Irrespective of whether you are a Thai or Foreign national, if you are earning in Thailand, you are liable to pay tax in Thailand. Obviously there are few exceptions and exemptions that you must know. This article aims to provide you with all that crucial information.
Who is Liable?
Individuals earning money from sources in Thailand, including residents and non-residents, are liable to Personal Income Tax (PIT). If the income is remitted to Thailand, a Thai resident will also have to pay tax in Thailand on self-employment and business income from outside Thailand.
Resident Status for Tax Purpose
Individuals are considered residents if they spend 180 days or more in Thailand in a calendar year. If income generated outside of Thailand is remitted to Thailand in the year it is earned, it is liable to PIT.
Income Subject to Tax
Assessable income less deductible expenses and allowances equals taxable income.
Employment Income
Unless specifically exempted by law, all benefits received from employment are assessable. Wages, salaries, per day allowances, bonuses, bounties, gratuities, directors’ fees, pensions, house rental allowances, the monetary worth of an employer’s rent-free housing, and income tax paid and borne on behalf of an employee are all examples of assessable benefits.
Self-employment and Business Income
Assessable income less deductible expenses and allowances is taxable self-employment and business income. Unless specifically exempted by legislation, all sources of income are generally assessable.
Investment Income
Investment income is liable to PIT at the applicable rates on interest, dividends, and other investment income.
Dividend Income
Dividend income received by a Thai resident from locally incorporated companies is eligible for a tax credit.
Income from Stocks
Tax is applicable on employer-provided stock options. Employees have to pay tax on the profit from shares provided by the employer for free or at a reduced price. The difference between the price paid by the employee, if any, and the fair market value of the shares is the taxable benefit.
Capital Gains
Gains from the selling of stock are usually subject to PIT. Gains on the sale of securities listed on the Thai Stock Exchange, on the other hand, are tax-free.
PIT applies to gains generated from the sale of real estate. Depending on the amount of years you’ve owned the car, you can deduct a standard allowance. Gains from the sale of real estate used in a trade or business are likewise subject to this tax.
Net Worth Tax
PIT calculation is usually on assessable income in a calendar year. However, if there is a doubt of understatement of a taxpayer’s income, the tax authorities may review income tax on the basis of net value. Nevertheless, there is least utilization of this authoritative power in practical.
Inheritance and Gift Taxes
Inheritances received are taxable solely on the accumulated value in excess of THB 100 million per benefactor under the Inheritance Tax Act, which went into effect on 1 February 2016, at a rate of 5% for descendants or parents and 10% for everyone else. Moreover, one may be subject to penalties and surcharges for not filing the tax within 150 days of receipt.
Tax rate on gifts is generally 5% of the gift value. Gifts from a lawful parent, child, or spouse (up to THB 20 million per year), as well as gifts given in a ceremony or on special occasions in accordance with custom and tradition (up to THB 10 million per year), are tax-free.
Social Security
On a maximum monthly pay of THB 15,000, the social security contribution rate is 5%. As a result, the monthly payment cap is at THB 750 and the annual contribution at THB 9,000.
Tax Filing and Payment Procedures
Employers withhold the PIT that employees owe. Some self-employed people, such as professionals and those who rent out property, are required to pay an interim income tax payment in September.
Therefore, on the due date, an individual or business have to pay the income tax after self-assessment in Thailand.
Additionally, Thailand has double tax treaties in place with 61 nations. The approach for avoiding double taxation differs by treaty. Therefore, to understand all statutory and regulatory compliance, it is highly commendable that you select an Accounting Firm in Thailand to do the needful for you.
You can reserve your spot for a round of free online consultation with our experienced accounting and taxation specialists of Thailand. Alternatively, you may email us at [email protected] to seek our support in this regard. Before you pay tax in Thailand, do take our help to make the accurate assessment!
