The personal income tax laws in Thailand levy tax on a taxable person's assessable income. A taxable person liable to personal income tax is subject to withholding tax by the payer of the income and is required to file a tax return and pay the balance of any tax due on a yearly (calendar) basis.

Taxable persons

Taxable persons are both residents and non-residents.

A resident is a person who resides in Thailand at one or more times for a period or periods aggregating 180 days or more in a calendar year. A resident is liable to tax on income derived from Thailand sources, whether that income is paid onshore or offshore, and on income from foreign sources that is remitted into Thailand in the year in which it is earned.

A non-resident is a person who residents in Thailand for less than 180 days in a calendar year, and is liable to personal income tax only on income from sources in Thailand.

Foreign expatriates

A foreign expatriate, whether a resident of Thailand or a non-resident of Thailand, is liable to personal income tax on income derived from Thailand sources (i.e. from the performance of duties in Thailand) whether such income is paid in Thailand or outside Thailand.

If a foreign expatriate's residency commences in the year of arrival in Thailand, a foreign expatriate is also liable to personal income tax on any remittances of foreign source income, which is derived in the year of arrival.

Double tax treaties

Thailand has executed double tax treaties with over 50 countries and nearly all of these treaties contain a provision, which can exempt a foreign expatriate from tax on income earned from the performance of duties in Thailand, but this only applies in the case when all of the following three conditions are met:

The expatriate is present in Thailand for less than 183 days in any twelve months period; and

The remuneration is paid by an employer who is not a resident of Thailand; and

The remuneration is not charged to any company or permanent establishment in Thailand.

Assessable income

Thai tax law prescribes eight categories of assessable income, as follows:

Income from hire of services (services rendered to employers);

Income from hire of work (from offices or positions held or services rendered);

Income from goodwill, copyright and other rights, annuities, etc;

Income from dividends, interest, share of profits, bonuses paid to shareholders and gains from the sale of shares;

Income from letting out property on hire (rent);

Income from performance of services by liberal professionals;

Income from construction contracts and hire of work where materials and tools are supplied; and

Income from business, commerce or industry etc, not specified above.

Assessable allowances and benefits

Assessable income also includes income received, not in cash but in kind. Allowances and benefits provided by an employer or other person, such as rent-free housing, children's school fees and return air travel for home leave etc, are additional assessable income for an expatriate under the Thai tax laws.

Capital gains

There is no capital gains tax in Thailand. Capital gains derived by resident expatriates are additional income subject to tax at the normal personal income tax rates. Capital gains derived by non-resident expatriates are subject to tax at the flat rate of 15%.

The amount of the capital gain is simply calculated by deducting the cost price of an asset from the amount of consideration received on disposal of the asset. The cost price of an asset is not indexed for inflation.

For personal income tax purposes, the consideration received is the amount of "proceeds derived" from a disposal of an asset, which may or may not be the market price of the asset, which is the rule that applies for corporate income tax purposes.

Interest and dividend income

Interest and dividends derived by a resident expatriate from foreign sources are subject to Thai tax in the case when the income is remitted into Thailand in the same year in which it is derived.

Interest and dividends derived by a resident expatriate from Thailand sources are subject to Thai withholding taxes of 15% and 10% respectively, and an expatriate may (at his option) exclude such taxed income from his computation of personal income tax.

Interest and dividend income derived by a non-resident expatriate are subject to the same prescribed rates of 15% and 10%. A double tax treaty may prescribe a lower tax rate for interest in certain cases but no tax treaty prescribes a rate lower than 10% on dividends.

Royalty income

Royalty income derived by a resident expatriate from Thailand sources is included in the computation of his personal income tax and is also subject to withholding tax on payment at the rate of 3%.

And similarly to other forms of income, if a resident expatriate derives royalty income from foreign sources and the royalty income is remitted into Thailand in the same year in which it is derived, it is subject to tax in Thailand.

Royalty income derived by a non-resident expatriate from Thailand sources is subject to withholding tax on payment at the rate of 15%, but a double tax treaty may reduce the tax rate to 5%, 8% or 10%, according to the type of royalty.

Tax exemptions

A foreign expatriate employee need not include the following types of income in a computation of personal income tax in Thailand:

Income derived from a sale of immovable property that is acquired by bequest or by way of gift;

Income derived from a sale of residential buildings if the income is spent to acquire a new residential building during a period of 1 year before and after the date of sale;

Income derived from a sale of shares listed on the stock exchange of Thailand;

Income from interest, provided that the interest is subject to 15% withholding tax at source; and

Income from dividends or share of profits from a Thai registered company or mutual fund, provided that the dividends are subject to 10% withholding tax at source.

RSM Advisory
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