Once eligible Expats in Thailand start to earn their living in Thailand, they become the tax residents of the Kingdom. Among the governing taxation laws in Thailand, this falls under the category of Employment Taxation for Expats in Thailand. This article vividly describes the eligibility criteria, process, and scenario of the same.
Residence
You will be considered habitually resident once you have stayed in Thailand for more than 180 days in a calendar year. As a resident, you will be taxable on your worldwide income and gains. If you remain non-resident you will only be taxed on your Thai-sourced income. The wording of double tax treaties can also affect whether you are treated as a resident or not. You must apply for a tax identification number (TIN) within 60 days of becoming employed in Thailand. The relevant application form for an individual is Form L.P.10.1 which must be lodged at the local area office of the Thai Revenue Department.
Tax rates and allowances
The tax year runs from 1 January to 31 December. Therefore, your employer will withhold tax from your wages or salary. Additionally, you have to provide them with your TIN. They will also deduct your social security contributions.
How much tax you pay is the same whether you are considered resident or non-resident. Moreover, certain expat employees who are working for a regional headquarters are taxed at a flat rate of 15%. However, this flat rate generally applies to up to four years of employment.
There are eight different categories of assessable income:
- Employment income (salaries and wages), will also include most fringe benefits such as free meals and accommodation, bonuses, and insurance.
- Income derived from a position or a service rendered
- Income from copyrights, franchises, patents, or annuities.
- Investment income such as dividends, interest, profit sharing, and gains created as a result of the transfer of shares or the amalgamation, acquisition, or dissolution of corporate structures.
- Income from the letting or hiring of both moveable and immoveable property
- Professional income is earned for example by an accountant, lawyer, architect, or engineer.
- Income from contracts in areas such as the construction industry, where all materials other than tools are from the contractor.
- Other incomes.
Moreover, the calculation of taxable income is ater the deductible expenses and personal allowances. However, deductible expenses vary according to the category of income. For example, standard employment income has a standard deduction of 40% up to a maximum of THB60,000. Moreover, the personal allowance for a single person is THB30,000. Once these deductions and expenses have been subtracted, the resulting taxable income is subject to progressive tax rates as shown in the table below.
Taxable Income(in THB) |
Rate |
| 1 to 150,000 | 0% |
| From 150,001 to 300,000 | 5% |
| From 300,001 to 500,000 | 10% |
| From 500,001 to 750,000 | 15% |
| From 750,001 to 1m | 20% |
| From 1m to 2m | 25% |
| From 2m to 4m | 30% |
| Over 4m | 35% |
You will also have to pay social security contributions, but these are small by European standards. Moreover, you must submit an annual tax return (PND90 or 91) regarding your total income to the tax office by 31 March of the following financial year. However, for married residents and non-residents, joint or separate filing is now possible with regard to all forms of income.
Self-employment
A sole proprietorship is not an option for the majority of expats. Few expats in Thailand can operate a sole proprietorship. However, they must match the criteria as on the Treaty of Amity and Economic Relations. It is a trade and economic bilateral between the Kingdom of Thailand and the United States of America.
We often come across Expats in Thailand who faces grave difficulties in understanding and adhering to the taxation regulations in Thailand. However, we do not want them to fall into such a category of violators and non-complying expats. Moreover, this may lead to heavy penalties and legal actions. Therefore, mail us at [email protected] for complete support and guidance on taxation in Thailand.
