Thailand Personal Income Tax

All resident and nonresident individuals earning income from sources in Thailand are subject to personal income tax (PIT). A Thai resident is also subject to PIT on self-employment and business income from sources overseas if the income is remit­ted to Thailand.

Individuals are considered resident if they reside in Thailand for a period or periods aggregating 180 days or more during a calen­dar year. Income earned overseas by Thai residents is also subject to PIT if it is remitted to Thailand in the year it is earned.

Income subject to tax. Taxable income consists of assessable income, less deductible expenses and allowances.

The taxation of various types of income is described below.

Employment income. All benefits derived from employment are assessable, unless expressly exempt by law. Examples of assess­able benefits are wages, salaries, per diem allowances, bonuses, bounties, gratuities, directors’ fees, pensions, house rental allow­ances, the monetary value of rent-free accommodation provided by an employer, and income tax paid and borne by an employer on behalf of an employee.

Tax-exempt benefits include medical expenses as well as travel expenses incurred wholly and exclusively by an employee in car­rying out his or her duties. In addition, group medical insurance premiums paid by the employer to an insurance company operat­ing in Thailand on behalf of its employees are tax-exempt bene­fits if the duration of the group insurance policy does not exceed one year. Income received from a provident fund by an employee at the termination of his or her employment as a result of retire­ment, disability or death is also exempt from income tax, subject to certain conditions.

Self-employment and business income. Taxable self-employment and business income consists of assessable income less deduct ible expenses and allowances. Generally, all types of income are assessable unless expressly exempt by law.

Investment income. Interest, dividends and other investment in come are subject to PIT at the rates set forth in Rates.

A tax credit is granted for dividend income received by an indi­vidual domiciled in Thailand from locally incorporated companies. The credit is calculated according to the following formula:

Tax credit =        t        × dividends received

100 – t

For the purposes of the above formula, t equals the rate of corpo­rate income tax applicable to the distributing company.

Capital gains. Gains derived from sales of shares are generally subject to PIT. However, gains derived from sales of securities listed on the Stock Exchange of Thailand are exempt from tax.

Gains derived from sales of real property are subject to PIT. A standard allowance is deductible, depending on the number of years of ownership. This tax also applies to gains derived from sales of real property used in a trade or business.

Taxation of employer-provided stock options. Employees are sub­ject to tax on the benefit derived from shares provided either for free or at a favorable price by the employer. The taxable benefit is the difference between the price paid by the employee, if any, and the fair market value of the shares.

Deductions

Deductible expenses. A standard allowance of 40% of assessable income, up to THB60,000, is allowed as a deductible expense against income from employment.

Personal deductions and allowances that are most applicable to expatriates coming to work in Thailand. To arrive at net assess­able income, the following allowances are permitted as deduc­tions.

Benefit Amount
Personal allowance THB30000
Spouse allowance THB30000
Child allowance THB15000 per child (maximum 3 children; conditions apply)
Education allowance THB2000 per child studying in Thailand (maximum 3 children)
Parental support allowance THB30000 per parent (conditions apply)
Life insurance allowance Up to THB100000 (conditions apply)
Parental health insurance allowance Up to THB15000 per parent (conditions apply)
Provident fund (PF) allowance Up to THB500000 (contribution cannot exceed 15% of assessable income)
Retirement Mutual Fund (RMF) Up to THB500,000 (contribution cannot exceed 15% of assessable income; sum of RMF allowance and PF allowance is subject to certain conditions)
Long-Term Equity Fund (LTF) Up to THB500,000 (contribution not exceeding 15% of assessable income)
Interest allowance (housing loans) Up to THB100,000 (conditions apply)
Donations allowance Up to 10% of net assessable income
Social security fund allowance Actual amount (5% of basic salary, not exceeding THB9,000 per year)
Patronage of disabled spouse/parent/child allowance THB60000 per person (conditions apply)

Business deductions. Certain expenses are fully or partially deduct­ible, depending on the type of income. For some expenses, standard deductions are provided. The following table provides the rates of deduction for certain types of income.

