I have a few “working in Thailand” related posts on the blog, and I often get questions related to income tax.
Specifically: How much tax does a foreigner have to pay on his/her earnings, and do 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 be reported in Thai, which presents a language barrier for most.
Income Tax on Earnings
Income tax in Thailand is based on assessable income. The definition of “assessable” covers the following:
- Wages paid in Thailand or abroad
- Income earned by a person who resided in Thailand for a total of 180 days
- Housing and meal allowances or their value
- School fees for dependents paid for by employer
- Cost of home leave for taxpayer and dependents
- Capital gains arising from transfer of assets
- Pensions and retirement pay brought into Thailand
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 a work permit, you will need to show a copy of your tax submission for the previous year.
Thai Income Tax Bands – 2021
Thailand taxes both residents and non-residents on income derived from employment or business carried out in Thailand, regardless of whether payment is remitted in or outside of Thailand.
Residents who receive income from abroad are taxable on that income if the income is brought into Thailand in the tax year in which it is received (see the section below of a definition on ‘resident'.
|0 – 150,000||Exempt|
|150,000 – 300,000||5%|
|300,000 – 500,000||10%|
|500,000 – 750,000||15%|
|750,000 – 1,000,000||20%|
|1,000,000 – 2,000,000||25%|
|2,000,000 – 5,000,000||30%|
* In addition to the 150,000 Baht tax exemption threshold, persons over the age of 65 receive an exemption on the first 190,000 of taxable income.
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, and in 2019 the 30% tax rate band was expanded – so you can earn more at that rate before being put onto the 35% band.
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.
Resident Vs Non Resident
The law stipulates that anyone who resides in Thailand for longer than 180 days is considered a resident.
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. This includes your pension (see below).
If you are a foreigner and reside in Thailand for fewer than 180 days each calendar year, then you 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.
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 or individual from one country being taxed twice on income earned in another country.
Many people assume that despite being considered a resident in Thailand, they don't need to pay tax on their income because it is taxed in their home country. This isn't quite true.
Once you stay the 180 days, the law requires you to declare money brought into the country if it was earned within the current tax year.
The onus is on you to sort out your residence status in your home country and let them know that for the given tax year you are a Thai resident and required to pay tax there. Then, because of the double tax treaty, you won't be taxed in your home country. And if you've already paid tax, you can ask for a rebate.
In short: the double tax treaty prevents double taxation, but doesn't define residency. This is a separate issue.
Is My Pension Taxable in Thailand?
Notice that I mentioned “pension” in the section before last. And yes, the same rule applies.
If you meet the resident requirements then the double tax treaty is irrelevant; you have a tax liability here. That doesn't mean you'd pay twice, it just means you need to sort out your residence status using the double tax treaty rules to avoid double payment.
But TTL… No One Declares Pension Income in Thailand
You're right. I don't know anyone either. I'm just giving you the letter of the law here.
The reality on the ground is that Thailand isn't about to go enforcing this on retirees, because the hassle would cause a backlash and most certainly repel prospective retirees rather than encourage them.
No one wants the added hassle of retiring to the beach and having to deal with an accountant.
In fact, read around the web and you'll find that expats who have tried to pay have been turned away by the tax office and told they are “too old to pay tax”, and other strange remarks. What can I say, this is Thailand (TIT).
It's also really difficult to enforce. They'd have to keep track of all the foreigners coming and going to determine who has fallen into residency status for that tax year.
Working Online (Digital Nomads) & Paying Tax in Thailand
There’s a a myth among the “working 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. If you stay over 180 days in a given year, you automatically have a tax liability in Thailand.
Even if you're staying less that 180 days, you still have a tax liability and will need to pay tax somewhere.
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, it may eventually catch up with you.
Thailand is not a tax haven. It never has been and isn't likely to ever be.
It is very likely that when Thailand finally does get around to addressing the digital nomad visa/work permit issue, that they’ll realize most of these people aren’t paying tax in their home countries and by law (residents) should be paying tax in Thailand.
Tax is always collected on retrospective earnings, and the penalty for failing to submit a tax return in Thailand is up to double the amount owed.
How to Get a Tax Number
To file a return you need a tax ID number from the tax office. 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. 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.
- Employment Income: 50% – not more than 100,000 THB
- Copyright Income: 40% – not more than 60,000 THB
- Rental Income from assets and properties: 10% – 30%
- Profession: a. Medical Profession: 60%. b. Liberal Profession: 30%
- Actual Expense or Contract Work: 70%
- 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
- 60,000 Baht: Both for the taxpayer and the spouse (provided that the taxpayer's spouse does not file his/her own return)
- 30,000 Baht: For each child (additional THB 30,000 for the second child onwards born in or after 2018)
- 30,000 Baht: 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
- 60,000 Baht: For the care of disabled or incapacitated family members.
* A non-resident is allowed to claim deductions for a spouse, children, and parent, but only if they are resident in Thailand
Please note: I am not a qualified accountant or tax advisor. I will do my best to answer your questions, but cross-boarder tax affairs can be complicated. If you are in doubt over the best arrangement for your tax affairs, please speak to an expert.
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