Thailand Income Tax

Thailand income tax system is governed by the Revenue Code B.E. 2481 (1938), which provides the legal foundation for personal and corporate income taxation. The system is administered by the Revenue Department (Ministry of Finance), responsible for issuing tax regulations, collecting taxes, conducting audits, and enforcing compliance.

Thailand employs a progressive income tax system for individuals and a flat tax rate for corporations. The tax treatment of income varies depending on the taxpayer’s status (resident or non-resident) and the type of income earned.

II. Legal Basis and Governing Law

A. Statutory Authority

• Revenue Code B.E. 2481 (1938): Establishes the legal framework for personal and corporate income tax.

• Ministerial Regulations under the Revenue Code: Provide detailed rules for income tax calculation, exemptions, deductions, and reporting.

• Double Taxation Agreements (DTAs): Thailand has DTAs with over 60 countries, reducing or eliminating double taxation for cross-border income.

B. Administrative Authority

• Revenue Department (Ministry of Finance): Responsible for tax collection, compliance, and enforcement.

• Regional Revenue Offices: Manage local tax collection and taxpayer support.

• Revenue Code Interpretations and Rulings: Provide official guidance on complex tax issues.

III. Taxpayer Classification

A. Resident vs. Non-Resident Taxpayers

• Resident Taxpayer:

  • Defined as an individual who resides in Thailand for 180 days or more within a calendar year.

  • Taxed on worldwide income, but foreign income is only taxable if remitted to Thailand in the same year it is earned.

• Non-Resident Taxpayer:

  • Defined as an individual who resides in Thailand for less than 180 days.

  • Taxed only on income sourced in Thailand.

B. Individual vs. Corporate Taxpayers

• Individual Taxpayers:

  • Thai citizens and foreign residents are subject to progressive income tax rates (5%–35%).

  • Income includes salaries, freelance income, rental income, capital gains, and other earnings.

• Corporate Taxpayers:

  • Thai companies and foreign companies with a permanent establishment (PE) in Thailand.

  • Taxed at a standard rate of 20% on net profit.

  • SMEs may qualify for reduced rates.

C. Special Taxpayers

• Partnerships and Joint Ventures:

  • Treated as separate legal entities for tax purposes.

  • Taxed at the corporate rate, with partners taxed individually on their share of profits.

• Permanent Establishments of Foreign Companies:

  • Foreign companies operating through a branch, office, or agent are subject to income tax on Thai-sourced income.

IV. Types of Taxable Income (Section 40, Revenue Code)

The Revenue Code classifies taxable income into eight categories, each with specific tax calculation rules:

Each category is subject to specific deduction rules and tax rates, which must be carefully applied.

V. Income Tax Rates

A. Individual Income Tax Rates (Progressive)

• 0% on income up to THB 150,000.

• 5% on income from THB 150,001 – THB 300,000.

• 10% on income from THB 300,001 – THB 500,000.

• 15% on income from THB 500,001 – THB 750,000.

• 20% on income from THB 750,001 – THB 1,000,000.

• 25% on income from THB 1,000,001 – THB 2,000,000.

• 30% on income from THB 2,000,001 – THB 5,000,000.

• 35% on income over THB 5,000,000.

B. Corporate Income Tax Rates

• Standard Rate: 20% on net profit.

• SMEs (Small and Medium Enterprises):

  • 0% on net profit up to THB 300,000.

  • 15% on net profit from THB 300,001 – THB 3,000,000.

  • 20% on net profit over THB 3,000,000.

C. Withholding Tax Rates

• Dividends: 10% (may be reduced under DTAs).

• Interest: 15% (10% for bank deposits).

• Royalties: 15% (may be reduced under DTAs).

• Service Fees (non-residents): 15%.

VI. Tax Deductions and Allowances

A. Standard Deductions for Individuals

• Employment Income: 50% of income (capped at THB 100,000).

• Independent Services: 30% of income (technical services).

• Rental Income: 10%–30% depending on the property type.

B. Personal Allowances

• Basic Allowance: THB 60,000.

• Spouse Allowance: THB 60,000.

• Child Allowance: THB 30,000 per child (up to 3 children).

• Parent Support: THB 30,000 per parent (aged 60+).

• Life Insurance Premiums: Up to THB 100,000.

• Retirement Savings (RMF/SSF): Up to THB 500,000 combined.

C. Corporate Deductions

• Business expenses (salaries, utilities, rent).

• Depreciation of assets.

• Loss carry forward (up to 5 years).

• Research and development (R&D) expenses.

VII. Filing and Payment of Income Tax

A. Individual Tax Filing

• Tax year: January 1 to December 31.

• Filing deadline:

  • March 31 (paper filing).

  • April 8 (online filing).

• Tax Forms:

  • PND 91: For employees.

  • PND 90: For individuals with mixed income.

B. Corporate Tax Filing

• Mid-year tax (PND 51): Filed within 2 months of the first half of the fiscal year.

• Year-end tax (PND 50): Filed within 150 days after the end of the fiscal year.

C. Payment Methods

• Direct bank transfer.

• Online payment through the Revenue Department website.

• Over-the-counter at Revenue Offices.

VIII. Compliance and Enforcement

A. Tax Audits

• Conducted based on risk profiling.

• Taxpayers must provide:

  • Financial statements.

  • Receipts and invoices.

  • Bank records.

B. Penalties for Non-Compliance

• Late Filing: 1.5% interest per month on unpaid tax.

• Underreporting: 100% penalty on underpaid tax.

• Tax Evasion: Criminal charges, fines, and imprisonment.

IX. Conclusion

Thailand’s income tax system is well-structured but complex, with different rules for residents and non-residents, multiple categories of taxable income, and specific deductions. Accurate calculation, timely filing, and full compliance are essential for avoiding penalties.