Personal income tax in Thailand

Understanding income tax in Thailand is essential for both residents and expats, as the tax regulations can be complex. This guide covers everything you need to know about personal income tax in Thailand, including rates, exemptions, and filing requirements.

Thailand’s income tax procedures can differ from those of other countries, and that is why J & E Concierge is here to explain the topic in depth. In the end, you will be fully informed about the income tax for expats and know your next steps regarding this aspect of your business.

When we speak about Thailand’s income tax, it’s important to know that not only Thai citizens must pay income taxes. If you are a resident or non-resident in Thailand, you can also represent a taxpayer. Staying in Thailand longer than 180 consecutive days a year means you are a resident of Thailand. So,  any earned income you get and overseas incomes become taxable. 

On the other hand, Thailand subjects you to income tax as a non-resident only if you earn income in Thailand. We will provide you with the proper information about Thailand’s income tax for expats.

Thailand has a wide range of taxes. Personal income tax is one of them. How does it differ from other taxes? It uses a progressive income tax system. The income tax in Thailand is progressive, meaning the rate increases as your income increases. This system applies to both locals and expats alike. There are also several particularities of Thailand’s income tax that every expat should know.

First, let’s clarify what personal income is.

By definition, personal income tax, known also as PIT, is a direct tax added to the income of a person. If you work in Thailand, you are probably familiar with this term with this term. If you are not working in Thailand, but planning to do so, you have to take into consideration the following information about income tax in Thailand for expats.

 Income tax in Thailand is applied to all types of income that derive from employment salary, professional fees, dividends, capital gains, rental of property, and many other personal activities.

Generally, the personal income tax in Thailand is obligatory for earning over THB150,001 annually. It doesn’t matter if you are an expat or not, you can be liable to pay income tax in Thailand.

Read more about Reasons to open a bank account in Thailand as a foreigner

When they first hear about it, many expats worry about how much the income tax is in Thailand. However, there are more important aspects they should focus on. First of all, you have to check whether you are a taxable person or not. To better clarify this misunderstanding, it is enough to know the following facts about residents and non-residents.

You are a tax resident if:

• You reside in Thailand for more than 180 days during a calendar year
• You must pay personal income tax in Thailand on the income you earn and a portion of the income mentioned above.

Expats residing in Thailand for more than 180 days must pay income tax in Thailand on both Thai-sourced and foreign-sourced income.

You are a taxable non-resident if:

• You reside in Thailand for less than 180 days during a calendar year
• The law requires you to pay personal income tax only on the income you earn in Thailand.

In other words, if you are a non-resident working from home for a foreign firm, you will not need to pay income tax in Thailand. Once you start generating income from Thailand, you automatically become a taxable non-resident. But, first of all, you should prepare the required paperwork accordingly.

 Legally working in Thailand as an expat requires a Non-Immigrant Visa followed by a Work Permit. Moreover, you should be aware that there are strict penalties such as huge fines and even imprisonment for illegal work activities.

As an expat, this tax depends mostly on the source of your income. But to be sure if you are eligible or not for this tax, let the Thai tax department determine it. If you know that you are eligible for income tax, you have to receive a tax ID. It is a small card that has a tax identification number. 

To apply for it, you have to go to the tax office and hand in the following documents

• Passport visa or visa exemption
• Valid lease agreement for six months or more
• Proof of residency

Read more about Thai visa services – office in Pattaya

Another way to determine if you need to register for personal income tax in Thailand is to confirm whether your income is exempt from PIT.There are several cases, but check them to be sure.

In detail, the law obliges most expats whose income comes from advantages gained in Thailand to pay personal income tax in Thailand. Even more, resident expats who bring foreign-sourced income into Thailand are considered taxable persons.

 You are considered a tax resident in Thailand if:

1. You earn your income from employment. Therefore,  if you are a foreign worker in Thailand and you receive wages, salary, bonus, gratuity, pension, house rent allowance, the monetary value of rent-free provided by an employer, payment of debt liability of employee made by an employer, or any money, property, benefit derived from employment, and other financial benefits, you have to pay tax under your earnings
2. Your income is provided by the hire of work, office employment, or services
3. Your income comes from goodwill, copyright, and franchise
4. Your income is derived from interest, dividends, and bonuses for investors
5. Income from liberal professions in law, medicine, engineering, architecture, etc
6. Income from businesses, commerce, agriculture, and transportation

Capital gains are taxable. There are also some exemptions to the personal income tax. Exceptions to the taxability of the capital gains:

1. Income from wages and salary
2. Capital gains on the sale of non-interest-bearing government bonds or debt instruments.
3. Capital gains from the sale of government bonds
4. Taxable incomes in Thailand that are between 0 and 150,000 THB are exempted from paying.

Common Deductions and Exemptions in Income Tax in Thailand

While the income tax law applies to both Thai residents and expats, it also allows for several deductions and exemptions that can reduce your tax liability. When filing your income tax in Thailand, you should also be aware of the available deductions and exemptions that may apply to you.

Some of the most common deductions and exemptions include:

• Personal income tax deductions.
• Exemptions for retirement savings contributions.
• Allowances for dependent children or elderly care.
• Deductions for mortgage interest on a primary residence.

These provisions are essential for anyone looking to minimize their taxable income and should be carefully considered when planning your financial strategy in Thailand.

Income Tax Rates in Thailand

Your tax income is calculated according to the type and amount of your income. Several incomes are exempted from paying personal tax income. If you are questioning how much is income tax in Thailand, we have below a list of values and rates.

• Incomes between THB 150,001 and THB 300,000 → Personal tax is 5%
• Incomes between THB 300,001 and THB 500,000 → Personal tax is 10%
• Incomes between THB 500,001 and THB 750,000 → Personal tax is 15%
• Incomes between THB 750,001 and THB 1,000,000 → Personal tax is 20%
• Incomes between THB 1,000,001 and THB 2,000,000 → Personal tax is 25%
• Incomes between THB 2,000,001 and THB 5,000,000 → Personal tax is 30%
• Incomes over THB 5,000,001 → Personal tax is 35%

Filing and Payment Deadlines for Income Tax in Thailand

In short, the Thai tax year starts on January 1st and ends on December 31st. During this time, the taxpayer must register for a tax identification number and pay the personal income tax.

Therefore, if your income is taxable, you have to pay the personal income tax until the calendar year ending December 31. But you have to complete and submit the tax filings and payments by March 31st of the following year. If your income comes from hiring out property and other derived aspects or liberal professions, you will have to file a half-yearly tax return by September 30. This process can be done on paper or online.

Pay attention to the preparation of tax filings. Submitting inaccurate tax returns may drive penalties and surcharges. This mistake will make you subject to a penalty rate of 100%. In exceptional cases, the penalty may be reduced to 50%. For this, you have to submit a written request to local authorities. During the tax audit, the assessment officer will decide whether you will pay the tax entirely or not.