Tax-Deductible Employee Welfare [2026]: What Counts? A Complete Summary

Are Employee Welfare Benefits Really Tax-Deductible? Key Criteria under Revenue Department Rules

Employee welfare benefits can genuinely be recorded as a 100% deductible business expense of a juristic person (company) under the Revenue Code. They are not treated as a non-deductible expense under Section 65 ter (13) of the Revenue Code (expenses that are not for the purpose of making profit or for the business specifically), provided that the benefit is intended to serve the business in managing its personnel, is set out in written rules, and is given to all employees according to the stated criteria without discrimination.

Under the practice of the Revenue Department, for welfare costs to count as a fully deductible expense for tax purposes, they must meet four key criteria:

• Clear written rules: A written employee welfare policy has been prepared, signed and approved by an authorised director, and openly announced in advance.
• General equality: The benefit is provided to all employees according to position level or type of work, not targeted only at directors or at one particular employee.
• Correct proof of payment: Receipts, tax invoices or other proof of payment must correctly and completely state the company's name, address and 13-digit tax identification number.
• A reasonable amount: In line with the size of the business and economic conditions, not unrealistically or abnormally high.

Why Businesses Need to Understand Employee Welfare before the End of the 2026 Tax Year

The last quarter before the close of the 2026 accounting period is an important time to check accounting net profit and plan taxes ahead. Many businesses find that their accounting profit is high, leaving them to pay corporate income tax at 20% (or the progressive rate of 15% for SMEs with paid-up capital of no more than 5 million baht and total revenue of no more than 30 million baht per year).

Converting part of the profit into an employee welfare budget under properly drafted rules is a highly effective tax management strategy. Besides reducing the net profit base on which corporate income tax is charged, it also increases motivation and helps retain staff. This matters especially for businesses in a tourist province, such as restaurants, cafes, hotels or service businesses in Chiang Mai that need to be ready for the high season. A well-structured welfare scheme also protects against the risk of a retrospective tax audit, which can carry a penalty of 1-2 times the tax and a surcharge of 1.5% per month on the tax due.

Popular Employee Benefits the Revenue Department Accepts, and the Personal Income Tax Conditions

For many types of welfare, not only can the company deduct the full amount as a tax expense, but the employee receiving the benefit is also exempt from including it in assessable income for personal income tax (P.N.D.91, personal income tax return) under Ministerial Regulation No. 126 (1966), as follows:

1. Medical Expenses and Annual Health Check-ups

Under Clause 2 (4) of Ministerial Regulation No. 126, medical expenses that an employer pays for an employee, or for the employee's spouse, parents or descendants who are dependants of the employee, for treatment within Thailand can be deducted as a company expense at the amount actually paid and are exempt from personal income tax for the employee. A receipt and a medical certificate from the healthcare facility must support the claim.

2. Employee Uniforms

Under Clause 2 (34) of Ministerial Regulation No. 126, the company can deduct 100% of the actual cost. The employee is exempt from personal income tax only on the value of uniforms received up to 2 sets per person per year and outerwear (such as a suit or jacket) up to 1 piece per year. The company must procure, have the uniforms made and pay for them against a receipt or tax invoice in the company's name. If cash is paid to employees to have the uniforms made themselves, the whole amount is treated as the employee's assessable income under Section 40(1) and must be included in their tax calculation.

3. Training and Seminar Costs for Skills Development (200% Deductible)

Under the Royal Decree issued under the Revenue Code (No. 437) of 2005, the company can deduct the cost of sending employees to external training or seminars with an accredited institution, or the cost of running in-house training, as a tax expense of up to 200% (twice the actual cost). The course must be certified by the Department of Skill Development or the Ministry of Labour, and this benefit is also exempt from personal income tax for the employee.

4. Group Life and Group Accident Insurance

Premiums for group life insurance, group accident insurance or group health insurance that the company takes out to cover all employees under company rules can be recorded as a business expense in full. Employees do not have to include the value of the premiums paid by the company in their personal income tax calculation, because it is a benefit that protects against work-related risk.

5. Lunch, Staff Parties and the Annual Company Outing

If these are provided to all employees under annual rules, such as a New Year party or team-building activity, the company can deduct 100% of the expense bills against corporate income tax, and employees do not have to include them in personal income. However, the value added tax (VAT) on entertainment costs or social activities is treated as non-creditable input tax: it cannot be refunded or offset against output tax, but the input tax can be included in full as a corporate income tax expense.

Comparison Table of the Tax Benefits of Each Type of Welfare

Worked Example: Saving Tax with Employee Welfare in a Real Business

Suppose a restaurant and cafe in the Nimmanhaemin area of Chiang Mai has 8 full-time employees and expects taxable net profit before welfare costs at the end of 2026 of 1,000,000 baht (meeting the SME criteria, taxed at 15% on the portion of profit above 300,000 up to 3,000,000 baht).

