Personal Income Tax on Foreign-Sourced Income in Thailand

 

Is foreign-sourced income getting credited to your Thai bank Account? Then you need to check whether it is taxable or not. Effective January 1, 2024, the Revenue Department of Thailand has implemented substantial revisions to the taxation of income derived abroad and imported into the country. These tax adjustments hold noteworthy consequences for individuals residing in Thailand. Read this article as it will help you reassess your tax on foreign income in Thailand.

Declaration of Foreign-sourced Income for Taxation

The Revenue Department’s recent directive, Notification 161/2566, specifically targets individual taxpayers who spend at least 180 days in Thailand during a calendar year (tax year). If you meet this criterion and bring foreign income into Thailand, you must declare it for taxation purposes. Whether the foreign income was earned in the same tax year or a different one, it’s considered income subject to taxation when brought into the country.

This new criterion replaces the previous directive, No. 0802/696, on May 1, 1987, which exempted foreign income brought into Thailand from being re-declared.

Sources of Income that will be "Taxable"

As per the newly implemented taxation regulation, income generated from sources outside Thailand is subject to taxation. This includes earnings from duties performed overseas, businesses operating abroad, or assets held outside the country.

Specific examples of such income sources include wages earned from work performed in foreign countries, profits obtained from the sale of assets overseas, dividends received from foreign stocks, interest earned from foreign sources, and royalties originating from abroad.

Order of Revenue Department of Thailand

On November 20, 2023, the Thai Tax Authority clarified the provisions of Revenue Department Order No. 161/2566.  Specifically, Revenue Department Order No. 162/2566 states that the changes made by Order 161/2566 do not apply to income received before January 1, 2024. In other words, the pre-existing rules continue to apply to income earned before this date.

Effective from January 1, 2024, this order governs foreign-source income assessment at the domicile of the income earner. The change applies starting from the 2024 tax year onwards. The previous principle continues to apply to income earned from foreign sources before the 2024 tax year. According to the Revenue Code, such income must be repatriated to Thailand in the same tax year it is earned. Furthermore, individuals are not liable for personal income tax on this income.

From January 1, 2024, individuals will be liable to pay tax on income earned before 2024. They should be able to demonstrate that it was transferred to Thailand after the effective date. This modification results from a new clarification regarding the taxation of foreign income.

Relief for Tax Treaties

The significance of tax treaties established between Thailand and other nations must be considered. These treaties may provide exemptions or reduced tax rates applicable to foreign income. Businesses and individuals should thoroughly examine the relevance of such treaties within the context of their unique circumstances.

Key Considerations for Foreign Businesses

In light of the newly implemented tax regulations, businesses need to take into account the following critical considerations:

• Increased compliance burden: To comply with tax regulations, businesses must maintain accurate records and prepare thorough tax reports for employees earning income overseas upon their transfer to Thailand.
• Tax implications for expats: Individuals living in Thailand for over 180 days must take notice of this recently enacted regulation and incorporate it into their financial plans accordingly.
• Review global mobility programs: In light of the recent changes in Thailand’s tax laws regarding foreign income, companies with global mobility programs that include tax equalization for assignees should consider revising their policies accordingly.

The Bottom line

Thailand’s new taxation criteria for foreign-sourced income bring about a significant change for individuals residing in the country for more than 180 days a year. Previously exempt, foreign income brought into Thailand is now subject to taxation regardless of the timing of its acquisition. This development necessitates diligent tax planning and meticulous bookkeeping for foreign individuals and businesses in Thailand.

This change may impose additional compliance burdens. However, it is crucial to consider that tax treaties with other countries may offer exemptions or reduced tax rates. It is advisable for businesses with employees earning income abroad and for expatriates living in Thailand to explore these possibilities to mitigate their tax liabilities. Companies with global mobility programs may also need to review and adjust their policies in light of the new tax treatment.
To assess and pay tax on your foreign income in Thailand, seek guidance from a qualified Thai tax advisor. Please email us at officer@konradlegal.com to connect with our team of qualified Thai Corporate and Personal Tax Accountants in Thailand.

