Thailand's New Taxation Law for Foreigners: What You Need to Know
Posted by Daniel D. | Sep 26, 2023
The new taxation law in Thailand for foreigners starting on January 1, 2024, significantly changes how foreign-sourced income is taxed in the country. Under the new law, all foreign-sourced income brought into Thailand by a Thai tax resident will be subject to personal income tax, regardless of the tax year in which the income was derived.
This means that even if a Thai tax resident earned foreign-sourced income in previous tax years and did not bring it into Thailand, they will still be required to pay tax on that income when they bring it into the country starting January 1, 2024.
The new law also applies to foreign-sourced income not physically brought into Thailand, such as payment deposited into a Thai bank account or used to pay for expenses in Thailand.
Who is affected by the new law?
The new law applies to all Thai tax residents. A Thai tax resident is an individual who spends more than 180 days in Thailand in a calendar year, or who has a permanent home in Thailand.
What types of income are affected by the new law?
The new law applies to all types of foreign-sourced income, including:
- Employment income
- Business income
- Investment income
- Rental income
- Capital gains
How is foreign-sourced income taxed under the new law?
Foreign-sourced income is taxed in Thailand under the same progressive tax rates that apply to domestic income. The tax rates for individuals range from 5% to 35%, depending on the taxpayer's total income.
How can foreigners comply with the new law?
To comply with the new law, Thai tax residents with foreign-sourced income must declare their foreign income on their Thai tax return and pay the appropriate tax. The Thai Revenue Department provides some resources to help taxpayers comply with the new law, including a guide to reporting foreign income and a foreign income tax calculator.
Conclusion
The new taxation law in Thailand for foreigners significantly changes how foreign-sourced income is taxed in the country. Thai tax residents with foreign-sourced income should seek professional advice to comply with the new law.
Personal Income Tax (PIT)
Personal Income Tax (PIT) is a direct tax levied on a person's income. A person means an individual, an ordinary partnership, a non-juristic body of a person, and an undivided estate. In general, a person liable to PIT has to compute his tax liability, file a tax return, and pay tax, if any, accordingly on a calendar year basis.
1. Taxable Person
Taxpayers are classified into “resident” and “non-resident.” “Resident” means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however, subject to tax only on income from sources in Thailand.
2. TAX BASE
2.1 Assessable Income
Income chargeable to the PIT 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, are also treated as assessable income of the employee for the purpose of PIT. Assessable income is divided into eight categories as follows :
- income from personal services rendered to employers;
- income by virtue of jobs, positions or services rendered;
- income from goodwill, copyright, franchise, other rights, annuity or income in the nature of yearly payments derived from a will or any other juristic Act or judgment of the Court;
- income like dividends, interest on deposits with banks in Thailand, shares of profits or other benefits from a juristic company, juristic partnership, or mutual fund, payments received as a result of the reduction of capital, a bonus, an increased capital holding, gains from amalgamation, acquisition or dissolution of juristic companies or partnerships, and gains from transferring of shares or partnership holdings;
- income from letting of property and from breaches of contracts, installment sales or hire-purchase contracts;
- income from liberal professions;
- income from construction and other agreements of work;
- income from business, commerce, agriculture, industry, transport or any other activity not specified earlier.
2.2 Deductions and Allowances
Certain deductions and allowances are allowed in the calculation of the taxable income. Taxpayer shall make deductions from assessable income before the allowances are granted. Therefore, taxable income is calculated by :
TAXABLE INCOME = Assessable Income - deductions - allowances
Deductions allowed for the calculation of PIT
| Type of Income | Deduction |
| a. Income from employment | 40% but not exceeding 60,000 baht |
| b. Income received from copyright | 40% but not exceeding 60,000 baht |
| c. Income from letting out of property on hire | |
| 1) Building and wharves | 30% |
| 2) Agricultural land | 20% |
| 3) All other types of land | 15% |
| 4) Vehicles | 30 |
| 5) Any other type of property | 10% |
| d. Income from liberal professions | 30%, except for the medical profession, where 60% is allowed |
| e. Income derived from a contract of work whereby the contractor provides essential materials besides tools | actual expense or 70% |
| f. Income derived from business, commerce, agriculture, industry, transport, or other activities not specified in a. to e. | actual expense or 65% - 85% depending on the type of income |
Allowances (Exemptions) allowed for the calculation of PIT
| Types of Allowances | Amount |
| Personal allowance | |
| Single taxpayer | 30,000 baht for the taxpayer |
| Undivided estate | 30,000 baht for the taxpayer’s spouse |
| Non-juristic partnership or body of persons | 30,000 baht for each partner but not exceeding 60,000 baht in total |
| Spouse allowance | 30,000 baht |
| Child allowance (child under 25 years of age and studying at an educational institution, or a minor, or an adjusted incompetent or quasi-incompetent person) | 15,000 baht each (limited to three children) |
| Education (additional allowance for children studying in educational institutions in Thailand) | 2,000 baht each child |
| Parents Allowance | 30,000 baht for each of the taxpayer’s and spouse’s parents if such parent is above 60 years old and earns less than 30,000 baht |
| Life insurance premium paid by taxpayer or spouse | The amount paid but not exceeding 100,000 baht each |
| Approved provident fund contributions paid by taxpayer or spouse | The amount paid at the rate not more than 15% of the wage, but not exceeding 500,000 baht |
| Long term equity fund | The amount paid at the rate not more than 15% of the wage, but not exceeding 500,000 baht |
| Home mortgage interest | The amount paid but not exceeding 100,000 baht |
| Social insurance contributions paid by taxpayer or spouse | The amount actually paid each |
| Charitable contributions | The amount actually donated but not exceeding 10% of the income after standard deductions and the above allowances. |
2.3 Tax Credit for Dividends
Any taxpayer who domiciles in Thailand and receives dividends from a juristic company or partnership incorporated in Thailand is entitled to a tax credit of 3/7 of the dividends received. In computing assessable income, the taxpayer shall gross up his dividends by the amount of the tax credit received. The amount of tax credit is creditable against his tax liability.