The owner allocates a year-end employee welfare budget under the company's rules as follows:

• Sending staff to barista skills and international-standard service training (certified course, 200% deductible): actual cost 30,000 baht → deductible as a tax expense of 60,000 baht
• Annual health check-ups for 8 employees at 1,500 baht each: 12,000 baht
• New uniforms for the tourist season for 8 employees at 2,000 baht each: 16,000 baht
• Group accident insurance premiums for 8 employees at 1,500 baht each: 12,000 baht
• Staff appreciation party and outing: 20,000 baht

Calculation summary and tax saving:

1. Total cash actually paid by the company = 30,000 + 12,000 + 16,000 + 12,000 + 20,000 = 90,000 baht
2. Total amount deductible as a tax expense = 60,000 + 12,000 + 16,000 + 12,000 + 20,000 = 120,000 baht
3. Taxable net profit falls from 1,000,000 baht to 880,000 baht
4. Corporate income tax liability is reduced immediately by (120,000 × 15%) = 18,000 baht

With this plan, the business pays a net of only 72,000 baht in cash (90,000 − 18,000) yet creates 90,000 baht of welfare value for its employees, while developing the team's skills and reducing its tax burden in a way that is 100% lawful.

How to Set Up an Employee Welfare System Correctly: Advice from Accounting Experts in Chiang Mai

Recording welfare costs as expenses to save tax safely requires a tight document control system that follows the Revenue Department's criteria. There are 4 practical steps to take:

1. Prepare Written Work Rules and Welfare Regulations

Prepare a written "Employee Welfare Policy Announcement" stating the types of welfare, entitlement limits, claim conditions and the documents that must be attached. Have an authorised director sign it with the company seal, and announce it so that all employees are aware of it.

2. Apply Equality and Do Not Discriminate

The welfare structure must be set fairly by position or length of service and must not be designed to favour directors or shareholders specifically. For example, if there is an annual health check-up, it must be provided to all employees at the same level, not as a special package bought for a single director only, which would immediately be assessed as additional income of that director.

3. Keep Complete Documents and Proof of Payment

Every claim must have a payment voucher with a full tax invoice or a receipt attached that correctly states the company's name, address and tax identification number, together with evidence of the transfer to the employee's or service provider's account.

4. Record Welfare in Clearly Separated Account Categories

The chart of accounts must separate expense types clearly under administrative expenses, for example "Employee welfare", "Training and seminars (200% deductible)" and "Employee health check-ups", so that the tax reconciliation in the P.N.D.50 (corporate income tax return) is accurate.

For business owners in the northern region who need precise documentation, using an expert accounting service in Chiang Mai helps you set up your tax structure with confidence and reduces accounting errors effectively, alongside a business tax planning service designed to fit the size of your business.

In addition, for businesses that manage a storefront and stock, using a POS program for shops (free with the monthly accounting service) makes it faster and easier to link income and expense control with the accounting system.

4 Common Mistakes that Turn Welfare into a Non-Deductible Expense

• No welfare rules in place: When a Revenue Department officer inspects the business, if there is no written company policy to confirm the benefits, all of the expenses are immediately added back as non-deductible under Section 65 ter (13).
• Welfare given only to directors: Claiming medical, fitness or travel expenses for directors only does not count as employee welfare. It is treated as a fringe benefit that must be included in the director's personal income tax calculation and is subject to withholding tax under Section 50 (1).
• Incomplete expense bills: Using cash bills or receipts without the company's name and 13-digit tax identification number makes the documents unreliable for tax purposes, so the expense cannot be recorded.
• Claiming a refund of input tax on parties and outings: VAT on staff parties or outing activities is non-creditable input tax under Section 82/5 (4). It must not be offset against output tax; instead, the full amount must be recorded as part of the cost.

Frequently Asked Questions about Tax-Deductible Employee Welfare

Can the company deduct daily staff lunches, and do employees have to pay tax on them?

The company can deduct 100% as a tax expense if company rules provide lunch to all employees equally and there is a correct tax invoice or receipt. Employees do not have to include the value of the meals in their personal income tax calculation. However, if a fixed daily cash allowance is paid for employees to buy their own food, that money is assessable income that the employee must include and pay tax on.

What is the Revenue Department's tax-exemption ceiling for employee uniforms?

Under Clause 2 (34) of Ministerial Regulation No. 126, the Revenue Department exempts from personal income tax the value of uniforms received by an employee up to 2 sets per person per year and outerwear up to 1 piece per year. The company must order the uniforms and pay against a receipt or tax invoice in the company's name. If the company pays cash to employees to have the uniforms made themselves, the whole amount is assessable income under Section 40(1) that the employee must include in their tax calculation, while the company can deduct the amount actually paid as a corporate expense.

Can input VAT on an out-of-town outing or New Year party be claimed back?

No. The input tax cannot be refunded or offset against output tax, because it is non-creditable input tax relating to entertainment or recreation under Section 82/5 (4) of the Revenue Code. However, the company can add the input tax to the expense and deduct the full amount for corporate income tax.

What conditions and documents are required for training costs to be 200% deductible?

The training course must relate to the company's line of business and develop employees' skills. For in-house training, approval of the course and its cost must be requested from the Department of Skill Development before the training takes place. Receipts, the attendance register, the training programme and the certification letter from the Department of Skill Development must be kept as supporting evidence when filing the P.N.D.50.

Summary: Providing Employee Welfare Correctly and Tax-Efficiently

Planning tax-deductible employee welfare in 2026 is one way of managing corporate tax that lets a business save money lawfully while strengthening employees' commitment to the organisation. The keys are issuing clear written rules, granting benefits equally, and collecting correct and complete accounting documents.

If you would like advice on setting up welfare documentation, year-end tax planning, or an accounting adviser, contact YMTD Accounting Partner in Chiang Mai at Tel: 081-542-3019 or LINE: @premwittawat. Our team is happy to give friendly advice and help your business grow securely.