Income Tax

Information on Thai taxes: general taxation on income, how it's calculated, when to pay tax, what exemptions there are and more...

All individuals, whether foreign or Thai, who work in Thailand or have taxable income must apply for a taxpayer's identification number which is issued by the Revenue Department on presentation of a Thai identification card or foreign passport and evidence of the need for registration.

  • ·      Sole proprietors and ordinary partnerships pay taxes at rates of 10 to 35 percent on their net profits
  • ·      Limited partnerships, registered ordinary partnerships and limited companies pay corporate income tax at the general rate of 20 percent of their net profits.
  • ·      There are lower tax rates for SME companies and juristic partnerships, meaning in this case, an entity with not more than 5 million Baht paid up capital. 
  • ·      Special rates apply to companies listed on the Securities Exchange of Thailand or the Market for Alternative Investment (MAI)
  • ·      For a complete listing of all taxable entities in Thailand including personal, business, VAT and property taxes, see the Revenue Department website. The site also has details of withholding percentages, timeframes, and regulations regarding each entity

 

Note that the Revenue Department may not immediately update its website information to show changes to tax rates, allowances or reliefs.

The main tax office is in Bangkok, but there are Revenue Department office branches throughout Thailand. The Main Office also has English-speaking personnel who can help with filing taxes, general information or to locate a branch.

Note: living in Thailand does not necessarily exempt a person from filing tax returns and paying taxes in their home country. Although a person may be exempt from paying taxes if they earn less than their government's tax thresholds, filing a return helps to avoid any problems in the future. The relevant taxation authority will have the appropriate forms and regulations for its country's taxes.

 

Resident Versus non-Resident

Taxpayers are classified into resident and non-resident. Resident means a person who resides in Thailand for a period or periods aggregating 180 days or more in any tax (i.e., the calendar) year.

Any taxpayer, whether or not Thai tax-resident, is liable to pay tax on income from sources in Thailand on a cash basis, regardless of where the money is actually paid.

A Thai tax-resident is also be subject to tax on income from sources overseas, if that income is brought into Thailand. In contrast, a tax non-resident will not be subject to tax on income sourced from overseas.    

 

Assessable Income

Income liable to personal income tax is called “assessable income”. The term covers income both in cash and in kind. Therefore, any benefits provided by an employer or other persons, such as a rent-free house or the amount of tax paid by the employer on behalf of the employee, is also treated as assessable income of the employee for income tax purposes.

 

Assessable income is divided into eight categories as follows:

  • ·      Income from employment with an employer
  • ·      Income by virtue of positions or services rendered
  • ·      Income from goodwill, copyright, franchise, other rights, annuity or income in the nature of annual payments derived from a will or any other juristic Act or judgment of the Court;
  • ·      Income in the nature of dividends, interest on deposits with banks in Thailand, shares of profits or other benefits from a juristic company, juristic partnership, or mutual fund, interest on loans or debt instruments, payments received as a result of the reduction of capital, a bonus, an increased capital holdings, gains from amalgamation, acquisition or dissolution of juristic companies or partnerships, and gains from transferring of shares or partnership holdings
  • ·      Income from letting out of property on hire and from breaches of installment sale or hire-purchase agreements
  • ·      Income from the liberal professions
  • ·      Income from construction and other contracts of work
  • ·      Income from business, commerce, agriculture, industry, transport or any other activity not specified earlier.

 

Deductions and Allowances

The calculation of taxable income is as follows: Assessable income, minus deductions, minus allowances.

 

The types of deductions for personal income include:

Nature of income

Permitted deduction

(a) Income from employment

40% up to a maximum of 60,000 Baht

(NB In April 2016 the Cabinet approved an increase to 50% subject to a maximum of 100,000 Baht for fiscal 2017 onwards)

(b) Income received from copyright

40%, but not exceeding 60,000 Baht

(NB In April 2016 the Cabinet approved an increase to 50% subject to a maximum of 100,000 Baht for fiscal 2017 onwards)

(c)Income from letting out of property or breach of hire-purchase contract or installments sale contract 

 

10-30% depending on nature of property

(d) Income from liberal professions

30%, except for medical profession - 60% is allowed

(e) Income derived from contract of work whereby the contractor provides essential materials besides tools

actual expenditure or 70%

(f) Income derived from business, commerce, agriculture, industry, transport, or any other activities not specified earlier

actual expenditure or 40-85% depending on type of income

A taxpayer may elect to itemize his/her expenditure in lieu of claiming the standard deduction.

