With its origins in Germany and a dedicated office in Thailand, our firm supports international businesses investing and operating in Southeast Asia. We primarily advise foreign investors on foreign direct investment (FDI) into Thailand, combining international standards with deep local expertise to guide clients through market entry, corporate structuring, and regulatory requirements.
Our Thailand office provides comprehensive accounting services to ensure full compliance with Thai laws and regulations, as well as alignment with international reporting standards. From day-to-day bookkeeping and statutory financial statements to tax filings and regulatory reporting, we support clients in maintaining transparent, reliable, and efficient financial operations in Thailand.
In addition to ongoing accounting support, we offer specialized services in forensic accounting and transaction-related matters, including financial due diligence (DD) for M&A and strategic investments. By integrating financial expertise with our international advisory experience, we provide clients with the clarity and confidence needed to operate successfully in Thailand.
In recent years, data privacy and security audits and reporting has become increasingly connected to financial reporting. Our office combines these services, creating efficiency benefits for clients.
What Thailand’s Accounting Standards are & How they relate to IFRS?
In Thailand, the accounting reporting framework is based on standards set by the Federation of Accounting Professions (TFAC) pursuant to the Accounting Professions Act, and these are published in the Royal Gazette:
a. TFRS for PAEs (Thai Financial Reporting Standards for Publicly Accountable Entities)
• PAEs are entities with public accountability — such as listed companies, public companies, banks, financial institutions, insurance companies, mutual funds, etc.
• They must use Thai Financial Reporting Standards (TFRS) which are official Thai translations of IFRS with only limited delay or modification.
• Therefore, TFRS for PAEs largely mirror IFRS, meaning they are highly aligned to international standards in recognition, measurement, presentation and disclosure.
b. TFRS for NPAEs (Non-Publicly Accountable Entities)
• NPAEs are entities without public accountability — most privately-held companies and SMEs.
• They use a simplified standard known as TFRS for NPAEs — still developed locally by TFAC and based on the IFRS conceptual framework, but with many requirements reduced or omitted to lessen complexity and cost.
• NPAEs may also elect to use full TFRS (i.e., IFRS-aligned) instead if they wish; TFAC guidance notes that choice should reflect the information needs of users of their financial statements.
Please note: Both sets of Thai standards stem from IFRS principles. However, TFRS for PAEs ≈ IFRS, while TFRS for NPAEs ≈ a simplified IFRS-based framework designed for smaller entities.
What are the Main Differences Between TFRS for NPAEs & TFRS/IFRS
Compared with full IFRS (TFRS for PAEs), TFRS for NPAEs simplifies or omits several requirements:
| Topic | TFRS (PAEs / IFRS) | TFRS for NPAEs |
| Statement of comprehensive income | Required | Not required (optional) |
| Statement of cash flows | Required | Not required (optional) |
| Financial instruments | Full-IFRS based valuation & impairment | Simplified or not required |
| Leases | Recognize right-of-use assets & lease liabilities per IFRS 16 | Usually simplified or excluded |
| Deferred tax accounting (IAS 12) | Full recognition of timing differences | Not required/not as detailed (optional) |
| Fair value measurement/revaluation options | Widely applied | More limited or not required |
In short, NPAE standards are easier to apply but may result in less detailed reporting than full IFRS-aligned standards.
Using Financial Statements for Corporate Income Tax (CIT) Filing in Thailand
In Thailand, corporate income tax returns must be supported by appropriate financial statements, but the tax computation follows the Thai Revenue Code, not IFRS per se.
Here’s how things typically work:
Accounting vs. Tax Basis
- Financial statements are prepared in accordance with applicable accounting standards (TFRS for PAEs or TFRS for NPAEs).
- For tax filing (CIT), Thailand’s Revenue Code determines taxable income and allowable deductions. Taxable profit is based on accounting profit but requires tax adjustments for items that differ under tax law (non-deductible expenses, tax incentives, allowances, etc.).
