Construction accounting is more complex than in most trades: income arrives in stages, costs are spread across several projects, and subcontractors bring withholding tax and VAT into almost every payment. This guide covers the main accounting principles and the Thai taxes a construction contractor needs to handle.
Key accounting principles for contractors
1. Revenue recognition in construction
Under Thai accounting standards for non-listed companies (TFRS for NPAEs), a contractor generally chooses between two approaches to recognising contract revenue. Whichever you choose, apply it consistently. For corporate income tax, net profit is calculated on an accrual basis (Revenue Code, Section 65).
- Percentage-of-completion method
- Revenue is recognised as the work progresses
- Suits long-term projects
- Requires accurate cost estimates
- Completed-contract method
- Revenue is recognised when construction is complete
- Suits short-term projects
- Simpler bookkeeping
2. Recording construction costs
Track costs project by project. They usually fall into two groups:
- Direct costs
- Construction materials
- Direct labour
- Subcontractors
- Indirect costs
- Machinery depreciation (rates are set by Royal Decree No. 145 (B.E. 2527); machinery and equipment are generally 20% a year)
- Insurance
- Site supervision
Only expenses that meet the Revenue Code’s rules are deductible. Some items are expressly non-deductible, such as capital expenditure, fines and surcharges, and expenses with no identifiable payee (Revenue Code, Section 65 bis and Section 65 ter).
If you need help setting up project-based accounts, see our bookkeeping service.
Taxes relevant to contractors
1. Value Added Tax (VAT)
- Rate: the law sets VAT at 10%, but it has been reduced to 7% by Royal Decree (Revenue Code, Section 80 and Royal Decree (No. 807)), currently extended until 30 September 2027. The reduction is renewed periodically, so confirm the current rate before you quote.
- Registration: you must register once annual turnover exceeds 1.8 million THB, within 30 days of exceeding it (Revenue Code, Section 81/1 and Section 85/1).
- When VAT falls due on your services: generally when you receive payment (for example, a progress instalment). If you issue a tax invoice, or the client starts using the service, before payment, VAT is due at that earlier time (Revenue Code, Section 78/1). Your tax invoice must contain the required details (Revenue Code, Section 86 and Section 86/4).
- Input VAT: you can generally claim VAT on materials and subcontractor fees if you hold a valid tax invoice. Some input VAT cannot be claimed, such as VAT on passenger cars, entertainment, or on invalid tax invoices (Revenue Code, Section 82/5).
- Returns: file the monthly PP.30 by the 15th of the following month (Revenue Code, Section 83). If you file electronically you get 8 extra days, currently extended until 31 January 2027 (Ministry of Finance notification).
“tax liability for provision of services […] shall take place at the time of receiving payment of services performed, except in the case where the following events take place before receiving the payment […] (a) issuance of tax invoice; or (b) use of services”
Revenue Code, Section 78/1(1) — Revenue Department unofficial English translation
2. Withholding tax
Withholding tax rates on payments for services and hire of work are set by Departmental Order Tor.Por. 4/2528. The payer deducts the tax and pays it to the Revenue Department; the payee uses the withholding certificate as a credit against its own tax.
- When you receive payment
- Your client may withhold 3% from contract payments for hire of work
- Your client may withhold 1% from transport fees
- When you make payments
- Withhold 3% from subcontractor payments for hire of work
- Withhold 2% from advertising fees
- Withhold 1% from transport fees
Withholding is filed on PND.3 (payee is an individual) or PND.53 (payee is a company) by the 7th of the following month; e-filing gets 8 extra days, currently extended until 31 January 2027 (Ministry of Finance notification). Legal basis: Revenue Code, Section 50 for the withholding obligation and Section 3 terdecim with Departmental Order Tor.Por. 4/2528 for payments of services.
3. Corporate income tax
- Standard rate: 20% of net profit (Revenue Code, Section 67).
- SME rates: a company with paid-up capital of 5 million THB or less and revenue of 30 million THB or less pays 0% on the first 300,000 THB of profit, 15% on 300,001 to 3,000,000 THB, and 20% above that (Royal Decree No. 530 (B.E. 2554), as amended).
- Net profit: construction revenue, less construction costs, less operating expenses (Revenue Code, Section 65).
- Half-year return PND.51: within two months after the first six months of the accounting period (Revenue Code, Section 67 bis). If your estimate is more than 25% below the actual half-year profit, a 20% surcharge applies to the shortfall (Revenue Code, Section 67 ter).
- Annual return PND.50: within 150 days after the accounting period ends (Revenue Code, Section 68 and Section 69); e-filing gets 8 extra days, currently extended until 31 January 2027 (Ministry of Finance notification).
