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.

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.

How to Obtain a Tax Clearance Certificate in Thailand?

 

You must be knowing about the sets of regulations governing the process of immigration of foreigners to Thailand. Similarly, there are some mandates that foreigners must follow while leaving Thailand. Obtaining a Tax Clearance Certificate in Thailand is one of those obligations. 

This article will guide you through the process of obtaining a Tax Certificate in Thailand. Additionally, this will also help you understand the importance of the document.

• What is a Tax Clearance Certificate?
• Who Requires Tax Clearance Certificate in Thailand?
• Who doesn’t needs Tax Clearance Certificate in Thailand?
• How Many Types of Tax Clearance Certificates in Thailand are there?
  • P.3 Tax Clearance Certificate
  • P.3.1 Tax Clearance Certificate
• How to Apply for a Tax Clearance Certificate in Thailand?
  • Documents required for P.3 Tax Clearance Certificate
  • Documents required for P.3.1 Tax Clearance Certificate
• What to do for Outstanding Tax Liabilities?
• Loss of Tax Clearance Certificate
• Presentation of Tax Clearance Certificate
• Penalty

What is a Tax Clearance Certificate?

A Tax Clearance Certificate is a document given to a foreigner leaving Thailand. The Director-General of the Thai Revenue Department, the Provincial Governor, or the delegated authority gives this Certificate. This document shows that taxes are not due and is a guarantee or collateral to prove tax liabilities and payable.

Who Requires Tax Clearance Certificate in Thailand?

According to Revenue Code Section 4 Quarter, irrespective of tax liability, a foreigner must apply for a Tax Clearance Certificate. He or she must do so before departing from Thailand. The foreigner must do so in the form declaration of the Director-General within 15 days before leaving the country. If any of the following applies, a foreign national leaving Thailand must submit Form P.1 (Application for Tax Clearance Certificate) and any supporting documentation:

• Is liable to payment of tax or tax arrears before departing Thailand
• Has the duty to file a tax return and pay tax on behalf of a company or juristic partnership incorporated under foreign laws and has been carrying on business in Thailand
• Has taxable income, whether or not in Thailand, from being a public performer in Thailand.

The term “public performer” refers to an actor or actress in a play or motion picture. He or she can also be a performer on radio/television, a musician/singer, a professional athlete, or any other entertainer.

Who doesn’t needs Tax Clearance Certificate in Thailand?

Foreigners need not apply for Tax Clearance Certificate in Thailand under the following conditions:

• A foreigner transiting Thailand, entering or residing in Thailand for a period
• Foreigners transiting Thailand for periods totaling no more than 90 days in a tax year
• Foreigners living in Thailand without earning assessable income, or
• A foreigner as specified by the Director-General with the Minister’s approval.

Additionally, the Notification of the Director-General of the Revenue Department on May 7, 1991, states that with the exception of the above circumstance, foreigners leaving Thailand do not need to file for a Tax Clearance Certificate.

How Many Types of Tax Clearance Certificates in Thailand are there?

P.3 and P. 3.1 are the two different forms of tax clearance certificates.

P.3 Tax Clearance Certificate

This certificate is issued to a visitor leaving Thailand temporarily. It is only good for one leave and needs to be used within 15 days of the date of issuing. The Tax Clearance Certificate will no longer be valid if he does not leave Thailand by the deadline. However, exceptions are there in case of re-issuance before it runs out.

P.3.1 Tax Clearance Certificate

This certificate is for a foreigner who often visits and exits Thailand as a result of his work or occupation. It is valid for recurring leaves of absence during the tenure in the Tax Clearance Certificate. However, this won’t be applicable for more than 180 days after the date of issuance. Form P. 3.1 renewal is not permissible from the Revenue Department of Thailand.

How to Apply for a Tax Clearance Certificate in Thailand?