- Therefore the commercial financial statements serve as a starting point, but additional adjustments are made per tax rules.
- SMEs can choose between using full TFRS or TFRS for NPAEs where eligible.
- There is no adoption of the IFRS for SMEs in Thailand at the moment; the NPAEs standard plays a similar simplifying role.
- Some NPAEs may opt into full TFRS to improve comparability or meet stakeholder requirements (e.g., lenders).
1. The Core Principles
For Thai CIT:
Taxable profit = Accounting profit per audited FS
± adjustments required by the Revenue Code
So:
- You do not restate the financial statements into a “tax balance”
- You keep one audited set
- You prepare a tax reconciliation (often called a tax computation schedule)
2. What Kind of Modifications Are Required?
Adjustments fall into a few very predictable buckets.
3. Reserves & Provisions (Your intuition is right)
❌ General rule
Accounting reserves and provisions are NOT tax-deductible, unless explicitly allowed by tax law.
Common examples
| Item | Accounting treatment (TFRS) | Tax treatment |
| General reserve | Expense / appropriation | ❌ Add back |
| Legal reserve (5% of profit) | Equity appropriation | ❌ Not deductible |
| Provision for doubtful debts | Allowed under TFRS | ❌ Add back (unless RD conditions met) |
| Provision for inventory obsolescence | Allowed | ❌ Add back |
| Provision for warranty | Allowed | ❌ Add back |
| Provision for employee bonus (not yet paid) | Accrued | ❌ Add back |
| Provision for lawsuits | Allowed | ❌ Add back |
✅ Exceptions (deductible)
- Employee severance when paid (not when provided)
- Bad debts only if strict Revenue Department criteria are met
- Retirement fund contributions within limits
📌 Key idea:
Thailand taxes realized expenses, not expected or estimated ones.
4. Depreciation & Amortization
This is one of the biggest adjustment areas.
Accounting
- Depreciation based on useful life
- IFRS allows judgment, revaluation, impairment, etc.
Tax
- Statutory depreciation rates apply
- Excess accounting depreciation must be added back
- Tax depreciation is then deducted separately
Example:
- Accounting depreciation: THB 1,200,000
- Tax-allowed depreciation: THB 800,000
➡ Adjustment:
- Add back: 1,200,000
- Deduct: 800,000
- Net add back: 400,000
📌 Revaluation surplus, fair value gains/losses → ignored for tax until realized
5. Unrealized Gains & Losses
| Item | Tax treatment |
| Unrealized FX gain/loss | ❌ Ignore (add back / deduct later) |
| Fair value gains on investments | ❌ Ignore |
| Impairment losses | ❌ Add back |
Tax only cares when:
- Asset is sold
- Liability is settled
Gain/loss is realized in cash or legally fixed amount
6. Income That Is Accounting Income but Not Taxable (or vice versa)
Add back (non-deductible expenses)
- Corporate income tax itself
- Penalties, fines, surcharges
- Entertainment expenses exceeding limits
- Donations exceeding thresholds
- Director expenses without proper documentation
Deduct separately
- BOI tax incentives
- Double deductions (e.g., training, R&D if approved)
- Tax depreciation not booked in accounting
7. Dividends & Reserves
Dividends received
- May be partially or fully exempt if conditions met (holding %, holding period)
Dividends paid
- Not deductible (appropriation of profit)
Legal reserve
- Required under CCC
- Never tax-deductible
8. Deferred Tax (Accounting vs Tax Reality)
- Deferred tax exists only in accounting
- The Revenue Department ignores deferred tax entirely
- You:
- Keep deferred tax in FS (TFRS)
- Exclude it completely from tax computation
9. What the Revenue Department Actually Expects
For CIT filing, you submit:
- Audited financial statements (commercial balance)
- Tax computation schedule, showing:
- Accounting profit
- Add-backs
- Deductions
- Taxable profit
- CIT return (PND 50)
📌 Auditors care about TFRS compliance
📌 Tax officers care about Revenue Code compliance
They are related — but not the same logic.