 

Personal allowances In addition to the standard or itemised deductions, the taxpayer is entitled to deduct from gross income the following annual personal allowances:

  1. A personal allowance of Baht 30,000. (For fiscal 2017 onwards, the personal allowance will increase to 60,000 baht, and where the taxpayer and spouse both earn taxable income, the maximum deduction for both will be 120,000 baht).  
  2. A personal allowance of Baht 30,000 for a non‑working spouse. (For fiscal 2017 onwards, this will increase to 60,000 baht.)
  3. Baht 15,000 for each child aged under 20, or under 24 and not working. There is an additional 2,000 Baht per year for a child who is studying in Thailand. For children born on or after 1980, the allowances are only claimable for a maximum of three children. (For fiscal 2017 onwards, the child allowance will be increased to 30,000 baht per child without limit in the number of children, but the educational allowance will be abolished).
  4. Life assurance premiums paid by the taxpayer or his spouse, in the amount actually paid but not exceeding 100,000 Baht for each spouse, and only in respect of policies issued by a Thai insurance company.
  5. Approved provident fund contributions, limited to the amount actually paid up to a maximum allowance of 500,000 Baht may be claimed, but the allowance claimed must not exceed 15% of income.
  6. Mortgage interest, limited to actual interest paid, and not exceeding 100,000 per year and only in respect of residential property.  
  7. Approved equity funds, limited to the amount actually paid up to a maximum allowance of 700,000 Baht may be claimed, but the allowance claimed must not exceed 15% of income. 
  8. Social security fund contributions paid by the taxpayer or his/her spouse, in the amount actually paid by each person. 
  9. Old age allowance (for a person aged 65 years or more) 190,000 Baht per person or spouse.
  10. An allowance for the support of an elderly parent may be claimed, by a taxpayer in respect of his parents or parents in law. Only one taxpayer child may claim such allowance. The parent must be aged 60 years or more and must have income not exceeding 30,000 Baht per year. The taxpayer may also claim an allowance for the parents of his/her spouse (i.e. his/her in laws). The allowance is 30,000 Baht for each parent or parent in law. A foreign Thai tax payer is eligible to claim such allowance in respect of parents or parents in law who fulfil the requirements above and are (a) Thai or (b) non-Thai but are resident in Thailand. 
  11. Payments to charities, in the amount actually donated but not exceeding 10% of income after standard deductions and the above allowances 


Separate returns for spouses The rules regarding tax returns and tax liability for husbands and wives were revised in December 2012. The position is that husbands and wives can deal with their tax returns in one of the following ways:

(a)    The taxpayer and the spouse can file a tax return jointly as before. Either spouse may also choose to file a return for his or her employment income separately, or

 

(b)    The taxpayer and the spouse can file separate tax returns for all categories of income received, and pay personal income tax separately.

(c)    Where income cannot be clearly identified as that of the taxpayer or the spouse, the following rules shall apply:


  •  For all income, except income from employment, and income from business, commerce, agriculture, industry, transport or any other activity not otherwise specified; the taxpayer and spouse must divide the income received equally. 
  • For income from business, commerce, agriculture, industry, transport or any other activity not otherwise specified, in general, the taxpayer and spouse must divide the income received equally. But the parties may agree the portion of income earned and pay income tax on that amount accordingly.
  • There are additional rules for deductible expenditure and allowances    

Tax credit for dividends

The withholding tax for an individual taxpayer on dividends or a share of profits is 10%. An individual who has domicile or is residing in Thailand and receives dividends from any company organised under the laws of Thailand (whether a listed, public or private company) is subject to personal income tax withheld at source at 10%, and also is entitled to claim a tax credit on the dividend depending on the corporate tax rate on the net profit of that Thai company from which that dividend is paid.