Business Tax for Foreigners in Thailand

 

Venturing into a foreign market like Thailand presents lucrative avenues for business growth, but it also entails the responsibility of understanding and adhering to local tax regulations. For foreign businesses operating in Thailand, accurate tax filing is crucial to ensure compliance with the law and avert potential penalties. Therefore, tax registration is very crucial for global investors and expats in Thailand to start a business in Thailand.

Here’s a comprehensive guide to help foreign businesses understand their tax obligations in Thailand!

Tax Registration

Foreign businesses operating in Thailand are required to register for taxation purposes. This involves obtaining a Taxpayer Identification Number (TIN) from the Revenue Department. This is a mandatory process for all types of business in Thailand. However, Representative Offices need not apply for this registration process as they cannot perform any commercial activity. The registration process may vary depending on the type of business entity and the nature of its activities in Thailand.

Corporate Income Tax (CIT)

Foreign businesses that generate income in Thailand are subject to Corporate Income Tax. The standard corporate tax rate in Thailand is 20%. However, certain types of businesses may qualify for reduced rates or incentives under various investment promotion schemes. Check if you want to register for corporate income tax in Thailand.

Value Added Tax (VAT)

Businesses selling goods or services in Thailand may have to register for Value Added Tax (VAT) purposes. The current VAT rate in Thailand is 7%. Furthermore, businesses must file periodic VAT returns and remit the tax collected to the Revenue Department.

Withholding Tax

Foreign businesses that derive income from Thailand, such as dividends, interest, royalties, or service fees, may be subject to withholding tax. The withholding tax rates vary depending on the type of income and whether there is an applicable tax treaty between Thailand and the foreign business’s home country. Check to know all about withholding taxes in Thailand.

Transfer Pricing

Compliance with transfer pricing regulations is crucial for foreign businesses with related-party transactions. Thailand follows the arm’s length principle from the Organisation for Economic Co-operation and Development (OECD), requiring transactions between related parties to be conducted at fair market value to prevent tax avoidance.

Annual Financial Statements

Foreign businesses operating in Thailand typically need to prepare and submit annual financial statements by Thai accounting standards. These financial statements must be audited by a licensed auditor and submitted to the Revenue Department along with the tax return.

Tax Filing Deadlines

Foreign businesses need to be aware of the tax filing deadlines in Thailand to avoid late filing penalties. The deadline for filing Corporate Income Tax returns is typically within 150 days from the end of the accounting period. However, there may be extensions under certain circumstances.

Tax Treaties

Thailand has entered into double taxation agreements (DTAs) with numerous countries to prevent double taxation and promote cross-border trade and investment. Foreign businesses should review the provisions of the relevant tax treaty to determine their entitlement to tax benefits and exemptions.

Tax Compliance Services

Given the complexity of Thailand’s tax regulations, many foreign businesses opt to engage the services of tax advisors or professional accounting firms with expertise in Thai tax law. These professionals can guide tax planning, compliance, and dispute resolution.

Penalties for Non-Compliance

Failure to comply with Thailand’s tax filing mandates can result in penalties, fines, and even criminal prosecution. Foreign businesses should prioritize tax compliance to avoid legal and financial repercussions.

In conclusion, foreign businesses operating in Thailand must familiarize themselves with the country’s tax filing mandates to ensure compliance and avoid potential pitfalls. 

By understanding their tax obligations and seeking professional advice when necessary, foreign businesses can navigate the complexities of Thailand’s tax system successfully and focus on achieving their business objectives in the vibrant Southeast Asian market. For complete support on any of these mentioned fields, email us at officer@konradlegal.com.

As a leading tax firm in Thailand, we will be happy to help you with all types of tax registration, accounts audit, and tax filing processes.

Outsourcing Accounting Services in Thailand

 

Outsourced Accounting Services in Thailand can not only help businesses here save time and effort, but can also protect them from heavy penalties. As a leading accounting and tax service provider in Thailand, we have witnessed many businesses run aground due to their lack of knowledge and experience in Thai Accounting & tax standards, specifically, foreign businesses.

