Thailand Income Tax

Thailand Income Tax is governed by the Revenue Code, a legal instrument administered by the Revenue Department under the Ministry of Finance. The code outlines taxation obligations for individuals, juristic persons (corporate entities), and certain non-resident earners of Thai-sourced income. The country operates on a self-assessment regime, placing the onus on the taxpayer to determine and report tax liabilities accurately.

1. Taxpayer Classifications

1.1 Individuals

Under Section 41 of the Revenue Code, residency status determines tax liability:

• Tax Resident: An individual who stays in Thailand for 180 days or more in a calendar year. Subject to tax on worldwide income only if foreign income is remitted into Thailand in the same year it is earned.

• Non-Resident: Taxed only on income earned in Thailand, irrespective of source or remittance behavior.

Thailand does not employ a citizenship-based taxation model. All personal income tax is residence-based with source considerations.

1.2 Juristic Persons (Companies)

• Companies incorporated under Thai law are taxed on worldwide income.

• Foreign companies operating through a branch, agent, or permanent establishment in Thailand are taxed only on Thai-source income.

• Foreign companies earning Thai-source income without a permanent presence may be subject to withholding tax.

2. Types of Taxable Income for Individuals (Section 40 Revenue Code)

Income is categorized into eight types:

1. Employment income (salary, wages, benefits)

2. Fees from professions (doctors, engineers, lawyers)

3. Contractual services (independent contractor work)

4. Royalties

5. Rental of property

6. Dividends and interest

7. Share of profits from partnerships

8. Capital gains and miscellaneous

Each category may have specific allowable deductions and withholding requirements. For instance:

• Employment income: subject to standard deductions and expense allowances

• Dividends: often subject to 10% final withholding tax, but may be exempt if reinvested or derived from Thai-listed companies

3. Tax Rates and Computation for Individuals

Thailand uses a progressive personal income tax rate, applied annually:

Deductions and Allowances:

• Personal allowance: THB 60,000

• Spouse (non-earning): THB 60,000

• Children: THB 30,000 per child (higher for eligible education expenses)

• Standard expense deductions:

  • Employment: 50% of income, up to THB 100,000

  • Professional services: capped at 30–60%

4. Corporate Income Tax (CIT)

4.1 General CIT Rate

• Standard rate: 20% on net profits

• Small and medium enterprises (SMEs): graduated rate depending on registered capital and income thresholds

4.2 Taxable Base

CIT is assessed on net taxable profits, calculated as:

• Gross income

• Minus allowable business expenses and capital depreciation

Certain expenses (e.g., entertainment, donations) have statutory caps on deductibility.

5. Withholding Tax (WHT) System

Thailand uses withholding mechanisms to ensure tax collection at source, especially from:

• Contractors and freelancers

• Interest, royalties, and dividends

• Payments to non-residents

WHT Examples:

• Professional fees to individuals: 3% WHT

• Dividends to Thai individuals: 10% final WHT

• Royalties to non-residents: 15% WHT (may be reduced via tax treaties)

WHT must be remitted by the payer to the Revenue Department within the 7th day of the following month.

6. Double Taxation and Tax Treaties

Thailand has signed 60+ Double Taxation Agreements (DTAs) which:

• Prevent double taxation,

• Define residency status and permanent establishment rules,

• Set reduced WHT rates on cross-border income streams.

Tax residents may claim foreign tax credits for income taxed abroad, provided they are remitted in the same tax year and properly documented.

7. Tax Compliance and Filing Obligations

7.1 Individuals

• Filing deadline: March 31st (paper) or April 8th (e-filing) of the following year

• Form PND.90/91 based on income type

• Foreign residents must report all Thai-source income and any foreign-sourced income if remitted to Thailand in the same year

7.2 Corporations

• Interim return (PND.51) due within 2 months after first 6 months of accounting year

• Annual return (PND.50) due within 150 days of fiscal year-end

• Required to withhold and remit taxes, file VAT (if applicable), and maintain accounting books in Thai

8. Tax Audits and Penalties

Thailand’s Revenue Department uses risk-based audit selection and computerized data matching. Taxpayers may be selected for:

• Field audits

• Desk audits

• Third-party verifications

Common Penalties:

• Late filing: up to 2,000 THB fine

• Late payment: 1.5% monthly surcharge

• False declarations or tax evasion:

  • Fines up to twice the amount of unpaid tax

  • Criminal charges in serious cases

9. Special Tax Regimes

9.1 Thailand’s Regional Headquarters and IBC Schemes

• Offer tax reductions or exemptions for qualified businesses serving affiliates across ASEAN.

9.2 Personal Tax Incentives for Skilled Foreigners

• Under the BOI and EEC frameworks, certain foreign employees benefit from flat 17% tax rates.

9.3 Long-Term Residents (LTR) Program

• Qualifying individuals (wealthy retirees, skilled workers) receive 10-year visa with personal income tax capped at 17%, subject to employment in qualified roles.

10. Recent Developments and Policy Trends

• Global Minimum Tax (Pillar Two): Thailand is preparing to implement the OECD’s global minimum tax for MNEs earning over EUR 750 million.

• Digital Assets and Crypto Taxation:

  • Gains from cryptocurrency and digital tokens are taxable under Section 40 (4).

  • Exemptions may apply for gains made on licensed Thai exchanges.

Conclusion

Thailand’s income tax system is both structurally mature and legally specific, with distinct obligations for individuals and companies based on residence, source of income, and structure of earnings. The complexities of tax compliance—particularly around international earnings, double taxation, and WHT obligations—require careful navigation.

Those engaged in cross-border transactions, digital business, or long-term residence in Thailand should obtain detailed legal and tax advice tailored to their specific exposure under Thai law and bilateral tax treaties.