How much income tax do you need to pay in Thailand ?

I – Tax Rates for Individuals in Thailand

Thailand’s individual income tax operates on a progressive scale, meaning the higher your income, the higher the rate of tax you pay. For residents—defined as individuals who stay in Thailand for 180 days or more in a given year—income tax is applied to worldwide income if remitted to Thailand within the same tax year. For non-residents, only Thai-sourced income is taxable.

The current tax brackets, as defined by Section 48 of the Revenue Code of Thailand, are as follows:

• 0% on income up to THB 150,000
• 5% on income between THB 150,001 and THB 300,000
• 10% on income between THB 300,001 and THB 500,000
• 15% on income between THB 500,001 and THB 750,000
• 20% on income between THB 750,001 and THB 1,000,000
• 25% on income between THB 1,000,001 and THB 2,000,000
• 30% on income between THB 2,000,001 and THB 5,000,000
• 35% on income above THB 5,000,000

This progressive tax structure ensures that higher-income individuals contribute more in taxes, while lower-income earners benefit from reduced rates. Non-residents are generally taxed at the same rates, but they are not eligible for the allowances that residents can claim.

II – Available Deductions and Allowances for Residents

Thailand’s tax system offers a range of deductions and allowances that can significantly reduce the taxable income of residents. These deductions are aimed at lessening the tax burden on individuals and encouraging savings, investment, and social contributions. As stipulated in Section 47 bis of the Revenue Code, several key deductions can be claimed:

• Personal allowance: THB 60,000 per taxpayer
• Spouse allowance: THB 60,000 (if the spouse has no income)
• Child allowance: THB 30,000 per child (for up to three children)
• Life insurance premiums: Deductible up to THB 100,000
• Retirement fund contributions: Eligible for deduction depending on contribution limits

Charitable donations, social security contributions, and specific healthcare or education expenses may also qualify as deductions. These allowances provide significant tax relief, making it essential for taxpayers to understand which deductions apply to their specific circumstances to maximize their savings.

III – Income Tax for Non-Residents in Thailand

Non-residents in Thailand are taxed solely on income sourced within the country. According to Section 40 of the Revenue Code, non-residents are subject to the same progressive tax rates as residents for income earned in Thailand, but they are not entitled to the same deductions and allowances. This can result in a higher effective tax rate for non-residents, as they cannot reduce their taxable income through deductions.

Non-residents working in Thailand under short-term contracts may also face withholding taxes, which apply to income such as wages, fees for services, or other contractual payments. The withholding tax rates vary based on the type of payment and the recipient’s status, ranging from 3% to 15%. These taxes are generally final and cannot be reclaimed unless the non-resident qualifies for relief under a double tax agreement (DTA) between Thailand and their home country.

IV – Corporate Income Tax Obligations

Corporate income tax (CIT) in Thailand is applied at a flat rate of 20% on net profits for most companies. However, small and medium-sized enterprises (SMEs) benefit from reduced rates, as detailed in Section 65 of the Revenue Code:

• 0% for net profits up to THB 300,000
• 15% for net profits between THB 300,001 and THB 3,000,000
• 20% for net profits above THB 3,000,000

Foreign companies that do not have a permanent establishment in Thailand but derive income from Thai sources are typically subject to withholding tax rather than corporate income tax.

V – Withholding Tax in Thailand

Withholding tax plays a significant role in Thailand’s tax system, especially for payments such as dividends, interest, royalties, and service fees. The withholding tax is deducted at the source, meaning that the payer of the income is responsible for withholding the tax and submitting it to the Thai Revenue Department. The applicable withholding tax rates are:

• 10% on dividends
• 15% on interest
• 15% on royalties
• 3% on service fees for residents and 5% to 15% for non-residents

Thailand has entered into numerous double taxation agreements (DTAs) with other countries, which can reduce or eliminate withholding tax obligations on certain income types.

VI – Tax Exemptions and Incentives

Thailand offers several tax incentives aimed at promoting investment, particularly for companies engaged in sectors deemed strategic by the government. Companies promoted by the Board of Investment (BOI) are eligible for substantial tax incentives, including exemptions or reductions on corporate income tax (CIT). Depending on the type of activity and the location of the investment, BOI-promoted companies can enjoy CIT exemptions for up to eight years.

Conclusion: Importance of Legal Advice

The complexity of income tax in Thailand—with its progressive rates, deductions, withholding taxes, and international treaties—makes it essential for taxpayers to seek professional advice. Both individuals and businesses must understand their obligations under the Revenue Code and explore opportunities to optimize their tax positions through incentives.

For official information on income tax regulations and forms, visit the Thai Revenue Department’s website.