Limited companies must also have their financial statements audited by a Thai CPA and approved at the shareholders’ meeting within four months of year-end (Civil and Commercial Code, Sections 1196 and 1197). See our audit service.
4. Stamp duty on construction contracts
Hire-of-work contracts attract stamp duty of 1 THB per 1,000 THB of contract value (Revenue Code, Stamp Duty Schedule, item 4).
Key documents to keep
The Accounting Act B.E. 2543 (2000) requires you to keep accounts (Sections 8 and 9), close them (Section 10), prepare and file financial statements (Section 11), keep supporting documents (Section 12), and keep books and documents for five years from the closing date (Section 14).
- Revenue documents
- Construction contracts
- Invoices and tax invoices
- Handover certificates
- Payment receipts
- Cost documents
- Material purchase orders
- Goods received notes
- Payment vouchers
- Subcontract agreements
Accounting pitfalls to avoid
- Separate costs clearly by project
- Record revenue in the correct accounting period
- Keep complete documentation, especially valid tax invoices, or you lose the input VAT claim (Revenue Code, Section 82/5)
- Calculate tax correctly, including withholding on subcontractors
- Track receivables and pay suppliers on time
Effective tax planning
Effective accounting and tax planning are at the heart of a successful construction business. Planning your tax within the law helps you minimise tax and reduce audit risk. See our tax planning service, or ask us any question about accounting and tax for your construction business.
FAQ
Do I have to register for VAT as a contractor?
Yes, once your annual turnover exceeds 1.8 million THB. You must register within 30 days of exceeding the threshold (Revenue Code, Section 81/1 and Section 85/1).
When do I have to issue a tax invoice for a progress payment?
VAT on services is generally due when you receive payment. It is due earlier if you issue a tax invoice, or the client uses the service, before payment (Revenue Code, Section 78/1). Issue the tax invoice in line with the payment schedule in your contract.
What withholding tax applies to subcontractors?
Generally 3% on hire-of-work and service payments, under Departmental Order Tor.Por. 4/2528. You file it by the 7th of the following month on PND.3 or PND.53.
What corporate income tax rate will my construction company pay?
The standard rate is 20% of net profit (Revenue Code, Section 67). Small companies with paid-up capital of 5 million THB or less and revenue of 30 million THB or less may qualify for reduced rates under Royal Decree No. 530 (B.E. 2554).
Legal references
- Revenue Code, Sections 3 terdecim, 50, 65, 65 bis, 65 ter, 67, 67 bis, 67 ter, 68 and 69: personal and corporate income tax, deductible and non-deductible expenses, withholding, half-year and annual returns
- Revenue Code, Sections 78/1, 80, 81/1, 82/5, 83, 85/1, 86 and 86/4: VAT rate, registration, tax point, input VAT, returns and tax invoices
- Revenue Code, Stamp Duty Schedule, item 4: stamp duty on hire-of-work contracts
- Royal Decree (No. 807): reduced VAT rate of 7%
- Royal Decree No. 530 (B.E. 2554), as amended: reduced corporate income tax rates for SMEs
- Royal Decree No. 145 (B.E. 2527): depreciation rates
- Departmental Order Tor.Por. 4/2528: withholding tax rates on service payments
- Accounting Act B.E. 2543 (2000), Sections 8, 9, 10, 11, 12 and 14: bookkeeping, closing accounts, financial statements, supporting documents and record retention
- Civil and Commercial Code, Sections 1196 and 1197: audit and approval of company accounts
- www.rd.go.th
Official sources (Thai government websites, mostly in Thai)
- Royal Decree No. 807 (B.E. 2569) – VAT 7% extended to 30 September 2027 (Royal Gazette, 23 Aug 2026)
- Ministry of Finance Notification on extending e-filing deadlines by 8 days (No. 7, as amended) – filings due up to 31 January 2027
- Departmental Order Tor.Por. 4/2528 – withholding tax rates (e.g. hire of work 3%, advertising 2%, rent 5%, transport 1%)
- Royal Decree No. 530 (B.E. 2554) – SME corporate income tax rates
- Revenue Department CIT guide for SMEs (paid-up capital ≤ 5M, income ≤ 30M THB)
- Revenue Department stamp duty schedule – item 4 hire of work, 1 THB per 1,000 THB
- Accounting Act B.E. 2543 (Department of Business Development)
- All documents above are published on the Revenue Department of Thailand website (search by document name or number).
Need help? Talk to an English-speaking accountant — call +66 96 969 8592 or message us on LINE.
This article is general information as of September 2026, not tax advice. Thai-language law prevails.
