Thailand income tax system applies to both individuals and businesses with earnings derived from Thai and foreign sources under specific conditions. The Revenue Department of Thailand governs the tax system, which includes progressive tax rates for individuals, corporate tax obligations, and various exemptions for qualifying taxpayers.
1. Tax Residency and Liability
1.1 Who Is Considered a Tax Resident?
- An individual who resides in Thailand for 180 days or more per tax year is considered a tax resident.
- Tax residents must pay income tax on all income earned in Thailand and any foreign income remitted to Thailand in the same tax year.
- Non-residents are only taxed on their Thai-sourced income.
1.2 Foreign Income Taxation
- Foreign income is taxable in Thailand only if remitted within the same tax year.
- Income earned and kept abroad beyond the tax year is not taxable in Thailand.
2. Personal Income Tax (PIT)
2.1 Taxable Income Categories
- Employment Income: Salaries, wages, bonuses.
- Business and Professional Income: Earnings from trade, business, or freelance work.
- Investment and Rental Income: Dividends, interest, and property rentals.
- Capital Gains: Profits from selling assets (subject to conditions).
2.2 Progressive Tax Rates for Individuals (2024)
| Annual Income (THB) | Tax Rate |
|---|---|
| 0 – 150,000 | Exempt |
| 150,001 – 300,000 | 5% |
| 300,001 – 500,000 | 10% |
| 500,001 – 750,000 | 15% |
| 750,001 – 1,000,000 | 20% |
| 1,000,001 – 2,000,000 | 25% |
| 2,000,001 – 5,000,000 | 30% |
| Over 5,000,000 | 35% |
2.3 Allowances and Deductions
- Personal Allowance: 60,000 THB per individual.
- Spouse Allowance: 60,000 THB (if spouse has no taxable income).
- Child Allowance: 30,000 THB per child (max 3 children).
- Provident and Retirement Fund Contributions: Tax-deductible up to specified limits.
- Health and Life Insurance Premiums: Partial tax deductions available.
3. Corporate Income Tax (CIT)
3.1 Standard Corporate Tax Rates
- 20% for most companies.
- SMEs with net profit below 300,000 THB: Exempt.
- SMEs with net profit 300,001 – 3,000,000 THB: 15%.
3.2 Withholding Tax
- Dividends paid to Thai companies: 10%.
- Dividends paid to foreign entities: 10% (subject to treaties).
- Interest payments to non-residents: 15%.
3.3 VAT (Value-Added Tax)
- 7% VAT applies to most goods and services.
- Businesses earning less than 1.8 million THB per year are exempt from VAT registration.
4. Tax Filing and Compliance
- Personal Income Tax (PIT) returns: Due by March 31 of the following year.
- Corporate Income Tax (CIT) filings: Mid-year report required by August 31, annual tax due by May 31.
- Penalties for Late Filing: Interest charges and fines apply for non-compliance.
5. Tax Treaties and Double Taxation Agreements
Thailand has tax treaties with over 60 countries, preventing double taxation and reducing withholding tax rates on international income.
6. Conclusion
Thailand’s income tax system is progressive for individuals and standardized for corporations. Tax residents are liable for income earned in Thailand, with foreign income only taxed when remitted in the same tax year. Proper tax planning, deductions, and compliance are essential for individuals and businesses operating in Thailand.