In Thailand, outsourcing accounting, audit, and tax services is a common practice for businesses looking to streamline their operations and ensure compliance with local regulations. Here are some key points to consider when outsourcing these services in Thailand:

Accounting Outsourcing in Thailand

• Bookkeeping: Outsourcing bookkeeping services in Thailand can help businesses maintain accurate financial records, manage accounts payable and receivable, and ensure compliance with accounting standards.
• Financial Reporting: Outsourced accounting firms in Thailand can assist in preparing financial statements and reports, providing valuable insights for decision-making.
• Payroll Processing: Outsourcing payroll services in Thailand will help ensure timely and accurate payment of salaries, tax withholding, and compliance with labor laws.

Audit Outsourcing in Thailand

• Internal Audit: Some companies outsource internal audit functions to ensure independent and objective evaluations of internal controls and processes.
• External Audit: Businesses may engage external audit firms to conduct statutory audits for compliance with regulatory requirements and international accounting standards.

Tax Outsourcing in Thailand

• Tax Compliance: Outsourcing tax services helps businesses stay compliant with Thai tax laws, including filing returns, meeting deadlines, and managing tax liabilities.

• Tax Planning: Outsourced tax professionals can provide strategic tax planning advice to optimize tax efficiency and minimize liabilities.

Choosing Service Providers

• Look for firms with expertise in Thai accounting standards, tax regulations, and audit requirements.
• Consider the reputation and experience of the outsourcing service provider in your industry.
• Ensure that the service provider uses secure and reliable technology for handling financial data.

Regulatory Compliance

• Verify that the outsourcing firm is familiar with Thai regulatory requirements relevant to accounting, audit, and taxation.
• Ensure that the service provider follows ethical practices and adheres to professional standards.

Communication and Reporting

• Establish clear communication channels and reporting structures to stay informed about the progress of accounting, audit, and tax-related activities.
• Define expectations regarding the frequency and format of financial reports and updates.

Cost Considerations

• Evaluate the cost-effectiveness of outsourcing compared to in-house alternatives.
• Consider the long-term benefits and potential cost savings associated with outsourcing these functions.

Data Security

• Implement robust data security measures and ensure that the outsourcing provider follows industry best practices for data protection.

Why Outsource Accounting, Audit & Tax Services in Thailand?

Thailand’s competitive business landscape demands a cost-effective approach. Outsourcing accounting not only reduces overhead costs but also provides access to top-notch professionals without the burden of hiring and training in-house staff. Therefore, it is always wise to free up valuable internal resources by outsourcing non-core functions. By entrusting your accounting tasks to experts, your team can concentrate on core business activities, fostering innovation and growth.

As your business expands, so do your accounting needs. Outsourcing allows for seamless scalability, ensuring your financial processes can adapt to the changing demands of your organization. Navigating Thailand’s intricate financial regulations can be challenging. Outsourcing your accounting, audit, and taxation to us ensures access to our pool of highly skilled professionals well-versed in local regulations and international accounting standards. 

Outsourcing will allow you to tap into this expertise, ensuring accurate financial reporting and compliance. This will surely ensure compliance and minimize the risk of legal issues. All you have to do is simply email us your requirements to officer@konradlegal.com and our team will get back to you with the guidance and best outsourced accounting services in Thailand – Konrad Legal.

Tax Benefits in Thailand for Startups

 

Tax liabilities can take a different disguise altogether if you are not knowing the regulatory norms. Even if you pay on time, non-adherence can lead to some sort of fine or penalty, or litigation. Similarly, there are a few obligatory aspects that can help you save taxes. In this article, we will explain to you the tax benefits in Thailand for Startups and CVCs. But please note that Tax Regulations in Thailand are very stringent and you must hire reliable Thai tax firms to manage everything smoothly.

Not only startups but there are also provisions of tax exemption for investors on their funding to startups in Thailand. Any person or organization who directly or indirectly invests in Thai startups in form of Venture Capital (VC), Corporate Venture Capital (CVC), or Private Equity Trusts, all are eligible for tax benefits in Thailand. These exemptions hold approval vide a draft Royal Decree of the Thai Revenue Code. This Draft Royal Decree seeks to repeal Royal Decrees No. 597 (B.E. 2559) and No. 636 (B.E. 2560), which prohibit capital gains tax on investments in startups.

