Investment Taxation for Expats in Thailand

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Be it short-term or long-term capital gains, expats who are earning living in Thailand become Tax Resident of the nation. Owing to this reason, they fall in the tax-payer category of residents.  Moreover, the taxation norms are very similar to that of Thai nationals. This article aims to vividly discuss all the scope of investment taxation for Expats in Thailand.

Taxable income in this category includes:

  • Interest from bank and building society deposits
  • Interest from government and corporate stocks (bonds)
  • Rental income from properties both in Thailand and abroad
  • Dividends, and
  • Capital gains

Interest

Interest income is subject to a 15% withholding tax in Thailand. Moreover, your tax return statement must have a mention of it. Income from an on-demand savings account of less than THB20,000 is not taxable. However, interest income from a fixed deposit account with a passbook and a term of five years or longer is subject to a 10% withholding tax.

You will have to pay tax on the interest you receive from other countries as a resident. Additionally, you may be subject to withholding taxes in your home country. The amount of tax that the country of origin can levy on the interest payments can be less. It is possible only if the country of origin has a relevant tax treaty with Thailand.

Interest income earned by a non-resident individual in Thailand is normally subject to a final withholding tax of 15%. Non-residents, on the other hand, are normally exempt from paying Thai tax on interest earned in other countries. However, they may be subject to withholding taxes in their place of origin. The amount of tax that the country of origin can levy on the interest payments can be lesser if the country of origin has a relevant tax treaty with Thailand.

Rental income

Taxes on rental income from Thai property is similar to ordinary income. Additionally, your annual tax return statement must have a mention of it. You can get the taxable amount by subtracting either real repair and maintenance expenses/costs or 10%-30% from gross rental income to arrive at the net rental income.

You must provide documentary verification of the costs and expenses if you desire to deduct actual maintenance charges. Additionally, you will be responsible for paying House and Land Tax, which is 12.5% of the rental income. You will have to pay tax on rental income you earn outside of Thailand as a resident, and you may be liable to withholding taxes in the place of origin.

Rental income from Thai property is taxed like ordinary income for non-residents. Additionally, you have to mention it in your annual tax return. Your tenant, on the other hand, will deduct a 15% withholding tax from the rental payments. However, this will be transmitted to the Revenue Department and used as a tax credit against your income tax bill.

Dividends

Dividend income in Thailand is usually subject to a 10% withholding tax. Moreover, the deduction is at the source for residents. You must mention it on your tax return together with all of your other investment income. You’ll also have to pay income tax on dividends you receive from other countries.

Additionally, you have to do the same for withholding taxes in your home country. The amount of tax that the country of origin can levy on dividend payments is lower if the country of origin has a relevant tax treaty with Thailand.

Dividend income in Thailand is subject to a 10% withholding tax. However, the deduction is at the source for non-residents. It must have its mention on your tax return together with all of your other investment income. Dividends from other countries are not subject to Thai income tax.  

Capital gains

Taxes on capital gains from Thai sources are the same as ordinary income. Additionally, you must disclose it on your tax return, whether you are a resident and non-resident. However, capital gains from the selling of shares listed on the Thai stock exchange are tax exempt. The gain from the sale of your house may be tax-free if it is reinvested within 12 months of the sale (or an amount equal to the gain was invested within 12 months before the sale).

You will have to pay income tax on capital gains made in foreign countries if you are a resident.

The Bottomline

If you are an expat in Thailand, you must know about the taxation policies in detail to avoid any and all types of penalties. But it never becomes possible for anyone to know all the regulations of a nation at a glance. This is where they seek professional services and support. 

We are addressing the audit and taxation needs of expats in Thailand since 2013. We will be happy to help you as well. Mail us at officer@konradlegal.com to book your free round of consultation.

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