The Revenue Department of the Thai Ministry of Finance handles the Taxation policies and framework in Thailand. Foreigners living and working in the country must file taxes both in Thailand and in their home countries. Although Thailand’s Tax Structure resembles that of the United States a bit, but, you should familiarize yourself with the essentials before working or earning money in Thailand.
Taxation in Thailand vs. Taxation in US
The most crucial thing for Americans residing in Thailand to know is that they must pay taxes in the country. It will be your obligation to file by the deadlines in both countries and to take advantage of any exemptions that may be available.
Americans who are living overseas on April 15th must file by June 15th. The tax year in Thailand runs from January 1 to December 31, and taxes are payable by March 31. It’s also worth noting that Thailand’s tax rates and the manner different classifications of income taxes varies significantly from those in the United States. Make sure to identify your earnings correctly for each country and become aware of the many types of “Assessable Income” in Thailand.
The Personal Income Tax is the most essential component of Thailand’s tax system for foreigners (PIT). If you live in Thailand and make money, you will have to pay the PIT. You may be able to get a tax ID number through your work, or you may have to go to the Revenue Department and seek one yourself. Your residency status will also influence how much of your income is taxable in Thailand. Foreigners who spend less than half of the year (180 days) in Thailand must pay taxes on the income they earn in Thailand. Those who stay in the country for longer than 180 days will be subject to taxes on any money earned worldwide.
Tax Filing in Thailand
The fact that all tax returns must be submitted in Thai is the major stumbling block for expats in Thailand when it comes to taxes. If you don’t speak Thai, you might need to hire a Thai-speaking accountant to help you. Payments are mandatory on the filing date (typically March 31). Some business owners may have to submit every six months, whereas most of them can file taxes only once a year.
On the Revenue Department’s website, you can file electronically. Unfortunately, the system is only available in Thai at the moment. The taxation policies of Thailand regularly undergoes developments and are amended and hence, we can expect inclusion of English as one of the official languages in the long run.
In Thailand, anyone anticipating a tax refund will receive their cheques 15 days after filing. There is an online method for tracking the status of your refund, however it is currently only available in Thai.
Types of Taxes under Taxation Policy in Thailand for Expats
General Income tax
Thailand’s income tax, often known as the Personal Income Tax (PIT), is the primary tax that foreigners must pay. This assessment could encompass a variety of income sources. Most foreigners earning more than 150,000 baht are liable to pay income tax; those earning less are not subject to the PIT.
Above this level, the rates are as follows:
- 150,00-500,000: 10 percent
- 500,000-1 million: 20 percent
- 1 million-4 million: 30 percent
- Above 4 million: 37 percent
Sales Tax
All purchases in Thailand are subject to a 7% sales tax (or Value Added Tax, or VAT). In most restaurants and retailers, the bill comes with VAT. Whereas, certain establishments may choose to ignore the tax or factor it into the purchase price. The VAT is distinct from any “service charges” or “taxes” that you may be charged in places that cater to visitors and foreigners.
Real Estate Tax
Expats with the interest in the purchase of homes or property in Thailand are subject to several taxes. According to the taxation policies in Thailand, these include:
- A business tax of 3.3 percent, either of the property’s appraised value or its registered sale value
- A transfer fee of two percent of the property’s value
- A stamp duty of 0.5 percent for those who do not have to pay the business tax
- Finally, a withholding tax of one percent either of the property’s appraised value or its registered sale value
Inheritance Tax
If you are planning to inherit in Thailand, you will be subject to a tax that varies depending on your relationship to the deceased. On the value of the bequest, descendants and descendants pay 5%, while others pay the entire 10%.
Capital Gains and Corporate Taxes
Thailand has no capital gains tax at the moment. Capital gains an expat earns outside of Thailand are tax-free, however profits they earn within Thailand are taxable income. Capital gains achieved on the Thai stock market, on the other hand, are excluded.
Thailand’s Corporate Tax Rate is now 20% of net income for companies doing business in the country. However, depending on the sort of business, its size, and its legal standing in Thailand, there are a variety of difficulties. A tiny business with profits of less than 3 million baht, for example, pays only 15%.
Exemptions and Avoid Double Taxation in Thailand
There are a number of tax deductions and exemptions available to Americans living in Thailand. There are rather complications, and you might benefit from the help of a tax expert.
The Foreign Earned Income Exclusion is the most important exemption for Americans. If you earn your full income in Thailand, this could result in a tax obligation of $0 in the United States. Thailand also provides a basic personal allowance as well as a range of exemptions based on family status, which can help you save money on taxes.
Unfortunately, Thailand and the United States are not among the countries that have signed a “Totalization Agreement” to govern their tax relations. This may necessitate the payment of social security taxes in both countries for expat taxpayers.
Taxation Policies for Retirees in Thailand
The following is a clear declaration from the Thai embassy regarding expat retirees and taxes in Thailand:
During retirement, only income received within Thailand will be taxed. As a result, you will not be required to pay any taxes on any income earned abroad. In Thailand, pensioners are also exempt from paying personal income taxes. It’s important to note that if you’re on a Retirement Visa in Thailand, you won’t be able to work.
You’d have to apply for a work permit first. You’d have to leave Thailand and return on a 90-day OA visa before starting the procedure of extending your retirement visa for another year.
It is highly recommended that you must consult with a local Thai Taxation Specialist for more information. This article does explain you with the basic backbone of the taxation in Thailand, but, for implementation, you will need a seasoned taxation specialist. Feel free to book your free round of consultation with our Tax Expert Team. Alternatively, you may also email us at [email protected].
