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Personal Income Tax

Every person, resident or non-resident, who derives assessable income from employment or business conducted in Thailand, is subject to personal income tax, whether such income is paid in or outside of Thailand. Exemptions are granted to certain persons (UN officers, diplomats and some visiting experts) under the terms of international and bilateral agreements.

An individual who is present in Thailand for at least 180 days in any tax year (calendar year) is treated as a resident of Thailand. Residents are also subject to income tax on any income from foreign sources that they bring into Thailand.

Personal Income Tax

Taxable income includes any payment for services and any other money, property, or benefits derived from hire of service or employment. It also includes dividends, interest, and any royalties or technical assistance fees. Capital gains are considered to be normal income except in the case of the sale of movable property acquired with no intention to trade or make a profit.

Personal income tax paid and absorbed by the employer (in effect giving the employee a net salary) is also considered taxable income to the employee, leading to a “tax pyramid” effect. Also included in taxable income are living allowances, the monetary value of rent-fee accommodation, school fees paid by the employer, travel allowances for annual leave, and the monetary value of any other benefit provide by the employer.

Income Exempt from Personal Income Tax

Certain types of income are excluded from assessable income, including business travel expenses, work-related moving expenses, interest on savings deposited with banks in Thailand, insurance benefits, inheritances and scholarships.

Deductions of Allowances and Expenses for Personal Income Tax

There are various kinds of allowances (subject to certain limitations) authorized by the revenue Code, including allowances for personal, life insurance premiums, provident or pension funds, interest payment and charitable donations.

Personal allowances are 30,000 each for the taxpayer and his or her spouse plus Baht 15,000 for each child. There is a Baht 2,000 educational allowance for each child. There is no limit to the number of children born before 1 January 1980 who are eligible for deductions, and only three children born after that time are eligible.

Deductions of allowances for the spouse and children of a non- resident are allowed only if they actually reside in Thailand.

A standard deduction of expense of 40%, but not exceeding Baht 60,000, is allowed against income from employment. Standard deduction of expenses from 10 to 85% is allowed against other categories of income, but for certain types of income, the taxpayer can elect to itemize expenses instead of taking the standard deduction.

Income from Dividends and Personal Income Tax

Dividends income is generally subject to personal income tax. Thai tax residents may choose to have tax withheld at the rate of 10% of the dividend income, without including such dividend payments in their taxable income at the end of the tax year.

Alternatively, Thai tax residents can claim an approximate 42% dividend tax credit if they incorporate such dividend into their taxable income at the end of the tax year. In this case, the corporate income tax rate if the dividend paying company is 30%. The tax credit is determined by dividing the corporate income tax rate of the dividend payer by the output of 100 minus such corporate income tax rate then multiplying the resulting figure by the dividend amount. This tax credit is only available to an individual who is domiciled in Thailand and who has stayed in the country for a minimum of 180 days of a tax year.

 

 

 

 

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