3. Progressive Tax Rates
3.1 Progressive Tax Rates
Personal income tax rates applicable to taxable income are as follows
Tax rates of the Personal Income Tax
| Taxable Income (baht) |
Tax Rate (%) |
| 0-150,000 | Exempt |
| more than 150,000 but less than 300,000 | 5 |
| more than 300,000 but less than 500,000 | 10 |
| more than 500,000 but less than 750,000 | 15 |
| more than 750,000 but less than 1,000,000 | 20 |
| more than 1,000,000 but less than 2,000,000 | 25 |
| more than 2,000,000 but less than 4,000,000 | 30 |
| Over 4,000,000 | 35 |
To be implemented for the 2013 and 2014 tax years.
When income categories (2) - (8) mentioned in 2.1 are earned more than 60,000 Baht per annum, the taxpayer has to calculate the amount of tax by multiplying 0.5% to the assessable income and comparing it with the amount of tax calculated by progressive tax rates. The taxpayer is liable to pay tax at the amount, whichever is greater.
3.2 Separate Taxation
There are several types of income that the taxpayer shall not include or may not choose to include such income to the assessable income in calculating the tax liability.
Income from sale of immovable property
The taxpayer shall not include income from sales of immovable property acquired by bequest or by way of gift to the assessable income when calculating PIT. However, if the sale is made for a commercial purpose, it is essential that such income must be included as the assessable income and be subject to PIT.
Interest
The following forms of interest income may, at the taxpayer’s selection, be excluded from the computation of PIT provided that a tax of 15 per cent is withheld at source:
- interest on bonds or debentures issued by a government organization;
- interest on saving deposits in commercial banks if the aggregate amount of interest received is not more than 20,000 baht during a taxable year;
- interest on loans paid by a finance company;
- interest received from any financial institution organized by a specific law of Thailand for the purpose of lending money to promote agriculture, commerce or industry.
Dividends
Taxpayer who resides in Thailand and receives dividends or shares of profits from a registered company or a mutual fund whose tax has been withheld at source at the rate of 10 percent, may opt to exclude such dividend from the assessable income when calculating PIT. However, in doing so, the taxpayer cannot claim any refund or credit, as mentioned in 2.4.
4. Withholding Tax
For certain categories of income, the payer of income has to withhold tax at source, file tax return (Form PIT 1, 2 or 3 as the case may be) and submit the amount of tax withheld to the District Revenue Office. The tax withheld shall then be credited against a taxpayer's tax liability when filing PIT return. The following are the withholding tax rates on some categories of income.
| Types of income (baht) |
Withholding tax rate (baht) |
| 1. Employment income | 5 - 37 % |
| 2. Rents and prizes | 5 % |
| 3. Ship rental charges | 1 % |
| 4. Service and professional fees | 3 % |
| 5. Public entertainer remuneration - Thai resident - non-resident |
5 % 5 - 37 % |
| 6. Advertising fees | 2 % |
5. Tax Payment
The taxpayer is liable to file a Personal Income Tax return and make a payment to the Revenue Department within the last day of March following the taxable year. Taxpayer, who derives income specified in c, d, or f in 2.3 during the first six months of the taxable year, must also file a half-yearly return and make a payment to the Revenue Department within the last day of September of that taxable year. Any withholding tax or half-yearly tax paid to the Revenue Department can be used as a credit against the tax liability at the end of the year.
Last Update second part of the article: Personal Income Tax: 23.11.2020
Source: https://www.rd.go.th/english/6045.html
Tags: Personal Income Tax
