Expatriate tax ebook - Thailand

Basis of taxation

Charge to tax
Residence
Income from employment
Source of employment
Benefits (in kind)
Expatriate concessions
Relief for foreign taxes
Deductions against income

Charge to tax
Thailand tax is imposed on assessable income. A resident of Thailand is taxed on income earned in Thailand and on income earned offshore which is brought into Thailand in the year the income is earned. Non-residents are subject to income tax on all income earned in Thailand.

The definition of income for income tax purposes includes wages, salaries, per diem, bonuses, bounties, gratuities, pension, directors' fees, brokerage fees, discounts, subsidies, meeting fees, house rent allowances, monetary value of rent free accommodation provided by the employer, income tax paid and borne by the employer, any other property or benefits derived by virtue of hire of services, rental fees, interest, dividends, capital gains and royalties.

Residence
Generally speaking, an individual is a tax resident in Thailand if he/she has been physically present in Thailand for an aggregate period of 180 days (or 183 days for double tax treaty countries) in any calendar year. The number of days is counted from the date the individual arrives in Thailand as shown in their passport.

Income from employment
Taxable income is income derived by virtue of hire of service in Thailand irrespective of whether income is paid inside or outside Thailand.

Thailand operates a self-assessment tax system where an expatriate is required to calculate and pay income taxes due on his income at the time of filing the return. In addition, under the Thailand withholding tax system, the employer is required to withhold tax monthly from employment income and remit the taxes withheld to the revenue office. Expatriates are required to obtain a tax identification number from the Thai Revenue Department (TRD).

Source of employment
Income from employment ordinarily has its source in the place where the services are performed. A contract executed offshore does not protect an expatriate from paying tax on income from sources in Thailand.

Benefits (in kind)
Income tax is imposed on benefits that are reimbursed or paid directly by the employer for the employee including, for example, accommodation rental, utility bills, club membership, transportation and automobile expenses, school fees, mobile phone bill, etc.

Benefits provided which are necessary for the trade or business of the employer, or provided for the convenience of the employer are not subject to income tax. Each case must be determined on its own facts and circumstances.

Expatriate concessions
Expatriates working for qualifying regional operating headquarters in Thailand may opt to be taxed at the final withholding tax rate of 15% instead of the normal progressive tax rates for a maximum period of 4 consecutive years, whether or not such an alien has occasionally been travelling out of Thailand during that period.

Relief for foreign taxes
Thai residents are taxable on worldwide income and are required to report these for income tax purposes in Thailand.

However income that has been taxed in a foreign jurisdiction which has a double taxation agreement with Thailand will be entitled to a tax credit, subject to certain limitations, against Thailand tax liability.

Deductions against income
Thai residents are given a lump sum standard deduction from employment income or personal services income at 40% of assessable income up to a maximum of 60,000 Baht. For other income, actual expenses or lump sum standard deductions are available. There is no tax deduction against passive income such as interest, royalties, dividends and other investment income. Individuals cannot deduct capital losses against capital gains.

Information about Thailand:

introduction

facts and figures

basis of taxation

what taxes?

tax planning opportunities