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.
- ·
Revenue Department, Main Office
At: Phaya Thai Road, Military Bank Building, Bangkok 100400
Tel: 02 247 2748
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:
- 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).
- A personal allowance of Baht 30,000 for a non‑working spouse. (For fiscal 2017 onwards, this will increase to 60,000 baht.)
- 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).
- 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.
- 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.
- Mortgage interest, limited to actual interest paid, and not exceeding 100,000 per year and only in respect of residential property.
- 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.
- Social security fund contributions paid by the taxpayer or his/her spouse, in the amount actually paid by each person.
- Old age allowance (for a person aged 65 years or more) 190,000 Baht per person or spouse.
- 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.
- 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.th, Website www.bia.co.th Copyright ® Bangkok International
Associates 2017 All Rights Reserved