Penalties, fines, and surcharges imposed by government authorities (e.g., traffic fines, tax penalties, customs fines) are monetary punishments for non-compliance with laws and regulations.

From a Corporate Income Tax (CIT) perspective in Thailand, these payments are explicitly non-deductible expenses. Allowing their deduction would undermine the punitive nature of the penalties.

General Criteria CIT Deductibility

• Absolutely NOT deductible for Corporate Income Tax.
• This non-deductibility applies regardless of the type of law under which the penalty is imposed.
• This rule applies to both fines and surcharges.
• Penalties are generally considered to be expenses not exclusively incurred for the purpose of acquiring profits or for the purpose of the taxpayer’s business in the ordinary course.

Documentation Needed For CIT Deduction

• No documentation makes these expenses tax deductible.
• Companies should keep records of penalty notices and proof of payment for internal accounting and compliance purposes, but they will be “added back” for tax calculation.

References

• Thai Revenue Code, Section 65 ter (6)
• Thai Revenue Code, Section 65 ter (13)
• Board of Taxation Ruling No. 40/2560