If you are a foreigner living and earning in Thailand, you become liable to pay income tax as per Thai Accounting and Taxation regulations. This article intends to provide you with the most recent updates on Income Tax in Thailand for Foreigners. Read and know all about the recent tax slabs, deductions, double taxation treaties and more from this piece of content.
Income Tax in Thailand for Foreigners on Earnings
In Thailand, income tax is calculated based on assessable income. What is included in the definition of “assessable” is:
- Wages paid in Thailand or abroad
- Income earned by a person who resided in Thailand for a total of 180 days
- Housing and meal allowances or their value
- School fees for dependents paid for by employer
- Cost of home leave for taxpayer and dependents
- Capital gains arising from transfer of assets
- Pensions and retirement pay brought into Thailand
- Royalties
Thai Tax Year
The tax year in Thailand runs from January 1 to December 31. The tax office must receive an income tax return for the previous tax year by March 31. Because there are fees for delayed processing and settlement, payments must be made on time.
If you make money from real estate sales, engineering, architecture, accounting, the fine arts, or the healing arts, you must file your tax return by the deadline of September 31 and pay your taxes by the deadline of June 30 of the following year. As a foreign national, you will have to present a copy of your tax return for the previous year in order to renew your work visa.
2022 Income Tax Bands in Thailand for Foreigners
Thailand taxes both residents and non-residents on revenue earned from work or business done there, whether the money is sent inside or outside of the country.
If the income is brought into Thailand in the tax year in which it is received, residents who receive income from abroad are subject to tax on that income.
| Income Band (in Thai Baht) | Income Tax Rate |
|---|---|
| 0 – 150,000 | Exempt |
| 150,000 – 300,000 | 5% |
| 300,000 – 500,000 | 10% |
| 500,000 – 750,000 | 15% |
| 750,000 – 1,000,000 | 20% |
| 1,000,000 – 2,000,000 | 25% |
| 2,000,000 – 5,000,000 | 30% |
| 5,000,001 + | 35% |
Persons above the age of 65 are exempt from tax on the first 190,000 Baht of taxable income in addition to the 150,000 Baht tax exemption level.
You’re probably thinking, “My own country’s tax rates are very much the same as Thailand’s!”
Thailand does not have a 45% tax rate, as it exists in some nations. The 30% tax rate band was increased in 2019. This was to relax higher earnings before moving into the 35% band.
In general, all forms of income are taxable and subject to the personal income tax bracket. As long as the profits are over the threshold, this includes everything from a work pay to capital gains or dividends, lease transactions, or even selling garments on the street.
Double Tax Treaties in Thailand for Foreigners
Almost all nations on the earth have double taxation agreements with Thailand. A tax treaty’s goal is to stop a business or person from one nation from paying double taxes on revenue received from another one.
Many people believe that even though they are regarded to be residents of Thailand, they are exempt from paying income tax because they are already subject to taxation in their home country. Not entirely true.
Once you have been in the country for 180 days, the law compels you to declare any money you brought in that was earned during the current tax year. You are responsible for determining your residency status in your home country and informing them that you are a Thai resident for the specified tax year.
Income tax Rules for Digital Nomads in Thailand
There is a misconception that Thailand is a “grey tax zone,” which would allow people to work there without having to pay taxes in either their home country or Thailand, which, incidentally, avoids the issuance of work permits because the current law simply does not provide for it.
That is untrue. You automatically owe taxes in Thailand if you remain longer than 180 days in a calendar year. Even if your stay is shorter than 180 days, you still owe taxes and must pay them somewhere.
Therefore, if you’re a digital nomad in Thailand working as a web developer, blogger, web cam stripper, or anything else, you should be aware that if you aren’t paying tax, it could result in legal action.
Therefore, if you’re a digital nomad in Thailand and you work as a web developer, blogger, webcam stripper, or anything else, you should be aware that if you don’t pay your taxes, it might eventually catch up with you. There is no tax haven in Thailand. It has never been and isn’t going to be.
It is highly possible that Thailand will recognize most of these people aren’t paying tax in their home countries and by law (as residents) should be paying tax in Thailand when they do get around to addressing the digital nomad visa/work permit issue.
Tax is always withheld from retroactive profits, and in Thailand, the fine for failing to file a tax return can be up to twice the amount payable.
Process of Filing Income tax in Thailand for Foreigners
A tax ID number from the tax office is mandatory to file a return. You’ll need a passport or ID card, as well as proof of your need for a number, in order to obtain one.
Tax exemptions and deductions are available in Thailand, just like in every other nation. These are designed to lessen your tax burden and make it appear almost kind that the government isn’t completely pulling your clothes off.
Deductible Expenses
- Employment Income: 50% – not more than 100,000 THB
- Copyright Income: 40% – not more than 60,000 THB
- Rental Income from assets and properties: 10% – 30%
- Profession:
- Medical Profession: 60%
- Liberal Profession: 30%
- Actual Expense or Contract Work: 70%
- Actual Expense or Business Activities: 65% – 85%
Income Tax Allowances in Thailand for Foreigners
There are only limited allowances for the following in addition to the scheduled tax allowance:
- Home mortgage interest payments
- Purchases of retirement mutual fund and long term equity fund
- Contributions to charities
- Social Insurance contributions
- Life Insurance premiums
- Qualified provident fund payments
Personal Deductions
- 60,000 Baht: For both the taxpayer and the spouse (if the spouse of the taxpayer does not file a separate return).
- 30,000 Baht: For every kid (additional THB 30,000 for the second child onward born in or after 2018)
- 30,000 Baht: For parents of the taxpayer and spouse who are over 60 and have an annual income of less than 30,000 Baht.
- 60,000 Baht: To care for family members who are ill or disabled.
Wrapping Up
Hopefully, this article has provided all the crucial information that is mandatory to file your income tax in Thailand as a foreigner. But, this was just to provide you with the regulatory framework. To pay your income tax in Thailand, you will need the assistance of leading accounting and taxation firms in Thailand. It is because there are frequent amendments in the regulations and a local Thai tax expert can stay updated on that on a functional basis.
Starting from reconciliation of your accounts, classification of your income sources and expense destination, up to, income tax return filing, you must seek assistance from a Thai taxation firm. To sort out everything conveniently and prevent from getting marked as a non-taxpayer in Thailand, Consult Us! Write to us at [email protected] to book a free round of consultation.