Type of income Rate of deduction
Service income 40%, up to THB60,000
Income from copyrights 40%, up to THB60,000
Income from goodwill or other rights None
Dividends None
Rental income Either 10% to 30%, or actual amount of expenses
Income from liberal professions Either 30% to 60%, or actual amount of expenses
Income from work contracts Either 70%, or actual amount of expenses
Income from other businesses, commerce, agriculture, industry and transport Either various rates or actual amount of expenses

Rates. Personal income tax is levied on an individual’s net assess­able income at the following progressive rates.

Assessable income Tax rate Tax due Cumulative tax due
THB % THB THB
First 150,000 0 0 0
Next 150,000 5 7,500 7,500
Next 200,000 10 20,000 27,500
Next 250,000 15 37,500 65,000
Next 250,000 20 50,000 115,000
Next 1,000,000 25 250,000 365,000
Next 2,000,000 30 600,000 965,000
Above 4,000,000 35

Proposed income tax changes. On 19 April 2016, the Cabinet agreed to a Finance Ministry proposal to restructure the Thai personal income tax rates, effective for assessable income received on or after 1 January 2017. Under the new structure, the standard allowance deduction is raised to 50% of assessable income, up to THB100,000, from 40% up to THB60,000, and the personal allowance is increased from THB30,000 to THB60,000. In addition, the spouse allowance is increased from THB30,000 to THB60,000, while the child allowance is raised from THB15,000 to THB30,000 per child, with no limit on the number of children for which it can be claimed.

The tax bands will also be tweaked, with income of between THB2 million and THB5 million being subject to the 30% rate, and only income above THB5 million being subject to the highest rate of 35%.

All changes are anticipated to be in place for the 2017 tax year.

Other taxes

Net worth tax. PIT normally is levied on assessable income earned during a calendar year. However, the tax authorities may reassess income tax based on net worth if the amount of a tax­payer’s income is believed to be understated. In practice, this power is rarely exercised.

Inheritance and gift taxes. Under the Inheritance Tax Act, which was enacted in 2015, inheritances received are taxable only on the accumulated value in excess of THB100 million per benefac­tor, at a rate of 5% in the case of descendants or parents or 10% in all other cases. The tax filing must be completed within 150 days from the date of receipt or penalties and surcharges are applied.

In general, gifts are taxed at a flat rate of 5%. However, gifts received from a legitimate parent, child or spouse (up to THB20 million per year) or in a ceremony or on occasions in accordance with custom and tradition (up to THB10 million per year) are exempt from tax.

Social security

The social security contribution rate is 5% on a capped remu­neration of THB15,000 per month. As a result, the contribution is capped at THB9,000 per year.

Tax filing and payment procedures

PIT payable by employees is withheld by employers. Some self-employed individuals, including certain professionals and those engaged in the rental of property, must make an interim income tax payment in September.

All individuals who earn income in Thailand during a calendar year must file personal income tax returns with the Revenue Department by the end of the following March. Self-assessed income tax must be paid on the filing date.

Married persons are taxed jointly or separately, at the taxpayers’ election, on employment income and jointly on all other types of income.

Tax treaties

Thailand has entered into double tax treaties with the jurisdictions listed below. The method of eliminating double tax varies by treaty.

