Accueil / Accounting Services Thailand / Personal Income Tax in Thailand

Learn more about Personal Income Tax

In Thailand, the personal income tax scheme levies taxes directly on people based on earnings. Here, an “individual” encompasses sole proprietors, partnerships and unincorporated businesses. Thus, distinguishing “residents” from “non-residents” is paramount.

Moreover, taxpayers must compute what they owe, submit returns, and pay up by the calendar year’s end. The Thai tax code delineates the percentages pertaining to taxable income. Furthermore, submitting returns to the tax department and payment deadline is the following March 31st for that fiscal cycle.

◊ What are the regulations for individual income tax in Thailand?

In Thailand, the Revenue Code governs personal income tax. Thus, here are the key regulations for personal income tax in Thailand :

Tax Residency: Individuals who reside in Thailand for 180 days or more in a calendar year are considered tax residents and are subject to tax on their worldwide income. Hence, non-residents are only taxed on income from Thailand.

Tax Rates: Thailand has a progressive tax system with varying tax rates based on income brackets. The personal income tax rates for residents are as follows:

Income up to 150,000 baht: Exempt from tax.
Income between 150,001 baht and 300,000 baht: Taxed at a rate of 5%.
Income between 300,001 baht and 500,000 baht: Taxed at a rate of 10%.
Income between 500,001 baht and 750,000 baht: Taxed at a rate of 15%.
Income between 750,001 baht and 1,000,000 baht: Taxed at a rate of 20%.
Income between 1,000,001 baht and 2 000, 000 baht: Taxed at 25%.
Income between 2 000 001 baht and 4 000, 000 baht: taxed at a rate of 30%.
Income over 4 000, 001 baht: taxed at a rate of 35%

Thus, it’s essential to note that these rates may have changed. Furthermore, you should check with the Thai Revenue Department or a tax professional for the most up-to-date rates.

Deductions and Allowances: To reduce taxable income, you can claim certain deductions and allowances. Then, standard deductions and allowances include:

Personal allowances: A standard deduction based on income brackets.
Social Security contributions: Contributions made to the Social Security Fund.
Provident fund contributions: Contributions made to a recognized provident fund.
Charitable donations: Donations made to approved charitable organizations.
Life insurance premiums: Premiums paid for qualifying life insurance policies.
Education expenses: Expenses for education up to a specific limit.

Filing and Payment: Personal income tax returns must be filed by individuals by the end of March of the year following the taxable year. Besides, taxes owed are generally paid in a lump sum when filing, although installments may be available for specific individuals.

Notably, when discussing personal income tax in various jurisdictions, it’s crucial to understand that this is a general overview of the regulations, and there may be additional rules, exemptions, or changes to the tax code. Additionally, to ensure compliance and to get the most accurate information for your specific situation, it is recommended to consult with the Thai Revenue Department or a qualified tax lawyer.

◊ What laws apply as regard personal income tax?

The primary law governing personal income tax in Thailand is the Revenue Code. Indeed, the Revenue Code contains provisions related to various aspects of taxation, including the determination of taxable income, tax rates, deductions, allowances, filing requirements, and penalties.

Additionally, supporting regulations, notifications, and rulings issued by the Thai Revenue Department provide further guidance and interpretation of the tax laws. Thus, these documents clarify specific aspects of the tax code and provide details on procedural matters, deadlines, and requirements.

To conclude, it is essential to consult the most up-to-date versions of the Revenue Code and any relevant regulations, notifications, and rulings to ensure compliance with the current tax laws in Thailand. In addition, these can be obtained from the Thai Revenue Department or through reputable tax professionals who stay updated on the latest developments in tax legislation.

◊ Who must pay individual tax in Thailand?

In Thailand, two categories of people must pay personal income tax: “Residents” and “Non-Residents.”

Firstly, a resident is a person who stays in Thailand for more than 180 days in a tax year. Then, residents are liable to pay tax on all income earned in Thailand and on income that enters Thailand from foreign sources.

Secondly, under Thai tax law, non-residents are only liable to pay tax on income earned in Thailand. However, there are bilateral tax treaties between Thailand and other countries to avoid double taxation.

◊ What are the taxable incomes?

First and foremost, all persons, whether residents or non-residents are taxed on taxable income from employment or occupation in Thailand. Therefore, Section 40 of the Thai Tax Code lists eight categories of taxable income:

“1. Wages and salaries (including income from stock options, housing allowances, and other fringe benefits)

Income from employment, paid work, or the rendering of services.
income from goodwill, franchises, patents, other rights, annuities, etc.
income from interest, dividends, investor dividends, proceeds from mergers, acquisitions, or dissolution of companies or associations, sale of stock, cryptocurrency, etc.
income from the rental of real estate, breach of rental and lease contracts
income from legal, medical, technical, architectural, accounting, and artistic professions
income from employment contracts for the provision of capital equipment other than tools by entrepreneurs; and
income from commercial, industrial, and manufacturing activities and income other than those mentioned in points 1 to 7.”

