Missed Your Annual Closing Deadline? Here’s What to Know

Introduction

All registered companies in Thailand are required to complete the annual closing of their accounts within 150 days of the end of their financial year. Most companies in Thailand elect to have their financial year end on December 31st, meaning the annual closing process must be completed by May 31st. 

Failure to complete the annual closing by this deadline can result in significant penalties being enforced against the company and its directors, including fines, loss of privileges and not being able to renew visas and work permits for foreign employees.

In this article, we will take a look at what happens if you fail to complete the annual closing process in time.

Requirements for the Annual Closing of the Company Accounts in Thailand

In Thailand, a company’s tax year typically runs from January 1st to December 31st. However, a company may choose a different financial year, as long as it does not exceed 12 months.

Thailand operates a self-assessment tax system, where companies are responsible for preparing and filing their tax returns by the required deadlines while paying any taxes due.

The annual Corporate Income Tax (CIT) in Thailand return (PND 50) must be filed within 150 days of the end of the accounting period.

What is the Process for the Annual Closing of a Company’s Accounts?

In order to complete the annual closing with full compliance, companies must complete the following process.

Please note, each step of the process has its own strict deadlines and compliance requirements, if you need assistance or would like to learn more, please feel free to contact our accounting experts for more information.

Prepare Financial Statements

Financial statements in Thailand are records that state the business activities and the financial performance of a company for the past year. 

The annual financial statements of a Thai company must include the following:

• Statement of financial position (balance sheet)
• Profit and Loss statement
• Statement of changes in equity 
• Cash flow statement

Annual Audit

As part of the accounting requirements in Thailand for a company, their financial statements for the previous fiscal year must be submitted to the Ministry of Commerce in Thailand. 

These financial statements must be audited by an independent auditor in order to verify the accuracy of the financial statements and to ensure compliance with financial reporting regulations. The audited statements must be submitted to the Ministry of Commerce within 150 days from the end of the financial year. 

Many companies in Thailand, the fiscal year concludes on December 31st, meaning the submission of the audited financial statements to the Ministry of Commerce must be made before the end of May.

Read more:

Do Thai Companies Need to Complete an Annual Audit?

Annual General Meeting (AGM)

All companies in Thailand are required to hold an AGM at least once per annum. The AGM must be held within 4 months of the end of the company’s financial year end.

During the AGM, the participants will be able to discuss key matters relating to the operation of the company, including reviewing and approving the audited financial statements.

Submit the Filing

Once the financial statements have been approved at the AGM, the final filing must be submitted to the Ministry of Commerce. This filing must be completed within 1 month of the AGM and the following documents must be submitted:

• Audited financial statement
• Balance sheet
• Company name
• Detail of directors
• List of shareholders
• Minutes of the annual meeting
• Profit and loss accounts
• Type of business

All documents must be prepared in Thai, however, the documents can be prepared in another language along with a Thai translation.

Read more here:

How to Complete the Annual Closing Process for Company Accounts

Can you Still Submit Your Annual Closing After the Deadline has Passed?

Yes, it is still possible to complete the annual closing process after the deadline. However, it is highly recommended to do so as soon as possible, as a delayed failure to comply will result in increased fines and penalties.

In such cases, completing the annual closing promptly is essential, as the penalties increase the longer the submission is delayed. It could also have a significant effect on the operation of your company as visa and work permit renewals may not be possible or if your company has received a BOI promotion, it may be at risk of losing its privileges.

If your company has missed the deadline for its annual filing, or you think you will miss the deadline, please feel free to contact our accounting team, for advice or assistance in completing the process as quickly as possible.

What are the Penalties for Failing to Properly Satisfy any of the Requirements for the Annual Closing?

Failing to complete any of the steps relating to the annual closing can result in significant penalties being imposed on both the company and its directors.

Failing to Hold an AGM

If a company does not hold their AGM and approve the audited financial statements within 4 months after the fiscal year end, both the company and the directors may be subject to a fine. The following penalties will apply:

• Company – a fine not exceeding THB 20,000
• Director(s) – a fine not exceeding THB 50,000

Failing to Submit the Audited Annual Financial Statements

Individuals or entities that do not comply with Thailand’s accounting regulations and do not submit their audited financial statements may face a penalty of up to 200,000 THB. Please note, the penalty is placed on both the company (up to 100,000 THB) and the directors (up to 100,000 THB).

