income Tax Act (PITA) and other related laws.
A petroleum taxpayer is anybody who
• Holds a concession granted for exploration and production of petroleum products (including crude oil, natural gas and liquid natural gas) by the Department of Mineral Resources
• Purchases crude oil for export from a concession holder
The Petroleum Income Tax Act does not govern over the downstream industries including refining.
If a petroleum taxpayer is obtaining income also from other business activities other than the petroleum activities covered by the PITA, he shall be subject to income tax imposed under the Revenue Code and PITA.
Taxable Income
Petroleum companies are taxed at a maximum rate of 50% of their annual net profit. Taxes are assessed on the sales of petroleum, that value of the petroleum, the profit from the transfer of any concession asset, the value of the delivered petroleum in lieu of a royalty, and other profit generating activity in relation to their petroleum operations.
Deductions are permitted for normal, necessary, not excessive and paid in total business expenses paid inside or outside of Thailand, as well as depreciation for expenditure of a capital nature, petroleum royalties and other charges. Interests are not allowed for deduction.
Production-sharing petroleum producers are taxed at a maximum 20% of their annual net profit from petroleum business activities. This includes profits eraned from the transfer of any interest of rights, annuities, or any other recurring income as a consequence of such transfer which cannot be accurately specified.
PT Return and Payment
PT return and payment must be submitted within 5 months after the closing date of the accounting period at the local Revenue Office. An accounting period is normally 12 months and starts on the day the company makes its first sale or disposal of petroleum subject to royalty. The accounting period can be shorter or longer if is the Director General deems it justified.
The tax return must be submitted together with the audited financial statements for that year.
Return for profit remittance has to be submitted within 7 days from the date of remittance.
Petroleum taxpayers covered by the Act 2532, must in addition to the annual tax return file a half year tax return and pay half of their projected annual income tax within two months after the first 6 months of their accounting period. The tax paid at half year is credited against the full-year tax liability.
Legal Consequences
If the taxpayer does not file a correct return or files late, he may be subject to penalties and surcharges that differ from those of applied to Corporate Income Tax. Penalties and surcharges can be lessened or erased if the taxpayer can prove the omission was not willful.