Indeed, it’s important to note that while the above categories define taxable incomes, the actual rates and specifics of personal income tax can vary based on several factors. Additionally, always consult with a tax lawyer for detailed guidance.

◊ How to calculate taxable income?

To correctly calculate taxable income, follow these steps:

First, the income received must be divided into eight income categories.
Second, the exemption system must be applied.
Third, it must add the total income after deductions together.
Finally, taxable income can be determined after deducting child allowances. Thus, it is possible to apply the exemption to taxable income according to the provisions:
60,000 Baht per taxpayer.
60,000 Baht if the spouse has no income.
30,000 Baht for each of his children under certain conditions.

◊ What deductions can be claimed for personal income tax ?

Firstly, deductions for income earned differ depending on the source. Wages and salaries up to one hundred thousand Baht receive half off, as does self-employment income from personal services. The same fifty percent deduction applies to the first one hundred thousand from business income or royalties. Interest, dividends, and capital gains lack deductibility, however.

Rental earnings are eligible for deductions based on property type. Buildings and wharves may subtract either actual costs or thirty percent, while agricultural land offers twenty percent. Other land allows actual expenditures or fifteen percent, yet vehicles provide thirty percent off actual expenses.

Next, the deductions get more complicated. All varieties of property qualify for actual costs or ten percent aside. Self-employment income usually deducts thirty percent of actual costs aside from doctors enjoying sixty percent. Contractors supplying indispensable gear besides tools take seventy percent of real expenditures. Income from trade, agriculture, transportation, or unspecified ventures allows forty to sixty percent based on source.

◊ What tax rates apply under the progressive system of personal income tax ?

Depending on taxable earnings, progressive tax rates apply in Thailand :

For income up to 150,000 Baht, there is no tax due.
Those earning between 150,001 to 300,000 Baht will pay 5% on their taxable amount.
The 10% rate applies to taxable income between 300,001 to 500,000 Baht.
Income from 501,000 to 750,000 Baht is taxed at 15%.
Earners taking home 750,001 to 1,000,000 Baht will lose 20% to taxes.
The 25% bracket captures revenue between 1,000,001 to 2,000,000 Baht.
Taxpayers making 2,000,000.01 to 5,000,000 Baht will pay 30% on their earnings.
Anything over 5,000,000 Baht is levied the highest 35% tax rate.

◊ What income is not taxable on a progressive basis ?

Some forms of earnings face unique tax treatments, such as interest, dividends, and property profits :

Interest profits escape the computation if the filer applies for a standard 15% withholding, excluding select interest types.
Government bonds and certain other public debts issue returns exempt from levies.
Additionally, savings accounts at banks enjoy freedom from fees on the first 20,000 Baht pulled yearly from interest alone.
Dividends dodge inclusion when subjected to the routine 10% tax held back upfront.
Distinct policies cover earnings on real estate trades, permitting payment of the conclusive withholding to the Land
Registry when registering a property’s new ownership. Complexity arises in navigating every category’s regulations, though thorough preparation helps fulfill obligations properly while making the most of exemptions designed to simplify taxpayers’ lives.

◊ Can I get a tax deduction ?

While taxpayers deserve credit towards their taxes paid for amounts withheld, specific incomes mandate withholding taxes at the source. Subsequently, those receiving designated payments must retain taxes deducted and convey such to authorities. Upon submitting tax returns, withheld sums lessen levies owed. Eligible receipts confined to wages, rents, dividends, interests, and services rendered face obligatory withholding.

◊ What is the “tax ID number” ?

All taxpayers must acquire a tax identification number within 2 months of earning their initial income in Thailand by registering with the Revenue Department. This registration requires submitting certain documentation.

Moreover, the paperwork necessary to obtain a tax ID includes furnishing copies of one’s passport as well as completing the tax ID application form. Should one opt to designate a service provider as their legal representative, an authorization form must also be filled out empowering said representative to request a tax number on your behalf.

Substantiation of income earned within Thailand’s borders must likewise be provided. Some taxpayers may find the registration process more intricate than others due to having longer or shorter periods of residency in the country, different types of income and employment situations, or dissimilar documentation available. Regardless, following the mandated steps will allow all taxpayers to pay their fair share as required under Thai law.

◊ What are the penalties for failing to file Individual income tax return or filing a late one ?

First and foremost, if one neglects to submit a tax return or submits a late return, they will face a penalty of approximately 1.5% of the total taxes owed for the majority of what is due each subsequent month.

Next, the tax enforcement agencies also reserve the right to impose additional penalties should certain circumstances arise. In the case of an incorrectly filed return, the charge amounts to the entire tax liability. For failing to submit a return altogether, the punishment could range up to double whatever was originally owed.

There exists one caveat, however. Should a taxpayer acknowledge their error but plea that it was done unintentionally and without ill intent, the levy may be reduced to half its standard amount pending written request and approval from the tax authorities.

