Key takeaways
Tax reconciliation links accounting profit to taxable profit. Add-backs make the usable loss lower than the loss in the financial statements. PND 51 needs a supportable estimate, because if the estimated profit falls short by more than 25%, a surcharge of 20% of the underpaid tax applies.
What is tax reconciliation
Tax reconciliation is a working paper that links "accounting profit or loss" under TFRS or TFRS for NPAEs to "net taxable profit or loss" under the Revenue Code. The two figures are rarely equal, because accounting aims to reflect operating results, while tax has its own recognition conditions and evidence requirements. Some items are deductible in the accounts but not for tax, and some are not yet recognised in the accounts but are already income for tax.
Accounting profit + non-deductible expenses − exempt income ± timing differences − additional deductible expenses − usable accumulated losses = net taxable profit
Net taxable profit × 20% = CIT
Four groups that make the figures differ
1. Non-deductible expenses under Section 65 ter: add back
- Entertainment expenses above the cap, which is 0.3% of revenue or paid-up capital, whichever is higher, and not exceeding THB 10 million
- Personal expenses of executives or shareholders unrelated to the business
- Tax penalties and surcharges
- Expenditure where the recipient cannot be identified
- Donations above the cap of 2% of net profit, subject to conditions
2. Temporary differences
- Depreciation that the accounts write off faster than the maximum rate under the Royal Decree
- Provisions, such as warranty repair reserves, which tax allows as a deduction only when actually incurred
- Impairment losses that the accounts recognise earlier
3. Permanent differences
- Dividends received that qualify for exemption under Section 65 bis (10)
- Expenses that the law allows to be deducted at an enhanced amount, such as R&D or training, subject to conditions
4. Accumulated tax losses
Net losses can be carried forward against profit for up to 5 accounting periods under Section 65 ter (12); losses not used in time expire
Example: a hypothetical condominium developer
The company is under construction in 2025 with no transfers yet, so it has no sales revenue.
| Tax reconciliation for 2025 | THB million | Notes |
|---|---|---|
| Accounting loss | (200.00) | From the income statement |
| Add back: entertainment expenses above the cap | 2.50 | Sec. 65 ter (4) |
| Add back: commission with no identifiable recipient | 8.00 | Sec. 65 ter (18) |
| Add back: interest expense whose necessity cannot be substantiated | 3.20 | Assessed on the facts |
| Add back: penalties and tax surcharges | 1.50 | Sec. 65 ter (6) |
| Net tax loss | (184.80) | 15.20 lower than the accounting loss |
Cumulative effect on loss carry-forward
| Year | Accounting loss | Tax loss | Difference |
|---|---|---|---|
| 2023 | 30.00 | 25.00 | 5.00 |
| 2024 | 90.00 | 80.00 | 10.00 |
| 2025 | 200.00 | 184.80 | 15.20 |
| 2026F | 250.00 | 230.00 | 20.00 |
| 2027F | 350.00 | 320.00 | 30.00 |
| Total | 920.00 | 839.80 | 80.20 |
The maximum usable loss is THB 839.80 million, not THB 920 million. The difference of THB 80.20 million is equivalent to tax of THB 16.04 million at 20%, and the portion that expires will reduce the entitlement further. All figures are illustrative.
What is PND 51
PND 51 is the half-year corporate income tax return, filed within 2 months of the last day of the first 6 months; for a calendar-year accounting period, this means by the end of August. The company estimates net profit for the full year, calculates the tax and pays half. It can use withholding tax credits that have been deducted, as entitled. At year-end it files PND 50 within 150 days and deducts the tax already paid.
If the estimated net profit falls short of actual net profit by more than 25% without reasonable cause, a surcharge of 20% of the underpaid tax applies under Section 67 ter. Later supplementary filings must also be taken into account in this test. The Revenue Department issued Orders Tor.Por. 369/2026 and 370/2026, dated 2 Jul 2026, adjusting the framework for waiving or reducing penalties and surcharges. Check the latest wording, especially for surcharges on half-year tax.
PND 51 calculation example
Assume that in 2029 there are many transfers, and the finance team prepares an estimate as at Aug 2029:
| Estimated profit before accumulated losses | 1,000.00 |
| Accumulated losses not yet expired | (540.00) |
| Estimated net taxable profit | 460.00 |
| Full-year tax at 20% | 92.00 |
| PND 51: pay half, before WHT credits | 46.00 |
25% test: if actual net profit is THB 600 million, the threshold is 600 × 75% = THB 450 million. The estimate of THB 460 million is not below the threshold, so it is not treated as a shortfall of more than 25%.
If actual net profit is THB 620 million, the threshold is THB 465 million. The estimate of THB 460 million is below the threshold. Half-year tax on actual profit is THB 62 million, the underpaid tax is THB 16 million and the 20% surcharge is THB 3.2 million. The actual outcome depends on how reasonable cause is interpreted and on the amount of credits.
Checklist before filing PND 51
Add-back items
- Entertainment expenses are supported by evidence showing the recipient and purpose, and are within the cap
- Commission has full withholding tax: for domestic payments, according to the income type and recipient; for payments abroad, check the 15% rate and the DTA
- Consultancy fees are supported by a contract and evidence of delivery
- Executives' personal expenses are separated from the company's
- Depreciation on passenger cars above the THB 1 million cap is added back, under the conditions in force
Loss Carry-Forward
- Separate tax losses by the year incurred and confirm they are within 5 accounting periods
- Identify the portion expiring this year, e.g. a 2023 loss can be used up to the 2028 period
- Use the oldest losses first and do not skip years with profit
Revenue recognition
- Units transferred in the year have complete Land Department documents
- Deposits and down payments remain liabilities until revenue is recognised
- Eligible companies that choose a method under Tor.Por. 1/1985 item 3.7 apply the same method consistently
- Freebies and discounts are recorded and taxed correctly
Document
- Withholding tax certificates are complete for every item, including the 1% on transfer
- Tax invoices agree with the VAT report
- Figures in the financial statements agree with PND 50 and 51
Conclusion
Tax reconciliation is the tool that shows a business's true tax position. Preparing the schedule every year and reviewing it before filing PND 51 reduces the risk of retrospective assessment and makes cash planning more accurate.