 

Tax Rates for Personal Income

Income

Taxable Income

Tax Rate

Tax Payable (Baht)

Cumulative Tax (Baht)

0 – 150,000

Nil

Nil

Nil

Nil

150,001– 300,000

150,000

5%

7,500

7,500

300,001- 500,000

200,000

10%

20,000

27,500

500,001- 750,000

250,000

15%

37,500

65,000

750,001-1,000,000

250,000

20%

50,000

115,000

1,000,001- 2,000,000

1,000,000

25%

250,000

365,000

2,000,001 – 4,000,000

2,000,000

30%

600,000

965,000

4,000,001 or more

Variable

35%

Variable

Variable

·      For more details see the Revenue Department

 

Procedures for Filing Personal Income Tax

An individual can file their own tax return, returns may be filed in Thai or English using the official form. A company can file its own tax return but this must include the balance sheet which must be drafted by an accountant and be in Thai.

 

Tax Identification Number (Form L.P. 10.1)

Every taxpayer, resident and non-resident, in Thailand must have a Thai Tax Identification Number (TIN) issued by the Revenue Department. This must be applied for within sixty days of receiving assessable income. If the person uses a personal identification number (PIN) issued in accordance with civilian registration law, a TIN is not needed.

·      For further information from the Revenue Department

 

To apply for a new TIN at any area revenue office, provide a photocopy of:

  • Passport
  • House Registration Document, if applicable
  • Court order appointing estate administrator, if applicable 

Tax Calendar and Deadline to Apply

The tax calendar for Thailand begins 1 January and ends 31 December. All taxpayers must file their taxes no later than 31 March for the previous tax year; for example, to file taxes from 2017, the deadline is March 31 2018. Payment must be made in full on or before the 31 March deadline. A penalty is chargeable for late payment.

If income is derived from property on hire, liberal professions, contract work or business and income was received during the first six months of the year, the taxpayer must file a half-yearly return (Form PIT 94). The deadline for filing and payment is 30 September of that taxable year. Any half-yearly tax paid will be credited against tax liability on 31 December.

 

Charitable Donations

Donations made to government organisations or foundations or charities, prescribed by the Ministry of Finance

·      Natural persons who donate money may claim an allowance for the amount donated. The amount donated when added to other donations must not exceed 10 percent of net assessable income.

·      Companies or juristic partnerships who donate money or assets may claim a deductible expense for the amount donated. The amount donated when added to other donations for public charity or public benefit, must not exceed 2 percent of net profit.

·      For those who are registered for VAT, who donate assets or goods, the value of donated goods or assets is excluded from the tax base for VAT purposes.

Donations made via a third party, e.g. a TV or radio station

·      Natural persons who donate money to flood victims via a company or juristic person as an agent may claim an allowance for the amount donated. The agent must be registered for tax purposes and must distribute donated money to flood victims. The amount donated when added to other donations must not exceed 10 percent of net assessable income.

·      Companies or juristic partnerships who donate money or assets to flood victims through a company or juristic partnership as agent, may claim a deductible expense for the amount donated. The agent must be registered for tax purposes and must distribute donated money to flood victims. The amount donated when added to other donations for public charity or public benefit, must not exceed 2 percent of net profit.

·      For those who are registered for VAT who donate goods through a company or juristic partnership as agent, exemption from VAT is granted.

Donations to certain educational institutions approved by the Ministry of Education to support education, e.g. construction of school buildings, providing supplies, equipment, books, professional fees and scholarships. Such donations may be claimed as an allowance or expense as follows:

·      Individuals may claim an allowance for double the money donated provided the allowance may not exceed 10 percent of net assessable income.

·      Companies or juristic partnerships may claim a deductible expense for double the money or assets donated, provided the deduction may not exceed 10 percent of net profit before deducting any donations for public charity, public benefit, sport or education.

·       

Further Information

For further information on income tax in Thailand, see chapter 12 of the BIA Legal Guide

 

Disclaimer

Any statements concerning taxation are based upon our understanding of current taxation laws and practices in Thailand which are subject to change. While every effort has been made to offer information that is current, correct and clearly expressed the publisher is not responsible for the results of actions taken on the basis of information contained in this summary, nor for any errors or omissions. Readers are encouraged to seek professional advice concerning specific matters before making any decision.

 

Prepared by: Stephen Frost, Director, Bangkok International Associates 17th Floor ITF Tower, 140/36-37 Silom Road, Bangkok 10500, Thailand Tel: 02 231 6201-3, Fax: 02 231 6204, e-mail sfrost@bia.co.thWebsite www.bia.co.th Copyright ® Bangkok International Associates 2017 All Rights Reserved