A foreign national who must have a tax clearance certificate must submit Form P.1, together with the following supporting documentation:

Documents required for P.3 Tax Clearance Certificate

1. Passport
2. Alien Certificate (if any)
3. Residence Certificate (if any)
4. Work permit or an application thereof (if any)
5. Tax Identification Card
6. Letter of guarantee (if having tax liabilities or payable) issued by any of the following authorities:
   • A person whose securities are greater than his tax liabilities or payable and whose reputation is acceptable to the Director-General of the Revenue Department 
   • The Provincial Governor 
   • The Assignee
   • A government officer of level 6 or equivalent or higher. 
   • A bank with a guaranteed amount exceeding tax liabilities or payable or $50,000. 
7. Tax payment records for the past three years of the company or juristic partnership which is represented by the applicant for a Tax Clearance Certificate including withholding tax receipts or tax receipts.
8. Other evidence as required by the Director-General of the Revenue Department

Documents required for P.3.1 Tax Clearance Certificate

1. The above documents 1-7
2. Evidence indicating the reasons for departing Thailand on a regular basis in connection with the business or profession of the foreigner
3. Evidence indicating that his assets in Thailand are greater than his tax liabilities or tax payable A foreigner applying for a Tax Clearance Certificate is required to file an application to the following persons within 15 days before departing Thailand:

What to do for Outstanding Tax Liabilities?

The Director-General of the Revenue Department, the provincial governor, or the authorized authority must receive a guarantee from the applicant for a Tax Clearance Certificate if they are unable to pay their tax obligations in full or in part or if they become due after the departure date.

Loss of Tax Clearance Certificate

The foreigner must get in touch with the office where they submit their application. This is enough to get a replacement Tax Clearance Certificate in case of misplacement. However, only until the prior Tax Clearance Certificate’s expiration date is reached is the new Tax Clearance Certificate valid.

Presentation of Tax Clearance Certificate

A foreign national leaving Thailand must show the Immigration Office the Tax Clearance Certificate on the day of departure. 

Penalty

Without a Tax Clearance Certificate, a foreign national who leaves Thailand or attempts to leave the country would be charged a surcharge equal to 20% of the tax amount. In addition, he faces a fine of no more than 1,000 Baht, a term of imprisonment of no longer than one month, or both.
For any type of assistance and professional guidance in the process of obtaining a tax clearance certificate in Thailand, feel free to write to us at officer@konradlegal.com.

How to File Personal Income Tax in Thailand in 2022-23?

Tax residents in Thailand are obligated by law to pay and file personal income tax returns each year. Therefore, it’s very important that you understand and accept your tax liabilities as a taxpayer. This article intends to guide you through the process of tax payment in Thailand this coming season.

Let’s find out more about Thailand’s taxation on income.

• Are you a Tax Resident of Thailand?

• What are the Types of Taxable Income in Thailand?

• Personal Income Tax Rates in Thailand 2022-23

• Tax Credits

• Deduction and Allowances on Personal Income Tax in Thailand

• Tax Administration for Personal Income Tax in Thailand

• Penalties and Surcharges for Late Filing of Personal Income Tax in Thailand

• Do You Need a Tax Clearance Certificate in Thailand?

Are you a Tax Resident of Thailand?

An individual’s income may be subject to personal income tax if it falls into the following categories:

• Benefits obtained in Thailand, whether monetary or non-monetary (paid in or outside Thailand)

• The income brought into Thailand within a year from a foreign source

Non-residents are only required to pay personal income tax on their income if they receive their benefits in Thailand.

Each year, both residents and non-residents must apply for a personal income tax ID and file a personal tax return in Thailand. If you are a foreigner staying for more than 180 days in Thailand in a single tax year and made income, you are a tax resident of Thailand.

What are the Types of Taxable Income in Thailand?

In Thailand, there are eight categories for assessing income:

• Earnings from employment, including wages, salaries, bonuses, gratuities, pensions, housing allowances, the monetary value of a home that an employer provides for free, the payment of an employee’s debt obligations by an employer, or any other money, asset, or benefit obtained from employment

• Income from jobs, employment offices, or services

• Goodwill, copyright, franchise, patent, and other rights income

• Income from interest, dividends, investor bonuses, gains from mergers, acquisitions, or dissolutions of businesses or partnerships, as well as gains from the sale of stock

• Property lease, violation of a hire-purchase contract, and installment sale deal

• Income from the liberal arts, engineering, architecture, accounting, and other professions

• income from a work agreement where the contractor is responsible for supplying all necessary materials other than tools

• Earnings from commerce, business, agriculture, transportation, or any other activity not already listed

Capital gains, as stated in the fourth point, are taxed as regular income. Moreover, capital losses cannot be used to offset capital gains, as is the situation in many other nations.

