Reduce taxable income - bonus or?

[Matt199]

Hi guys,

 

It's my first year running a private limited company in Thailand (or any company whatsoever). I will make some profit end of the financial year which ends November 2019 so in 2 weeks. If profit is more than 300,000 THB then it's taxed and the company will exceed that.

 

Question is if I can pay myself and my employees a bonus? Anyone has any experience in doing so?

 

I would like to avoid any problems with audit so any experience shared would be beneficial. I'm not experienced in this manner. I also have only 2 weeks to reduce taxable income.

 

Thanks,

Matt

[AJBangkok]

Salaries and bonuses are operating expenses so you can pay them and it will decrease the company’s taxable income. The flip side of that the recipient of the bonus must pay personal income tax on the bonus. Company tax is 20% and personal income tax is a sliding scale peaking at 35%.

 

You can do the math but at some level it works out better to pay yourself a dividend rather than a salary as dividends are taxed at 10%. Dividends are a below the line item and paid from after tax profits so using a dividend will save you 5% in PIT but only if you have reached the 35% level already.

 

 

[Matt199]

@AJBangkok thanks for the info! I did some research after my post and indeed this is what I understood made sense as well (dividend after PIT effective 30%+). Thanks once again.

[tjo o tjim]

Another approach is to bring costs forward into this year, if you think you might want a buffer for next year.