The Draft Royal Decree in the Government Gazette is applicable until June 30th, 2032 for all startups and investors. The government expects that these tax advantages will make it easier for Thai startups to attract more funding. Henceforth, this will result in a faster expansion of Thailand’s GDP and a rise in employment.

Let’s take a quick glance through the norms of eligibility for tax benefits in Thailand for startups and investors.

Eligible Startups

A startup must engage in the targeted activities of the “Target Industries”. This classification holds the endorsement of pertinent government agencies. The Committee on Policy for National Competitive Enhancement for Targeted Industries mandates this categorization. Note that, the startup business must rely on technology as the foundation for its production process and services. Additionally, it must be in accordance with rules established by the Director-General of the Revenue Department. The National Science and Technology Development Agency (NSTDA) and the National Innovation Agency (NIA) are the government entities in charge of issuing the certification of the target activities.

Eligible Target Investors for Tax Benefits in Thailand

The Draft Royal Decree requires that all target investors qualifying for income tax exemptions must hold shares of the startup, CVC fund, or PE Trust for at least 24 months prior to the transfer of shares. Additionally, they should refrain from exercising their rights under the earlier Royal Decrees No. 597 (B.E. 2559) and No. 636. (B.E. 2560).

• Either abroad or in Thailand, an investor can register a CVC fund or PE Trust. On the final day of each month, to comply with Thai legislation, the CVC fund or PE Trust must have paid-up capital.
• Additionally, they have to file Accounts with the Securities and Exchange Commission for a financial period of THB 20 million or more.
• Individuals or corporate entities that solely participate in Thai CVC funds and Thai PE Trusts must be shareholders of the CVC fund or unitholders of the PE Trust.

Inability to comply with these regulations will lead to termination of tax exemption for CVC fund or PE trust.

Tax Benefits in Thailand: Terms and Conditions

Direct Investment

If a startup engages in the Targeted Industries and generates at least 80% of its total revenue from the target activities in the two preceding accounting periods prior to the transfer of shares, then a person or a legal entity registered in Thailand or abroad will be eligible for income tax exemptions on the gains from the transfers of shares in that startup.

Indirect Investment through VC

Tax benefits for VC funds will vary depending on the degree of investment made by the PE Trust and CVC fund. Additionally, it depends on the level of investment made by CVC fund shareholders and PE Trust unitholders. The following illustration will make things more clear:

Tax benefits in Thailand for CVC and PE Trust

If a startup generates at least 80% of its revenue from the targeted activities in each accounting period for two consecutive accounting periods prior to the transfer of shares, the CVC fund will benefit from exemptions from corporate income tax on the gains from the transfers of shares in that startup.

There is no corporate income tax for PE Trusts.

Tax benefits in Thailand for shareholders of CVC funds and unitholders of PE Trusts

Tax breaks will be given to PE Trust unitholders and CVC fund shareholders on the following:

Gains from transfers of shares in CVC funds and PE Trusts, where the investors in the CVC funds and unitholders in the PE Trusts will receive personal or corporate income tax exemptions in proportion to their investments, provided that such startups generate at least 80% of their income from the target activities during each accounting period for two successive accounting periods prior to the transfer of shares.

Gains from the dissolution of CVC funds and PE Trusts based on the percentage of retained earnings received from the startups’ target activities, provided that these startups generate at least 80% of their income from the target activities each accounting period for two consecutive accounting periods prior to the dissolution.
Startups confront legal challenges, which Konrad Legal Company Limited is aware of. Your company can achieve its objectives with the assistance of our Legal, Accounting & Tax Professionals for Startups in Thailand, including learning how to successfully draw in new investors. Call us right away for further details. You can also email your concern to officer@konradlegal.com.

Thailand Tax Guide for US Expats

 

Around 20,000 Americans live in Thailand, which manages to maintain a careful balance between its rich cultural heritage and cutting-edge future. The Land of Smiles is a great place for American expats to base themselves on because of its laid-back atmosphere and tropical climate. Taxes are only one of the obligations that come with living abroad in Thailand. Knowing how other nations’ tax laws affect you while you are a US citizen living abroad is crucial. As an expat, you will need a Thailand tax guide to check your liabilities.