However, capital gains are not always taxable, and there are three exceptions:

• Income from earnings and salaries, including any perks offered by the company (such as stock option income, employer-paid personal income taxes, living expenses, the value of rent-free housing, etc.), but excludes costs for business travel and medical care.

• Gains on the selling of debt instruments or government bonds that don’t pay interest (although there are exceptions)

• Revenue from the sale of government bonds

Personal Income Tax Rates in Thailand 2022-23

Thailand uses a progressive tax system for personal income tax, with the following rates:

Tax Credits in Thailand

Taxpayers are eligible for credits for tax withholding at source against their annual tax liability. The income tax withheld at source from dividends received from Thai-incorporated companies may be applied as a credit against a person’s tax liability if they are domiciled and resident in Thailand. 

Dividend income is combined with other types of income after the credit is added to account for the underlying corporate income tax paid on the profit being distributed. The value of the tax credit is subtracted from the tax that has been determined by applying the personal income tax rates to the entire taxable income. If a double taxation agreement does not allow it, taxpayers cannot use foreign taxes as a credit against Thai taxes.

Deduction and Allowances on Personal Income Tax in Thailand

According to the chart below, resident taxpayers may deduct personal and special allowances:

Apart from the above-mentioned allowances, the assessable income is also subject to some special allowances like the following:

Tax Administration for Personal Income Tax in Thailand

Thailand applies a self-assessment system in collecting taxes. Taxpayers must declare their tax liabilities in their tax returns and pay the tax due at the time of filing. The following individuals must file income tax returns for income earned in the preceding tax year:

• A person who has no spouse and earns an income of more than Baht 60,000

• A person who has no spouse and earns income under the category of salaries and wages of more than Baht 120,000

• An individual who has a spouse and earns an income of more than Baht 120,000

• A person who has a spouse and earns income under the category of salaries and wages of more than Baht 220,000. 

• Each husband or wife earning income can choose to file his/her income tax return either separately or jointly with their spouse, whichever they prefer. 

The tax year is the calendar year. All tax-liable persons must file a tax return no later than 31 March of the following year for hardcopy filing. However, 8 April is the date for online filing. Additionally, those taxpayers deriving income from the lease of property, liberal professions, contractual work, and other businesses, commerce, or industries must file a mid-year tax return by 30 September. Note that, this tax calculation is on the income during the first half of the tax year to 30 June. Tax paid at the time of the mid-year filing is creditable against the annual tax liability.

Penalties and Surcharges for Late Filing of Personal Income Tax in Thailand

A penalty rate of 100% will is payable for incorrect tax returns. Furthermore, a penalty rate of 200% will apply in cases of failure to file a tax return. The penalty decreases by 50% if the taxpayer submits a request in writing. On this, the assessment officer determines the intention of the taxpayer in regard to tax payment during the tax audit.

A surcharge of 1.5% per month, or a portion of the tax due or remittable, less the amount of the tax imposed, will be applied to anyone who doesn’t pay the tax within the allotted time.

The surcharge decreases to 0.75% per month or a fraction thereof if the Director-General extends the deadline for payment or remittance of tax and the payable tax or remittance within the time.

Anyone who knowingly or intentionally reports false information makes false statements, answers inquiries with false information, presents false proof to escape taxes, or attempts to evade taxes is subject to a fine of THB 200,000 and a sentence of three months to seven years in prison.

Do You Need a Tax Clearance Certificate in Thailand?

The following people must request a tax clearance certificate:

• Obligated to settle tax debts before leaving Thailand

• Owes a tax return and must pay taxes on behalf of a foreign-incorporated firm or legal partnership that conducts business in Thailand.

• Earn money in Thailand by performing in public

Before departing Thailand, a foreigner must submit an application for a tax clearance certificate within 15 days. On the day of departure, it is compulsory to show the tax clearance certificate to the immigration office.

A surcharge of 20% of the tax due will be due without the tax clearance certificate. The foreigner may also undergo imprisonment with a fine of no more than 1,000 THB, a month in jail, or both.

To avoid penalties or imprisonment, taxpayers in Thailand should continue to comply with their personal income tax requirements.

We advise getting in touch with Konrad Legal if you need expert tax assistance in Thailand. Simply email us your requirement at officer@konradlegal.com.