Companies that fail to submit properly audited financial statements may also face additional checks from the Revenue Department, for example an audit being conducted or additional tax assessments being imposed.

The Revenue Code of Thailand states that if a company fails to prepare audited financial statements to support tax calculations and the submission of annual and half-year corporate income tax returns, the Revenue Department has the authority to assess income tax. This tax will be calculated at a rate of 5% based on either the company’s total gross income before expenses or its gross sales before expenses for the accounting period, whichever amount is greater.

Incorrect Filing

If a company’s half-year Corporate Income Tax return (PND 51) understates its taxable profits by more than 25% compared to its final annual CIT liability, a 20% penalty will be charged on the shortfall. Additional penalties include a 100% surcharge for incorrect filing and a 200% surcharge for failing to file the return altogether.

However, if the taxpayer submits a formal request to the tax officer, a penalty reduction of up to 50% is possible.

What Happens if you Miss the Deadline for the Annual Closing?

Business owners in Thailand should also be aware that financial penalties are not the only consequences they may face for failing to properly complete their annual closing.

Other potential risks a company or its directors may face include:

Risk of Being Delisted or Declared a Defunct Company

Failing to meet the annual compliance requirements as a company in Thailand can have serious legal and financial consequences for companies in Thailand. 

The Department of Business Development (DBD) actively monitors registered entities, and non-compliance can result in strict penalties, including financial fines or in the worst case scenario, removal from the Department of Business Developments business registry.

In 2024, the DBD announced the removal of over 11,500 businesses from the active business registry due to failure to submit financial statements or complete the liquidation process.

If a company fails to submit required financial statements for 3 consecutive years, it may be removed from the DBD registry. Once a company is deregistered, it loses its legal status and can no longer engage in any business transactions. 

Once a company has been deregistered, it is possible to apply for reinstatement through the courts within 10 years. However, the process is complex, requiring legal justifications, administrative procedures including court hearings, and significant costs.

Liability for Directors

A director who does not satisfy their duties or responsibilities will be liable for any subsequent consequences, such as dismissal, financial penalties, compensation to the company, shareholders or third party(s) for the loss.

For example, if a director fails to fulfill their duties related to the annual closing, both they and the company may be liable for penalties.

Some examples of directors duties which are a related to the annual closing includes:

• arranging the annual meeting of shareholders to approve the company’s audited financial statement within 4 months of the end of the fiscal year.
• filing the audited financial statement and supporting documents and related supporting documents within 1 month after the date of the shareholder meeting.

Additionally, if a director breaches their duties and commits a criminal offense, such as forging documents submitted as part of the annual closing, they will be subject to criminal penalties, provided the offense resulted from their actions or negligence.

Loss of BOI Status and Privileges

Preparing and submitting the annual closing is mandatory for all companies in Thailand. However, for BOI-promoted companies, non-compliance can significantly impact the business.

If a BOI-promoted company in Thailand fails to submit its annual return, they may face the following issues:

Suspension from BOI Online Platforms: The company may be suspended from accessing the BOI’s electronic systems, which are required for important tasks such as visa and work permit renewals.

Revocation of BOI Promotion Certificate: If the company fails to submit the annual report over an extended period of time, the BOI may decide to revoke the company’s BOI promotion certificate. This means the company will no longer be able to use the tax incentives and other benefits awarded to them under the BOI promotion.

Audits and Inspections: The BOI conducts regular audits and inspections to ensure compliance. If a company is found not to be meeting the conditions, it may receive an official warning, and if there are no valid explanations, the BOI may recommend revoking the promotion.

Unable to Extend Work Permits and Visa

Another consequence of failing to complete the annual account closing on time is the negative impact on a company’s ability to renew work permits for foreign employees in Thailand.

When applying for a Non-Immigrant B visa and a Work Permit, the hiring company must include a copy of its completed and filed annual returns. 

If the company cannot provide these documents, then the application is likely to be rejected and the foreign employee will not be able to obtain or renew their visa and/or work permit.

This is applicable to both visas and work permits, for regular Thai Limited Companies and BOI promoted companies.

Disclaimer

This information is provided for general informational purposes only and is not legal, tax, or financial advice.