Here is all the tax information you require if you are a US expat in Thailand.

• Residency Requirement for US Expats in Thailand
• How do Thailand Tax Laws Work for US Expats?
• Current Income Tax Rates for US Expats in Thailand
• Social Security Tax Rates for US Expats in Thailand
• Value-Added Tax Rates for US Expats in Thailand
• Deadline for US Expats to Pay Taxes in Thailand
• How Can US Expats file Tax Returns in Thailand?
• Do US Expats in Thailand have to file US Taxes?
• Do US Expats in Thailand Need to Pay Tax Twice?
  • Foreign Tax Credit (FTC) for US Expats in Thailand
  • Foreign Earned Income Exclusion (FEIE) for US Expats in Thailand
    • Physical Presence Test
    • Bona Fide Residence Test
• FBAR Filing Requirement for US Expats in Thailand
• Are there any more Tax Requirements for US Expats in Thailand?

Residency Requirement for US Expats in Thailand

You might be able to qualify for Thai residency despite the fact that you live in the US. Knowing this is crucial since it will help you calculate how much income tax you owe and to which countries by understanding your resident status.

Thailand’s residence criteria are rather straightforward in comparison to those in some other nations. The Revenue Department of Thailand categorizes residents and non-residents into two categories that are equivalent to the IRS. Both categories may apply to US expats living abroad.

If you spent 180 days or more in Thailand during a tax year, you are a resident of the nation. Thailand views those who have only recently moved there as non-residents.

So, if you spent seven months (approximately 210 days) in Thailand in 2022, the nation will see you as a resident. However, if you spend less than three months (approximately 90 days) residing in this Asian nation in 2022, you are not a Thai resident.

How do Thailand Tax Laws Work for US Expats?

If you meet Thailand’s residency requirements, you must pay two sorts of taxes: a portion of your foreign income generated outside Thailand and income taxes to Thailand on any income produced there.

You are exempt from paying taxes to Thailand on any foreign money made during your visit. Nevertheless, you must meet the criteria to be eligible as a non-resident. However, you will have to pay taxes on any income made while you were a resident of Thailand.

If you’re an expatriate, the US further demands that you pay income taxes in both situations. Additionally, if you visited any other nations in 2022, you should check their residency laws to see if you owe taxes to those nations.

Current Income Tax Rates for US Expats in Thailand

Thailand has a progressive tax system, charging you a percentage of tax based on how much money you make annually, just like the US. This system, which varies from 0% to 35%, is based on the baht, Thailand’s national currency. As of January 31st, 2023, one baht is equivalent to around $0.030 USD.

The tax rates in Thailand in 2022 are:

To know more, check this link from Thailand Tax Guide for Foreigners

Social Security Tax Rates for US Expats in Thailand

Whether you are a resident or a non-resident, Thailand has social security taxes that you must pay if you earn money there, just like the US.

Your employer will match your contribution, adding another 5% to social security, on the first 15,000 Baht you earn in Thailand. Then, the Thai government contributes an additional 2.5%.

This implies that you might have to pay social security taxes to both the US and Thailand.

Value-Added Tax Rates for US Expats in Thailand

Value-added tax, also known as VAT, is a tax that US citizens residing abroad in Thailand may have to pay in addition to income tax and Social Security contributions.

Similar to the US sales tax, this tax is applicable to the price of several goods and services you purchase in Thailand. VAT is a nationwide tax irrespective of states or territories, in contrast to the US sales tax.

Thailand’s official VAT tax rate is 10%. But as of right now, it is 7% through September 30, 2023.

Deadline for US Expats to Pay Taxes in Thailand

You must file your Personal Income Tax (PIT) return in Thailand once a year, whether you are a resident or not. Thailand tax obligations for the previous tax year are due on March 31st.

You must additionally submit a mid-year return by September 30th of the applicable tax year if you are in the entertainment profession or earn advertiser fees.

