THAI

INCOME TAX

Both residents (people residing in Thailand for a period or periods aggregating more than 180 days per tax year) and non-residents are obligated to apply for a personal income tax ID.

Residents have to pay taxes on all the earnings derived from:

  • Advantages accomplished in Thailand(paid in or outside Thailand) in cash or in any other form.
  • Income from a foreign resource that is brought into Thailand within the year.

*Income generated by non-residents is only subject to the personal income tax if the advantages are received in Thailand.

The assessable income is classified into eight categories:

  • 1.  Earnings from wages and salary, including the benefits provided by an employer (e.g. income from stock options, personal income tax paid and absorbed by the employer, living allowances, monetary value of rent-free accommodation…), but excluding business travel expenses and medical treatment.
  • 2.  Earnings from services, hire of work or office of employment.
  • 3.  Revenue generated from royalties (goodwill, copyright, franchise, patents or other rights).
  • 4.  Income acquired from dividends, interests (e.g. on deposits with banks in Thailand), capital gains, bonuses for investors, acquisition or dissolution of companies or partnerships.
    However, this does not include the share of profits obtained from a non-juristic body of persons or from the sale of investment units in a mutual fund.

 

  • 5.  Income resulting from leasing out a property and breach of a hire-purchase agreement.
  • 6.  Income generated from liberal professions (e.g. law, medicine, engineering, accounting, architecture, and fine arts).
  • 7.  Benefits earned from construction and other contracts of work, whereby the contractor provides essential materials.
  • 8.  Income generated from the business, commerce, agriculture, industry, transport or any other activity not mentioned here above (carry-all clause).
    However, Insurance benefits, inheritances, and scholarships are not part of the assessable income, hence these are not subject to personal income tax.

*As specified in the fourth point, capital gains are taxable as ordinary income. As is the case in many countries, capital losses cannot be offset against the capital gains.

There are three exceptions to the taxability of the capital gains:

  • Capital gains on the sale of shares in a company getting listed on the Stock Exchange of Thailand.
  • Capital gains on the sale of non-interest bearing government bonds or debt instruments (although there are exceptions).
  • Capital gains on the sale of government bonds.

LEGAL ASSISTANCE FOR

DEDUCTIBLE EXPENSES AND ALLOWANCES

Several deductible expenses and allowances are available to lessen the personal income tax burden.

The following may be deducted from the assessable income:

  • 40% deduction for income as defined in (1), (2), and copyright income mentioned in (3). The maximum is 60,000 THB.
  • No deductions for the income mentioned under (3) – other than income from copyright – and (4).
  • 10 to 30% deduction for income under (5), depending on the type of property.
  • 30% deduction or the actual expense (if proof can be provided) for income under (6), with the exception of medical professions (60%).
  • 70% deduction or the actual expense (if proof can be provided) in case of income earned under (7).
  • 65-85% deduction or the actual expense (if proof can be provided) for other business activities.

Thailand tax law also foresees different allowances:

  • 30,000 THB for each the taxpayer and his/her spouse.
  • 15,000 THB for every individual child (with a maximum of 45,000 THB).
  • 2,000 THB educational allowance for each child.
  • 30,000 THB per parent (for 60+ years old and with a yearly income less than 30,000 THB).
  • 60,000 THB per disabled or incapacitated person whom the taxpayer takes care of.

Apart from these personal allowances, multiple specific allowances can be deducted:

  • Life insurance premiums (max. 100,000 THB).
  • Health insurance contributions paid for the taxpayer’s parents (max. 15,000 THB).
  • Qualified provident fund payments (max. 500,000 THB).
  • Interest on mortgages post purchasing of a residential building in Thailand is deductible up to an amount of 100,000 THB.
  • Contributions to a Long Term Equity Fund for up to 500,000 THB.
  • Charitable contributions, but not exceeding 10% of the taxable income.
  • Donations to educational institutions may be deducted for up to 200% (up to a maximum of 10% of the taxable income).

The personal income

TAX RATE

The personal income tax system is progressive:

Taxable Income (in THB) Tax Rate
0 – 150,000 (189,999 for 65+ years old individual) Exempted
150,001 – 300,000 5%
300,001 – 500,000 10%
500,001 – 750,000 15%
750,001 – 1,000,000 20%
1,000,001 – 2,000,000 25%
2,000,001 – 4,000,000 30%
4,000,001+ 35%

However, if assessable income amounts to more than 60,000 THB per year, the taxpayer has to multiply the assessable income with 0.5%. According to the progressive tax rate if the total amount is more than the payable amount, then that amount will remain due, else the amount resulting in a higher taxable base – will be applicable.

Legal Services For

WITHHOLDING TAX

For certain types of income, taxes have to be withheld at the source and submitted to the District Revenue Office. For the receiver of the income, the tax withheld will be credited against the tax liability at the end of the year.

There are different rates of withholding tax depending on the sort of income, for example:

Type of income Withholding tax
Income from employment 0-35%
Income from rent Resident: 5%  |  Non-resident: 15%*
Income from hire of work and professional fees Resident: 3%  |  Non-resident: 15%*
Public entertainment remuneration Residents: 5%  |  Non-residents: 0-35%*
Transportation 1%
Advertising fees 2%

*The exact percentage may vary depending on double tax agreement between Thailand and the foreign national’s country.

INCOME TAX

CONTRIBUTIONS

All companies employing more than ten employees are obliged to make a contribution to the Provident Fund. Compensation can be claimed from this fund in case of, amongst others, retirement or death during the employment. The compensation amounts to the total of the contributions made by the employee and employer, as well as the benefits accrued on it.

Each company and employee are also duty-bound to make contributions to the Social Security Fund. The contribution amounts to 5% of the total salary but does not exceed 750 THB. In many countries, this fund serves for example for those who are injured, sick, disabled, or on maternity leave. Child welfare and unemployment (50% of the salary for a maximum of 180 days) are paid out of this fund as well.

Companies employing more than ten employees also have to pay a contribution to the Workmen’s Compensation Fund, amounting to between 0.2% and 1% of the annual salary of the employee (depending on the assessed risks of the work). In case of injury, sickness, disablement or decease, the employee or the heirs will receive compensation (60% of the monthly salary) and reimbursement of certain costs out of this fund.

PERSONAL

INCOME TAX RETURN

The tax year for personal income tax simply follows the calendar year ending with December 31. As such tax filings and payments must be completed by March 31 of the following year (PND 90 or 91). Personal income tax filings may be done on paper or by electronic form. For income generated from hiring out a property, liberal professions and all other income that falls within the scope of point (8), the taxpayer needs to file a half-yearly tax return on September 30. These taxes may be set off at the end of the tax year as tax credits.

In case of an inaccurate return, a penalty of 100% may be imposed. The penalty for not filing a return amounts to 200%. These penalties may be reduced with 50% by the officer at the Revenue Department if he/she can prove that there was no intention to evade taxes.

Contrary to the personal income tax, the employer is responsible for the payment of the withholding tax, social security fund, and provident fund contributions. Social security contributions have to be paid within 15 days after the end of the months, and payments to the Provident Fund have to be done within 3 days post transfer of the salary (SPS 1-10). Withholding tax becomes due on the 7th day of the following month (PND 1).