Thailand Income Tax

Thailand  income tax system is governed primarily by the Revenue Code of Thailand, administered by the Revenue Department under the Ministry of Finance. As a country that attracts a substantial number of expatriates, investors, and multinational enterprises, understanding the structure, scope, and obligations related to income tax in Thailand is essential for both individuals and corporate entities.

This article presents a detailed examination of Thailand’s income tax framework, focusing on tax residency rules, types of income subject to taxation, progressive tax rates, deductions, exemptions, foreign-source income, and administrative procedures.

1. Legal Basis and Tax Authorities

• Governing law: Thailand Revenue Code (Royal Decree No. 11 B.E. 2481 onwards)

• Administrative body: The Revenue Department (under Ministry of Finance)

• Applicable taxes on income:

  • Personal Income Tax (PIT)

  • Corporate Income Tax (CIT)

  • Withholding Tax (WHT)

  • Specific Business Tax (SBT)

  • Value Added Tax (VAT) – indirectly related for business income earners

2. Tax Residency: Who Is Liable to Pay Income Tax?

Thailand differentiates between tax residents and non-residents based on time spent in the country.

2.1 Definition of Tax Resident

Under Thai tax law, a person is considered a tax resident if they reside in Thailand for 180 days or more within a calendar year.

• Residents are taxed on:

  • Thai-sourced income, and

  • Foreign-sourced income remitted into Thailand within the same calendar year it is earned.

• Non-residents are taxed only on Thai-sourced income.

2.2 Corporate Residency

• A company incorporated in Thailand or with its head office located in Thailand is subject to corporate income tax on its worldwide income.

• Foreign companies are taxed only on income earned from business activities or assets in Thailand.

3. Types of Taxable Income (Personal)

Thai law categorizes income into eight classes, all subject to personal income tax if received by a resident:

1. Income from employment (Section 40(1))

2. Income from hire of work/services (Section 40(2))

3. Income from goodwill, copyright, patents, etc. (Section 40(3))

4. Income from interest, dividends, or profits from partnerships (Section 40(4))

5. Rental income and income from contracts of hire (Section 40(5))

6. Income from liberal professions (e.g., medicine, law) (Section 40(6))

7. Income from construction and other contracts of work (Section 40(7))

8. Business, commerce, agriculture, or other income not listed (Section 40(8))

4. Personal Income Tax Rates and Brackets (2024)

Thailand uses a progressive tax system for individuals.

Note: Thai citizens earning below THB 150,000 per year are exempt.

5. Corporate Income Tax (CIT)

5.1 Standard Rates

• General corporate tax rate: 20%

• Small and medium enterprises (SMEs):

  • 0% for first THB 300,000

  • 15% for THB 300,001–3,000,000

  • 20% for income above THB 3,000,000

Conditions for SME rate: Registered capital not exceeding THB 5 million and revenue not exceeding THB 30 million annually.

5.2 Tax Incentives

Offered under:

• Board of Investment (BOI)

• Eastern Economic Corridor (EEC)

• International Business Center (IBC) regime

6. Deductions and Allowances (Individual)

6.1 Standard Deductions

• Employment income: 50%, capped at THB 100,000

• Professional income: actual expenses or lump sum deduction (30–60%)

• Business income: actual business expenses or standard deduction (65–85%)

6.2 Personal Allowances

• Taxpayer: THB 60,000

• Spouse: THB 60,000 (if no income)

• Children: THB 30,000 per child (up to three)

• Parental support: THB 30,000 per parent

6.3 Additional Deductions

• Life insurance premiums

• Retirement mutual funds (RMFs)

• Donations (up to 10% of net income)

• Mortgage interest payments (up to THB 100,000)

7. Foreign-Sourced Income and Remittance Rule

Thailand uses the remittance basis for taxing foreign income, applicable only to tax residents:

• If foreign-sourced income is remitted into Thailand in the same tax year it is earned → taxable.

• If income is remitted in a later year, it is not subject to Thai tax.

This offers legitimate tax deferral or planning strategies, particularly for expatriates and digital nomads.

8. Withholding Tax System

Thailand enforces withholding tax at the source on many types of income, including:

• Dividends: 10%

• Interest: 15%

• Royalties: 15%

• Services (for individuals): 3%

• Services (for companies): 5%

Foreign companies may be subject to withholding unless covered by a Double Taxation Agreement (DTA).

9. Tax Filing and Payment Procedures

9.1 Personal Income Tax

• Tax year: January 1 – December 31

• Filing deadline: March 31 of the following year (online: April 8)

• Form used: PND 90 or 91

9.2 Corporate Income Tax

• Half-year prepayment: PND 51 due within 2 months after first 6 months of accounting period

• Annual return: PND 50 due within 150 days from fiscal year-end

Late filing or underpayment may lead to surcharges and penalties.

10. Double Tax Agreements (DTAs)

Thailand has signed over 60 DTAs with countries including the UK, US, Australia, Germany, Singapore, and others. These agreements help:

• Avoid double taxation

• Determine source of income

• Provide reduced tax rates or exemptions on certain income types

Claiming benefits under a DTA generally requires:

• Tax residency certificate from the foreign country

• Proper submission of tax forms and documentation

11. Tax Implications for Foreign Professionals and Digital Nomads

Foreign professionals working remotely or under employment agreements in Thailand must assess:

• Whether they are deemed residents (180-day rule)

• Whether their income is sourced from a Thai employer or foreign entity

• If foreign income is remitted in the same tax year

The Revenue Department is increasingly scrutinizing cross-border work arrangements. It is advisable to consult a professional for tax structuring, permanent establishment (PE) risk, and immigration compliance.

12. Tax Audits and Enforcement

The Revenue Department has the authority to conduct audits for up to 5 years (or 10 years in cases of fraud). Key risk indicators include:

• Unexplained wealth or luxury assets

• Cash-intensive businesses

• Frequent remittance of untaxed foreign income

Thailand is also participating in the OECD’s Common Reporting Standard (CRS), which allows automatic exchange of financial account information between jurisdictions.

Conclusion

Thailand’s income tax system blends civil law tax structures with extensive administrative discretion. While the headline rates may seem moderate, compliance requires careful navigation of residency rules, foreign remittance regulations, corporate structuring, and reporting obligations. For individuals and businesses alike, a strong understanding of these tax nuances is essential—not only for legal compliance but also for optimizing one’s position within the bounds of Thai law.