On this day, you must file your tax returns and pay any unpaid taxes (if they were not deducted from your paycheck).

How Can US Expats file Tax Returns in Thailand?

Through the website of Thailand’s Revenue Department, you can submit your tax returns online. Additionally, this website has links to outside tax preparation businesses that can assist you in preparing your income tax return. To make sure they understand all of their tax obligations and to make sure any tax breaks and credits they may be eligible for are claimed, US expats may find it beneficial to consult with a tax service in Thailand.

Do US Expats in Thailand have to file US Taxes?

Yes. If you are still a US citizen or have a Green Card, you must submit a US tax return. It is regardless of whether you are a resident of Thailand or a non-resident who paid Thailand taxes.

The US holds a citizenship-based taxation system, rather than a residency-based system. For this reason, you must submit a US tax return and notify the same to Internal Revenue Service (IRS).

Are US Expats in Thailand Taxed Twice?

You can legally owe tax returns to Thailand and the US if you’re a US expat. However, for this, you have to qualify as a resident of Thailand or generate income here. You might be concerned about paying taxes twice on the same income in this situation. Fortunately, the 1996 US-Thailand tax treaty shields US citizens living abroad from double taxation. The IRS also provides a few more initiatives that can lower your US tax obligation.

The Foreign Tax Credit and the Foreign Earned Income Exclusion are two double-taxation schemes. These are frequently used by Americans living abroad.

Foreign Tax Credit (FTC) for US Expats in Thailand

US residents with unpaid taxes on income obtained in Thailand are eligible for the Foreign Tax Credit (FTC). US citizens living and paying taxes abroad on their foreign income are eligible for a dollar-for-dollar credit under this program. Lowering the amount of income you must pay taxes on, can help you pay less in US taxes.

To be eligible to use this tax credit, you must fulfill certain requirements. You must first pay or owe foreign taxes. Additionally, you have to satisfy the three requirements listed below in order to be eligible for the FTC. Additionally, other requirements are:

• You must pay income taxes in your present country of residence. These income taxes must be levied against you by the nation in which you now reside, either through withholding from your pay or mandating payment from independent contractors prior to the filing date.
• Taxes must be legitimate.
• There can be no additional taxes; only income taxes are allowed.

You might be eligible for the FTC if you satisfy all three of the aforementioned conditions. Therefore, you can make a claim for this credit. However, this is up to the amount of foreign taxes you have paid or owe.

Therefore, if you satisfy these criteria for the FTC in 2022 and made $65,000 in Thailand income, you could claim a tax credit of up to $9,750 utilizing the foreign tax credit.

Foreign Earned Income Exclusion (FEIE) for US Expats in Thailand

The Foreign Earned Income Exclusion is a different foreign tax deduction. This tax benefit is for US expats residing in Thailand might take into account. With the FEIE, you can effectively pay less US tax by excluding overseas income from your US tax return. The FEIE enables you to exclude up to $112,000 of foreign-earned income for the 2022 tax year.

There are prerequisites for this tax credit. If you are a US citizen residing in Thailand, you must satisfy one of the following two requirements:

Physical Presence Test

How long you’ve been outside the US is determined by this exam. If you spent 330 days or more outside the US in any 365-day period, you’ll pass this exam. For instance, you might not pass the Physical Presence Test for the 2022 tax year if you lived in Thailand in 2022 but returned to the US for a total of 40 days during that year.

Bona Fide Residence Test

This exam evaluates your foreign resident status. For this, you have to be a foreign resident of Thailand for more than one calendar year. Additionally, you must be able to present proof of your residency. It can be by presenting a residency card or visa, paying income taxes to the nation, or having family members who are also foreign residents live with you. This will make you pass this test.

If you pass either exam, you can use the FEIE to have the first $112,000 of your income for the 2022 tax year excluded from your US tax return. In other words, if you made $99,000 in income in 2022 and passed one of the FEIE tests, you would actually be able to reduce your US taxable income to $0, which would effectively result in a tax refund.

