Are you a foreigner or an expat earning your living and thinking of filing income tax in Thailand? To proceed on this step, the first thing that you should do is to check whether there is any bilateral treaty between your nation with Thailand. If yes, you may enjoy some tax deductions! However, this article intends to provide comprehensive guidance on Income Tax for Foreigners in Thailand, following which, our assistance is going to make the process easy for you.
Types of Income that Make Foreigners Tax-liable in Thailand
Before you check your tax eligibility, it is essential to check whether your income supports tax compliance or not. In many cases of double tax treaties between your nation and Thailand, you may have to pay tax in your home country but not in Thailand. In general, the following types of income in Thailand make you tax-liable:
Salary and Employment Income
Foreigners working in Thailand are typically subject to income tax on their salaries and employment income they earn here. The tax rates may vary based on income levels.
Check out the Income Tax slab for foreigners in Thailand.
Rental Income
If you own property in Thailand and earn rental income from it, this income is generally subject to taxation.
Business and Self-Employment Income
If you operate a business or engage in self-employment activities in Thailand, the income from these sources is typically taxable.
Interest and Dividends
Income earned from bank interest, dividends from Thai companies, or other investment income may also be subject to taxation.
Capital Gains
Depending on the circumstances, capital gains from the sale of certain assets in Thailand. Note that, it can be real estate or securities that are taxable in your case.
Pensions and Annuities
Foreigners receiving pensions or annuities from sources in Thailand may have tax obligations.
Royalties
If you receive royalties from intellectual property or other sources in Thailand, this income may be taxable.
Other Sources of Income
Any other income earned in Thailand, including prizes, awards, or other windfalls, may also be subject to taxation.
As stated earlier, if your country holds any type of tax treaty or bilateral trade agreement with Thailand, your income may be subject to tax deductions or exemptions. Therefore, it is recommended that you should consult with a reliable tax firm in Thailand to get this eligibility checked.
Income Tax Eligibility for Foreigners in Thailand
Income tax for foreigners in Thailand varies depending on several factors, including your residency status and the type of income you earn in the country. Here’s a general overview:
Residency Status
Thailand distinguishes between resident and non-resident foreigners for tax purposes. Your residency status is determined by how many days you spend in the country within a tax year.
- Resident: If you stay in Thailand for 180 days or more in a tax year, you are considered a tax resident.
- Non-Resident: If you stay in Thailand for at least 180 days in a tax year, you are considered a non-resident.
Taxable Income
Tax residents are generally taxed on their worldwide income, while non-residents are taxed only on income earned in Thailand.
Tax Rates
Thailand uses a progressive tax rate system for personal income tax, which ranges from 0% to 35%. Please note that tax rates and brackets may change over time, so it’s essential to check the latest tax rates from the Thai Revenue Department or consult a tax professional in Thailand.
Tax Deductions and Exemptions
Thailand offers certain deductions and exemptions for both residents and non-residents. These may include deductions for specific expenses, allowances, and exemptions for certain types of income.
Filing and Payment
Tax residents must file a personal income tax return by the end of March each year. Non-residents must file a return within seven days of departing Thailand if their income is subject to withholding tax.
Double Taxation Agreements (DTAs)
Thailand has entered into Double Taxation Agreements with many countries to prevent double taxation. If you’re a foreigner, check whether your home country has a DTA with Thailand, as it can affect your tax liability.
Tax Identification Number (TIN)
Foreigners who work or earn income in Thailand should obtain a Tax Identification Number, which is used for tax-related purposes.
Types of Income Tax Payable by Foreigners in Thailand
Foreigners in Thailand may be subject to various types of income tax depending on their specific circumstances. Here are the main types of income tax that foreigners may be liable for in Thailand:
Personal Income Tax (PIT)
Foreign individuals who earn income in Thailand are generally subject to PIT. The tax rates vary based on the amount of income earned, with progressive rates ranging from 0% to 35%. Deductions and exemptions may apply depending on the nature of income and personal circumstances. Know about the recent updates on Personal Income Tax in Thailand.
Corporate Income Tax (CIT)
Foreigners who own or invest in Thai companies may be subject to CIT on their corporate income. The standard CIT rate is 20%, but certain incentives and exemptions may apply to specific industries or activities. Click to file your corporate income tax in Thailand today!
Withholding Tax
Foreigners who receive certain types of income from Thai sources may have withholding tax obligations in Thailand. This can include dividends, interest, royalties, and payments for services. The rates vary depending on the type of income and the tax treaty, if any, between Thailand and the foreign individual’s home country.
Value Added Tax (VAT)
While not an income tax per se, VAT is an indirect tax that can impact foreigners doing business in Thailand. It applies to the sale of goods and services and is typically collected by businesses. Foreigners who engage in business activities in Thailand may need to register for VAT and comply with its regulations.
Specific Business Tax (SBT)
SBT is a tax that applies to specific types of businesses and activities, such as liquor, tobacco, and entertainment establishments. Foreigners involved in such businesses may be subject to SBT.
Property Tax
Foreigners who own property in Thailand may be subject to property taxes, including the land and buildings tax and the local development tax.
Check out whether you have to pay property tax in Thailand or not!
Stamp Duty
Stamp duty may apply to certain legal documents and financial transactions in Thailand, and foreigners could be subject to it depending on their activities.
The Bottomline
Income tax, be it personal, corporate, withholding, or of any type in Thailand is guided by some country-specific protocols. Thailand typically follows Thailand Financial Reporting Standards (TFRS) as the governing guidelines in the process of reconciliation, filing, and payment of income taxes. However, if you need to show the same in your country, that may need International Financial Reporting Standards (IFRS).
Therefore, it is crucial that you consult a reputed tax firm in Thailand to get things properly aligned. For a complete solution, email us at [email protected] and get to know all about your eligibility to pay tax. Our professionally qualified Thai tax professionals will surely ensure a smooth tax filing and payment process in Thailand.
