Thai Income Tax
Thai Taxation System Overview
Knowledge of Thailand’s tax system is essential for individuals and businesses operating within the country. Whether you’re a resident, an expat, or a foreign company, staying informed about the Thai Income Tax rules and the updates since 2024, ensures compliance with the rules and maximizes financial efficiency. Below, we break down key aspects of the personal Thai tax framework, and provide regular updates on exemptions, allowances, and support you to ensure accurate filing to avoid penalties.
Are you a Thai tax resident?
A Thai tax resident is anyone who spends 180 days or more in Thailand during a calendar year. This is cumulative over the calendar year even if you leave and return, it’s the total number of days spent in the country. Your tax residency status affects whether you have tax obligations in Thailand. If you meet the qualifying criteria of a Thai tax resident and you remit foreign sourced income, then you will need to acquire a Tax Identification Number (TIN) and file a tax return.
Thai Income Tax Rules (from 1st January 2024)
Starting January 1, 2024, if you are a Thai tax resident, you will need to pay income tax on foreign-earned income that you bring into Thailand. Any money earned before 1st January 2024 is not taxable under this same rule. This means all moneys earned before this date in bank accounts, property, shares, crypto currency, and income is not taxable in Thailand.
Who is affected?
The rules apply to all Thai tax residents, which is defined as anyone spending 180 days or more in Thailand in a calendar year. This includes foreign nationals who are on various types of visas, including retirement, work permit, marriage, elite, privilege, student and supporting spouse visas.
Prepare for Taxation on your overseas income
Since January 2024, any foreign earned income taken into Thailand should be reported and considered for Thai tax. Be careful of when and how much foreign income you transfer to Thailand, understand what is classed as Foreign Sourced Income, as this is a broad term which encompasses many distinct types of assets, like pensions, investments, and rental income. Maintain detailed records of foreign-earned income and any taxes paid on it abroad, especially if you plan to bring it into Thailand.
What is remitted income?
Remitted foreign sourced income refers to income that is earned outside a taxpayer’s country of residence and then taken into or used in that country. Direct and indirect financial transfers, ATM withdrawals and credit card spending, if sourced from overseas, are considered remitted and therefore assessable income for tax purposes. Cash or assets physically carried across the border, or through the airport are also classed as remittance and should be declared on the tax return.
Personal Thai Income Tax
Tax Rates after allowances in Thai Baht
| Taxable Income | Rate | Max tax per bracket | Cumulative max |
|---|---|---|---|
|
1-150,000* |
Exempt |
0 |
0 |
|
150,001-300,000 |
5% |
7,500 |
7,500 |
|
300,001-500,000 |
10% |
20,000 |
27,500 |
|
500,001-750,000 |
15% |
37,500 |
65,000 |
|
750,001-1,000,000 |
20% |
50,000 |
115,000 |
|
1,000,001-2,000,000 |
25% |
250,000 |
365,000 |
|
2,000,001-5,000,000 |
30% |
900,000 |
1,265,000 |
|
5,000,001 and over |
35% |
unlimited |
|
*Over 65 increases allowances by 190,000
What can you do to ensure the best tax position possible?
There are ways and solutions to help you reduce your taxable income rates! Understanding and being aware of the available tax exemptions, allowances and international tax treaties can all significantly reduce the Income tax payable.
Double Taxation Agreements (DTAs)
Double Taxation Agreements (DTAs) are bilateral agreements between two countries that aim to prevent the same income from being taxed twice. The inter-Governmental agreements that exist between Thailand and other countries prevent the same income from being taxed twice.
Thailand has DTAs with 61 countries, which covers most expats living in Thailand. It is important to realise that all DTAs are not the same. Each is an individual agreement with different terms and conditions. It is particularly important that you understand the DTA for the specific source of income, as some DTAs state that Thailand has no right to tax assets situated in the other country, while others say that they have the sole right to tax residents.
Tax Exemptions
Income earned before Thai tax residency
Income accumulated before becoming a Thai tax resident is not assessable.
Long Term Residency (LTR) Visa
Certain categories under the LTR visa have a royal decree and are exempt from foreign sourced income. One example is the ‘Wealth Pensioner’ LTR Visa.
Inheritance
Overseas inherited income remitted into Thailand is exempt.
Life Insurance
Sums received under life insurance policies are not assessable as income.
Losses
Disposed investments or overseas assets that have sustained a loss.
Gifting
Limits apply up to 20 million baht to a spouse.
Deductions and Allowances
Personal and Family Allowances
Thailand offers personal and family allowances which can significantly reduce taxable income. These allowances are available for the taxpayer, spouse (if not filing jointly), and children (subject to specific conditions).
Health and Medical Deductions
Deductions can be claimed for medical expenses, including health insurance premiums. There are caps on the amount that can be claimed, and specific criteria must be met.
Home Mortgage Interest Deduction
Interest paid on a mortgage in your name against a Thai property can be claimed as a deduction. The deduction has an upper limit and is subject to certain conditions.
Education Expenses
Expenses for your own or your dependents’ education costs in Thailand are deductible. Tuition fees and other related expenses are included within certain limits.
Charitable Contribution
Donations to approved charities and religious institutions in Thailand are tax-deductible. Proper documentation and receipts are essential for these deductions.
Retirement Contribution Deductions
Contributions to approved retirement funds are eligible for tax deductions. There are annual limits on the amount that can be deducted.
Personal Thai Income Tax with Business Class Asia
The new income tax update in Thailand introduces significant changes for taxpayers. As you navigate these changes, it is crucial to stay informed and adapt your financial planning accordingly. Business Class Asia is here to help you navigate, adapt, and optimize your financial strategy. Contact our experts for personalised support.
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