Additionally, you can apply the FTC and FEIE to other forms of income. For instance, you may use the FEIE to reduce your US tax burden if you earned $85,000 in foreign income. When it comes to passive income (like investment or rental income), you could then use the FTC. However, you cannot utilize both tax-saving strategies on the same income.

FBAR Filing Requirement for US Expats in Thailand

While the majority of the essential requirements for US citizens living in Thailand are covered above, there are a few more common tax reporting requirements that you might run across.

US citizens living abroad who have overseas bank accounts worth more than a specific amount are required to file the FBAR (Report of Foreign Bank and Financial Accounts), a financial disclosure form. You must file an FBAR if you have a foreign bank account that had $10,000 or more in it at any point during the tax year. You must additionally submit an FBAR if you had more than one international bank account with a cumulative balance of $10,000 throughout the tax year.

Are there any more Tax Requirements for US Expats in Thailand?

You can have additional US tax obligations depending on the kind of employment you do while residing abroad. For instance, if you run your own business, you might need to record it on your US tax return and pay business taxes.

The regulations governing overseas business taxes can be complicated and differ depending on whether you run your own company, operate as a freelancer, or own a controlling interest in a foreign corporation. This Thailand tax guide is surely by now able to explain to you the basics of taxation for US Expats.

When you reside abroad, managing your US taxes is more challenging. Konrad Legal CPA is here to guide you through the complete tax procedure or just have a few inquiries about your tax liability.
Contact us at officer@konradlegal.com now to get started by meeting with your Thailand Tax Guide – LIVE!

Shop Dee Mee Kuen for Tax Deduction in Thailand in 2023

Tax Season in Thailand is going to start very soon. So, if you have already made the calculations to file your Personal Income Tax this year, you need to hold back and check once. Have you made a deduction for the shopping you did this year? If not, let us explain to you the “Shop Dee Mee Kuen” Scheme which grants Personal Income Tax deduction for purchasing goods and services in Thailand.

• What is Shop Dee Mee Kuen?
• Shop Dee Mee Kuen Program: Background
• Who will benefit from Shop Dee Mee Kuen?
• Shop Dee Mee Kuen Personal Income Tax Deduction: Scheme Details
  • The Mandates
  • Who is Eligible for the Deduction?
  • Shop Dee Mee Kuen Slab
  • Are there any Exemptions Shop Dee Mee Kuen Tax Deductions?
• The Bottomline

What is Shop Dee Mee Kuen?

The Thai Cabinet gave approval to a new stimulus plan on December 20, 2022, to support the nation’s economy in 2023 as tourism will improve drastically. Please note that customers who spend money on goods and services in Thailand will be able to deduct up to THB 30,000 in taxes due to the “Shop Dee Mee Kuen” program. Additionally, note that “Shop Dee Mee Kuen” means “Shop and Payback”.

The initiative will run from January 1 through February 15, 2023. Meaningfully, it will create more than THB 56,000 million in cash flow for the nation. Furthermore, according to the estimates from the Ministry of Finance, is going to cost the Revenue Department THB 8,200 million in lost tax revenue. However, the program has the potential to increase Thailand’s GDP by 0.1-0.2% in 2023.

Shop Dee Mee Kuen Scheme: Background

To promote consumer spending in the final two months of the year, the Thai Retailers Association has suggested that the government resurrect the “Shop Dee Mee Kuen” program in November 2022.

According to Chairman Yon Pokesap, the weeks before the New Year are the perfect time to encourage people to spend. Additionally, it was noteworthy that spending has already begun to increase as a result of the relaxation of lockdown regulations.

Therefore, now was a good time to use this spending behavior of consumers for a tax deduction. Furthermore, he advised that the optimal period to introduce the program would be between November 15 and the end of December.

He said that other consumer groups would be included in the program. Additionally, this will include individuals who have signed up for previous government stimulus programs like the “Ying Chai Ying Dai” (the more you spend, the more you get) and 50:50 co-payment programs.

Note that, Yon added that the government should raise the cap on personal spending under this scheme from 30,000 to 200,000 baht. Furthermore, he estimates that this will increase annual shopping expenditures by about 400 billion baht in the final two months of the year, which could increase Thailand’s growth rate by 0.7 to 1%.

