Personal income tax in Thailand: Overview for expats

This article focuses on explaining how personal income tax works in Thailand, who has to pay it and on what income they have to and don’t have to pay tax.

How does personal income tax in Thailand work?

Thailand’s tax administration follows the concept of self-assessment. That means that each year, taxpayers are legally obliged to declare what they earn, calculate their taxes, file a tax return and pay their respective taxes to the authorities in local currency (THB). Technically, there’s an exemption from filing the tax return, but since the threshold for this is very low, it doesn’t really apply to expats.

The income declared and tax paid is assumed to be correct, but don’t get a wrong idea. Sometimes, the administration goes back and checks your paperwork (for example when you have to refile your return), so it’s in your best interest to be honest. There’s also a penalty for incorrect or late filing and late payment of tax – in case you are wondering what happens if you don’t pay tax in Thailand.

Do foreigners pay income tax in Thailand?

Unlike locals – of which only about 10% regularly pay income tax – foreigners need to do their filings rigorously each year as they will need the tax return for things like visa extension etc. (more on the qualifying criteria below). The good news for foreigners is that expats pay the income tax at the same rates as Thais.

Tax year & filing deadline

The Thai tax year coincides with the calendar year (Jan 1–Dec 31). The filing deadline follows three months later – March 31 for paper filing or April 8 for online filing. Married couples can either file their tax returns separately or jointly, whichever they prefer.

Note that if your earn income type 5-8 (defined below) in the first half of the year, you will also need to file the so-called half-year return and make payment within the last day of September of that tax year. This amount will count towards your total tax liability for the entire year. It’s essentially tax prepayment.

Payment of income tax

You don’t pay your income tax all at once but gradually throughout the year in the form of withholding payments. Income from the payment of salaries, other employment benefits and certain other income categories is legally required to be withheld at source (e.g. your employer). The remaining balance of any tax due for a calendar year is then payable at the time of filing the annual tax return.

Tax administration in Thailand

All things personal income tax in Thailand (for foreigners and Thais alike) fall under the governance of the Revenue Department of the Ministry of Finance. It sets the rules in the Revenue Code and collets tax payments. The department has a number of offices throughout Bangkok and the whole country, so if you ever need to visit one, you typically go to your local office. The staff don’t speak much English, but are usually helpful and nice.

Taxable person

A taxable person or an individual taxpayer in Thailand can be:

• Individual/natural person (foreign or Thai)
• (Unregistered) ordinary partnership
• Non-juristic body of a person
• Deceased person for their assessable income and estate throughout the year in which death occurred
• Undivided estate of the deceased (= property with multiple owners)

Taxpayers can be residents and non-residents.

Resident taxpayer

Residents are individuals residing in Thailand for more than 180 days in a calendar year (in a row or in aggregate). They need to pay tax on their Thai-sourced income and part of the foreign income brought into Thailand in the same year it’s earned.

There’s also a minimum threshold for residents. If you earn only income from employment, you need to file your taxes once your earnings exceed 120,000 THB a year (or combined income of 220,000 THB for a married couple). These figures are lower for those earning not only employment income – 60,000 THB and 120,000 THB respectively.

In contrast, non-residents are only taxed on income from sources in Thailand (regardless of where it’s paid). They can bring in foreign income without triggering any Thai tax.

For clarity, income sourced in Thailand includes income derived from a duty, post, employment, or office performed in Thailand, business or an employer’s business carried on in Thailand, or from property located in Thailand. Similarly, foreign-sourced income includes income from a post/office, a business or property situated abroad.

Assessable & taxable income

In general, all types of income are assessable unless expressly exempt by law (see the exemptions below).

Assessable income covers income both in cash and in-kind (in goods or services instead of money). In-kind payment means that any benefits provided by an employer or other persons, such as a rent-free accommodation 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 a personal income tax in Thailand.

