I have a few working in Thailand related posts on TTL, and one common question that comes up is related to income tax. Specifically, how much tax does a foreigner have to pay on his/her earnings, and whether others such as digital nomads, who are not currently paying tax in their country of origin, have to pay tax in Thailand.
Tax law in Thailand is actually pretty complicated, so in this post I’ll just cover the need to know stuff. I would also advise that if you aren’t on PAYE with a company and are required to do your own return that you get an accountant. Tax returns have to reported in Thai, which presents a language barrier for many.
Income Tax on Earnings
Income tax in Thailand is based on assessable income. The definition of “assessable” covers the following:
- Employment or services rendered
- Professional fees
- Interests, dividends and capital gains on securities
- Rental of properties/assets
- Income from contractor related activities
The Thai Tax Year
The Thai tax year runs from 1st January to 31 December. An income tax return needs to be made to the tax office by the 31st March, for the prior tax year. Payments need to be made immediately because there are penalties for delayed processing and settlement.
For those earning income from property selling or engineering, architecture, accountancy, fine arts and the art of healing, the tax return must be filed on or before the 31st of September, with the tax due on or before the 30th of June of the following year.
Foreigners should note that when renewing your work permit, you will need to show a copy of your tax submission for the previous year.
Thai Income Tax Bands – 2016
|0 – 150,000||Exempt|
|150,000 – 300,000||5%||New Tax Rate|
|300,000 – 500,000||10%|
|500,000 – 750,000||15%||New Tax Rate|
|750,000 – 1,000,000||20%|
|1,000,000 – 2,000,000||25%||New Tax Rate|
|2,000,000 – 4,000,000||30%|
|4,000,001 and Up||35%||New Tax Rate (Reduced from 37%)|
Yes, I know what you’re thinking, Thailand’s tax rates are pretty much the same as my home country! One saving grace is that Thailand does not have a 45% tax rate like some countries.
All forms of earnings are generally taxable and fall under the personal income tax bracket. This ranges from a work salary to capital gains or dividends, lease transactions, or even selling clothes on the sidewalk – as long as the earnings are over 150k per year.
Working Online (Digital Nomads) & Paying Tax in Thailand
There’s a a myth among the “work online” community, which, by the way, avoids the work permit issue because the current law simply doesn’t legislate for it, that Thailand is a grey tax zone; meaning one can work inside Thailand and not pay tax in their home country, or Thailand for that matter.
This isn’t true. Everyone has a tax liability in Thailand. So if you’re a digital nomad in Thailand, working as a web developer, blogger, web cam stripper or whatever, you should be aware that if you aren’t paying tax in your home country, you will need to pay tax in Thailand.
Thailand is not a tax haven. It never has been, and isn’t likely to ever be.
Resident Vs Non Resident
The law stipulates that anyone who resides in Thailand for longer than 180 days is considered a resident for tax purposes. That’s right; not a resident as in a citizen, but citizen as in eligible to pay tax. This means you’ll need to pay tax on your global income, which is money you earn in your home country and any other country.
If you are a foreigner and reside in Thailand for fewer than 180 days each calendar year, then you are will only have to pay tax on the earnings that you earn inside Thailand.
Now, before you say, “But I haven’t got a work permit!.” It doesn’t matter. Those who do not have a work permit are NOT exempt from paying tax.
“But how will they know I’m not paying tax in my home country”, you might ask.
I will tell you.
Double Tax Treaties
Thailand has double tax treaties with nearly every country on the planet. The purpose of a tax treaty is to prevent a company from one country being taxed twice on income earned in the other country. This also applies to individuals performing services in the other country.
So, if you are paying tax in your home country, you’re legal. If you’re in the “grey zone”, you’re not. You see, it’s very likely that when Thailand finally does get around to addressing the digital nomad visa/work permit issue, that they’ll realise most of these people aren’t paying tax in their home countries and by law should be paying tax in Thailand. And tax is always collected on retrospective earnings. Food for thought.
How to Get a Tax Number
If you are earning profits and residing in Thailand, you need a tax ID number to pay your dues. The tax office will happily grant you a tax number. To acquire one, you’ll need a passport or identity card, and need to demonstrate why you need a number.
Tax Deductions & Allowances
Like every other country, tax deductions and allowances are available in Thailand too. These are intended to reduce the tax load and make it seem almost generous that the tax man isn’t taking the shirt entirely off your back, so to speak.
|Source of Income||Deduction Rate Allowed|
|1. Employment Income||40% – not more than 60,000 THB|
|2. Copyright Income||40% – not more than 60,000 THB|
|3. Rental Income from assets and properties||10% – 30%|
a. Medical Professionb. Liberal Profession
|5. Actual Expense or Contract Work||70%|
|6. Actual Expense or Business Activities||65% – 85%|
Aside from the scheduled tax allowance provided in the table below, there are limited allowances for the following:
- Home mortgage interest payments
- Purchases of retirement mutual fund and long term equity fund
- Contributions to charities
- Social Insurance contributions
- Life Insurance premiums
- Qualified provident fund payments
|30,000||Both for the taxpayer and the spouse|
|a. For each child|
b. Education allowance for each child
|30,000||For the taxpayer and spouse’s parents, if the parents are over 60 years old and whose income for the tax year is below 30,000 Baht|
Got a specific question related to tax in Thailand? Leave it in the comments section below.