◊ How to file your personal tax return in Thailand ?

Firstly, the complex tax code mandates returns must reach authorities by specific deadlines, whether filed online or through the post. Individuals have the option to submit their tax documents through the Revenue Department’s portal by April 10th, though the agency requires paper forms arrive by March 31st.

Secondly, those opting to fill out the “PND 90/91” and deliver it personally have a week from the date printed to visit a regional office and settle any balance through cash, check, or digital payment. The absolute latest to pay without penalty is the 31st of March. Furthermore, anyone failing to pay on time incurs a surcharge of one and a half percent for each subsequent month the amount remains outstanding. As such, persons applying for an interest-free payment installment program can divide the sum across three months. Fines for tardy returns range from two hundred to two thousand baht.

When reporting personal income on forms “PND 90 or 91”, one must ensure the declared taxable amount accurately represents all earnings from within Thailand regardless of source or residency status, as well as any foreign sums transferred locally within the same fiscal year. Income tax percentages for locals and foreigners span from zero to thirty-five percent.

Finally, filing a personal tax return in Thailand involves several sequential steps. Consider the following eight general steps:

Step 1. Procure the required forms either from the Thai Revenue Department’s website or local offices, primarily the “PND 90” form for income and deductions reporting.

Step 2. Gather supporting documents diligently: Ensure you collect all essential papers to substantiate your income, deductions, and entitlements comprehensively. Pertinent materials may encompass salary statements, banking records, receipts and other applicable files.

Step 3. Compute your taxable income judiciously: Determine your taxable income by totalling all your sources of revenue meticulously, such as compensation, rental yields, commercial proceeds, and any other profits attained during the tax year. Deduct any permissible reductions and allowances to arrive at your taxable income accurately.

Step 4. Fill out the tax return form fully: Complete the PND 90 form entirely and correctly. Supply the necessary particulars, including personal details, financial particulars, deductions, and allowances. Be sure to double-check your entries to avoid errors or omissions.

Step 5. Affix supporting documents appropriately: Attach the related supporting documents to your tax return form suitably. Ensure you have proper documentation for all reported income, deductions, and allowances. Preserve copies of these records for your files.

Step 6. Submit the tax return promptly: Present your finished tax return form and supporting documents to the local tax office where you are registered or straight to the Revenue Department. Indeed, the submission deadline is typically by the end of March following the taxable year. However, confirming any changes to the filing deadline is crucial.

Step 7. Pay any taxes owing duly: If you have a tax liability, ensure that you pay the amount owed to the Revenue Department at the time of filing. Payment can be made entirely or in installments, depending on your situation and the applicable rules.

Step 8. Maintain records carefully: Hold onto copies of your filed tax return, supporting files, and proof of payment for future reference and audit purposes.

◊ What are the differences between employee and investor tax returns?

In Thailand, the tax returns for employees and investors may differ due to variations in the types of income, deductions, and reporting requirements. Here are some key differences between the two:

	Employees tax returns	Investors tax returns
Income Sources	Employees primarily earn income from salaries, wages, and benefits provided by an employer. Employment income reported their income.	On the other hand, investors earn income from investments such as dividends, interest, capital gains, rental income, and business profits. Different categories reported their income, depending on the specific source.
Reporting Forms	Employees generally use the PND 1 form to report their income and deductions. This form is specifically designed for reporting employment income and related details.	Investors, depending on their income sources, may use different forms. For example, if they receive dividends, they use the PND 53 form, and for interest income, they use the PND 3 form. Rental income is reported on the PND 1 form, similar to employees, but additional schedules may be required for detailed information.
Deductions and Allowances	Employees typically have deductions and allowances related to employment, such as social security contributions, provident fund contributions, and personal allowances based on income brackets. They may also claim deductions for specific expenses related to their employment, such as work-related travel or uniform expenses.	Investors may have deductions and allowances related to their specific investment activities. For example, they may claim deductions for expenses related to earning rental income, such as property maintenance or mortgage interest. They may also have allowances specific to certain investment types, such as investment incentives for specific industries or tax privileges for certain investment projects.
Reporting Requirements	Employees generally receive a Form PND 1 from their employers, summarizing their income, taxes withheld, and other relevant information. They use this information to complete their tax return.	Investors, especially those earning income from multiple sources, are responsible for tracking and reporting their income individually. They need to keep accurate records of their investment-related income and expenses to ensure accurate reporting on the appropriate tax return forms.

While that outline presents a broad framework, unique complexities demand flexibility. For accurate guidance on obligations, clarify ambiguities by directly engaging Thai revenue authorities or tax specialists vetted in recent rules. Seeking validation from credible sources ensures full compliance as statutes adapt. Some intricate cases may diverge from the blueprint’s generalized processions; therefore, scrutinizing stipendiary particulars reduces the risk of nonconformities.

You might be interesting by the following resources :

Accounting services Thailand

Corporate Tax

Tax exemption

Tax lawyer