Additionally, Yon asserts that by doing this the government stands to lose 15-20 billion baht in tax revenue. But, the immediate benefits from more money moving in the economy will accelerate economic recovery. Furthermore, it will make up for the loss in tax revenue.

Who will benefit from “Shop Dee Mee Kuen”?

According to market research, customers who earn at least THB500,00 per year, or roughly THB42,000 per month, will certainly profit from the stimulus program known as “Shop Dee Mee Kuen”. Furthermore, 70% of all respondents to this research survey plan to take part in this stimulus program. However, the majority of consumers, who make less than THB 500,000 annually, do not intend to do this. It is because they continue to worry about future expenses. Furthermore, they don’t need to spend more on tax deductions because their personal income tax rates are relatively low.

Note that, the “Shop Dee Mee Kuen” stimulus campaign is to encourage customers to spend more on dining out, IT products (such as smartphones, smartwatches, and computers), and personal care items (namely shampoos, liquid soaps, and toothpaste). However, because customers frequently eat out and buy certain personal care products anyhow, such expenditure during the implementation of this effort may not increase much over a typical period (when there is no stimulus program). Furthermore, it’s expected that more young people and adults will buy IT devices. Meanwhile, the majority of customers plan to eat at restaurants and shop in malls. It is because the e-marketplace is the preferred purchasing platform for the younger generation. However, these offline channels provide a full range of goods and services.

Personal Income Tax Deduction: Scheme Details

The Mandates:

• Scheme valid on purchases made between January 1, 2023 – February 15, 2023.
• Deductions will be done only on purchases made from VAT-registered sellers.
• All purchase receipts showing the VAT Number of the seller must be preserved till filing Income Tax.

Who is Eligible for the Deduction?

All taxpayers in Thailand with an annual income of above 150,000 THB are eligible for this deduction. However, Ordinary Partnerships and non-juristic bodies are not in the scope of this income tax deduction. Please take note, that you should consult with a professional Tax Consultant in Thailand to check your eligibility.

Shop Dee Mee Kuen Slab

Annual Income Range (in THB)	Income Tax Rate (%)	Tax Deduction (in THB)
0 – 150,000	0	Not Eligible for Deduction
150,000 – 300,000	5	Upto 1,500
300,001 – 500,000	10	Upto 3,000
500,001 – 750,000	15	Upto 4,500
750,001 – 1,000,000	20	Upto 6,000
1,000,001 – 2,000,000	25	Upto 7,500
2,000,001 – 5,000,000	30	Upto 9,000
Above 5,000,000	35	Upto 10,500

Are any Goods Exempted from Shop Dee Mee Kuen Tax Deductions?

The scheme is applicable on all purchases from January 01 – February 15, 2023. However, the following expenditures do not fall in the classification to get the eligible deduction:

• Purchase of liquor, beer, wine, and tobacco products
• On the purchase of motor vehicles, motorcycles, and boats
• Purchase of newspapers and magazines
• Subscription of e- newspaper and online magazine services
• Tourism services and hotel accommodation
• Utility, water, electricity, telephone, and internet service charges
• Service fees paid for services that can be used after 15 February 2023 (e.g. club membership fees)
• Non-life insurance premiums

The Bottomline

By now, we hope that you have understood the concept of Shop Dee Mee Kuen for tax deduction thoroughly. However, it is advisable that to claim your tax rights, you must consult with an expert tax consultant. Furthermore, there are many vital factors that you must keep in mind before you pay taxes, which are, although not limited to, the following:

• Manage your accounts effectively
• Get your accounts audited
• Have updated knowledge of the tax rates, deductions, and applicable incentives
• Prepare all the documents for filing the tax
• Be Conversant with the Tax Return filing process
• Have a thorough knowledge of tax payment and return filing deadlines

There are many more small factors and considerations that are very much case-specific. Apart from the tax slab, deduction rates, and incentive figures, nothing is absolute when it comes to paying taxes. Therefore, you must have a reliable tax firm by your side in Thailand. For professional support and complete guidance along with documentation support, you can consult with Konrad Legal. Email your requirements to officer@konradlegal.com.