Armenia                          Indonesia                     Russian

Australia                          Ireland                          Federation

Austria                            Israel                            Seychelles

Bahrain                            Italy                              Singapore

Bangladesh                      Japan                            Slovenia

Belarus                            Korea (South)              South Africa

Belgium                           Kuwait                         Spain

Bulgaria                           Laos                             Sri Lanka

Canada                            Luxembourg                Sweden

Chile                                Malaysia                      Switzerland

China                               Mauritius                     Taiwan

Cyprus                            Myanmar                     Tajikistan

Czech Republic               Nepal                           Turkey

Denmark                         Netherlands                  Ukraine

Estonia                            New Zealand                United Arab

Finland                            Norway                        Emirates

France                             Oman                           United Kingdom

Germany                         Pakistan                       United States

Hong Kong SAR            Philippines                   Uzbekistan

Hungary                          Poland                          Vietnam

India                                Romania

Entry visas

Foreign nationals of most countries who intend to stay in Thailand for 15 days or less are not required to obtain visas prior to entry.

Nationals of 40 countries, including most Western, Southeast Asian and Middle East countries, are granted a 30-day stay at the point of entry.

The government of Thailand through its embassies or consulates overseas can issue many types of visas. However, the three prin­cipal types of visas requested by foreigners from Thai embassies and consulates are tourist visas, non-immigrant visas and transit visas.

Tourist visas are granted for the purpose of tourism only and are normally valid for 60 days. Non-immigrant (business type or Non-B) visas are required for foreign nationals who wish to work in Thailand. The holder of a non-immigrant visa is granted a stay of 90 days. The visa may be extended to a maximum of 12 months with permission from the Immigration Bureau. Foreign nationals who are 50 years of age and older or who invest at least THB10 million in Thailand may apply for one-year non-immigrant visas.

Work permits and self-employment

Foreign nationals who wish to work in Thailand must obtain work permits from the Employment Department. To be eligible for a work permit, a foreign national must enter Thailand on a Non-Immigration Category “B” (Non-B) Visa.

The granting of a work permit is discretionary, based on such criteria as the nature of the work, the knowledge and skills of the applicant, the capital of the employer, and the proportion of Thai national employees to foreign national employees.

An application for a work permit must be submitted by the appli­cant’s employer to the Employment Department of the Ministry of Labor and Social Welfare, together with required documents, including the following:

  • Passport or equivalent document and three photos of the applicant
  • Details of the employer’s business and explanation of the need for the foreign employee
  • Evidence of the employer’s registration and shareholding struc­ture, and financial statements and corporate income tax return (IT. 50) for the preceding year
  • Educational records and employment history of the applicant
  • Recent medical certificate of the applicant obtained from a hospital operating in Thailand

After all required documents are received, the time for processing a work permit can range from approximately a few days up to two weeks, depending on the qualifications of the employer in Thailand. Applicants may not begin working in Thailand while their work permit applications and other papers are being processed. To change employers after an applicant receives a work permit, the applicant must file a new application reflecting a change of employer.

Work permits are usually granted for one year. An application for renewal is required if the holder wishes to continue working in Thailand.

Foreign nationals may establish businesses in Thailand if the type of business is not restricted to majority Thai shareholding by the Foreign Business Law. Under a bilateral agreement, nationals of the United States may apply for exemption from this restriction.

Residence permits

In general, ordinary residence permits are granted to no more than 100 foreign nationals each year. However, residence permits may also be granted to experts in certain fields through the Immigration Bureau, and it takes approximately two to three years for the consideration and approval of the Immigration officer.

An application for a residence permit must be submitted by the applicant to the Immigration Bureau, together with required documents, including the following:

  • Passport or equivalent document and three photos of the appli­cant
  • Proof of financial means
  • Recent medical certificate from a hospital operating in Thailand
  • Statement certifying the applicant has no criminal record

Family and personal considerations

Family members. The working spouse of a work permit holder does not automatically receive a work permit; an application must be filed independently.

Marital property regime. Thailand does not have a community property or similar marital property regime.

Forced heirship. No forced heirship rules apply in Thailand.

Driver’s permits. Although Thailand has no driver’s license reci­procity agreements with other countries, a foreign national may drive legally in Thailand with an international driver’s license.

Obtaining a Thai driver’s license requires taking a written exami­nation and a driving test and undergoing a physical examination.