Eight types of income

The Revenue code classifies assessable income into eight types. This is mainly due to different deductible expenses and withholding tax rates for each type. The eight income categories are:

1. Employment income – income derived from personal services rendered to employers, regardless of whether the income is paid within or outside Thailand.
2. Income from hiring of services – income derived from a post, performance of work, office of employment or service rendered (this is largely a subcategory of the first type)
3. Royalty income – income from goodwill, copyrights, franchises, patent, other rights, annuity, etc.
4. Interest, dividends, capital gain income – income in the nature of interest, dividends, bonus for the investor, reduction of capital, increment of capital, gain on amalgamation, acquisition, or dissolution, and gain on transfer of shares
5. Rental income – income from letting properties, breaches of contracts of instalment sale or hire-purchase contracts
6. Professional/liberal services income – income from liberal professions such as law, engineering, architecture, accounting, fine arts or other liberal professions as prescribed by a Royal Decree
7. Contractor/construction services income – income from contracting of work whereby the contractor provides essential materials besides tools
8. Other income – income from a business, commerce, agriculture, industry, transport, or any other activity not specified above

You can read the Revenue Code (Section 40) for more details about each type.

While assessable income represents a total of income that counts towards your tax liability, taxable income/base is the actual amount on which you pay tax. You can calculate it by subtracting deductions & allowances from your assessable income:

Taxable income = Assessable income (excl. exempt income) - Deductions - Allowances

Tax-exempt income

Currently, there are 29 income categories exempt from personal income tax. Below is a summary of some of those most likely to apply to foreigners living in Thailand (courtesy of the Revenue Code):

Employment income

• Per diem or transport expenses spent in good faith by an employee, a holder of an office, or a person rendering services necessarily, exclusively, and wholly for carrying out his/her duties
• The portion of travelling expenses paid by an employer to an employee for travelling from another place to take employment for the first time or for returning to his/her place of origin at the termination of employment if such expenses are incurred necessarily for those very purposes (travelling expenses received by an employee who returns to his/her place of origin and then takes up employment with the same employer within 365 days from the expiration of the previous term of employment are not exempted)
• Medical expenses paid by an employer for an employee and his/her family

Capital gains

Most types of capital gains are taxable as ordinary income. However, the following capital gains are exempt from tax:

• Income from the sale of securities (investment units in a mutual fund) on the Stock Exchange of Thailand, excluding income from the sale of debentures and bonds
• Gains on the sale of securities listed on stock exchanges in the Association of Southeast Asian Nations (ASEAN) member countries and traded through the ASEAN Link, excluding securities in the form of treasury bills, bonds, bills, or debentures

Capital gains and investment income earned by a resident from sources outside Thailand aren’t taxable unless remitted to Thailand in the year of receipt. Capital losses may not be offset against capital gains.

Interest

Interest income is subject to withholding tax at a flat rate of 15%. Provided that it is withheld at source, you as a taxpayer have a choice. You can either choose to exclude the above interest income from other income, in which case you pay the 15% withholding tax (it won’t be credited back to you). Or you can include such interest income with other income and pay tax according to the income tax rates, in which case the tax withheld at source is credited against the tax liability. The interest income in question includes:

• Interest on bonds or debentures issued by a government organisation
• 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 organised by a specific law of Thailand for the purpose of lending money to promote agriculture, commerce or industry

Gifts/inheritance

• Maintenance income derived under a moral obligation, a legacy, an inheritance, or gifts made in a ceremony or on occasions in accordance with established custom
• Proceeds from the sale of movable property acquired by bequest or acquired without a view to trading or profits. 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 personal income tax.

Dividends

Dividends received from a company incorporated in Thailand are subject to withholding tax at a flat rate of 10%. Resident taxpayers who earn dividend income have two options. They can either choose to exclude this income from the computation of income tax and pay the 10% tax that’s already withheld. Or they can include the dividend income in the calculation of their total assessable income, use the 10% withholding tax as a tax credit and deduct it from the total assessable income.

Others

• Awards for the purpose of education or scientific research
• Compensation for wrongful acts, sums derived from insurance or from a funeral assistance scheme
• Share of profits obtained from a non-registered ordinary partnership or a group of persons
• Compensatory benefit received by an insured person from the social insurance fund under the law governing social insurance

You can find the full list in the Revenue Code (Section 42).