Thailand Income Tax

Thailand income tax system is governed by the Revenue Code B.E. 2481 (1938), which establishes the principles of taxation on income earned by individuals and entities within Thailand. The income tax regime is administered by the Revenue Department under the Ministry of Finance, which is responsible for issuing tax regulations, collecting taxes, and enforcing compliance.

Income tax in Thailand applies to both residents and non-residents, but the scope of taxation and applicable rates differ depending on the taxpayer’s status.

II. Legal Basis and Governing Law

A. Primary Statutory Authority

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

• Ministerial Regulations under the Revenue Code – Provide detailed rules on tax calculation, exemptions, and reporting.

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

B. Administrative Authority

• Revenue Department (Ministry of Finance) – Administers tax collection, audits, and enforcement.

• Regional Revenue Offices – Oversee local tax collection and taxpayer support.

• Revenue Code Interpretations and Rulings – Provide 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 in a tax year.

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

• Non-Resident Taxpayer:

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

  • Taxed only on income sourced in Thailand.

B. Individual vs. Corporate Taxpayers

• Individual Taxpayers:

  • Includes Thai citizens and foreign residents.

  • Taxed on progressive rates (5%–35%).

• Corporate Taxpayers:

  • Includes Thai companies and foreign companies with a permanent establishment in Thailand.

  • Taxed at a standard rate of 20%, with reduced rates for SMEs and BOI-promoted companies.

C. Special Taxpayers

• Partnerships and Joint Ventures:

  • Taxed at the corporate rate for legal entities.

  • Partners are taxed individually on profit distributions.

• Permanent Establishments of Foreign Companies:

  • Taxed on income earned in Thailand through a branch, office, or agent.

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

The Revenue Code classifies income into eight categories, each subject to specific rules:

Each category has its own deduction rules and tax calculation method.

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% of 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 above THB 3,000,000.

C. Withholding Tax Rates

• Dividends: 10%

• Interest: 15%

• Royalties: 15%

• Service Fees (non-residents): 15%

These rates may be reduced under applicable Double Taxation Agreements (DTAs).

VI. Tax Deductions and Allowances

A. Standard Deductions for Individuals

• Employment Income (Category 1): 50% of income (maximum THB 100,000).

• Independent Services (Category 2): 30% of income (for technical services).

• Rental Income (Category 6): 10%–30% of rental income, depending on property type.

B. Personal Allowances

• Basic Personal Allowance: THB 60,000.

• Spouse Allowance: THB 60,000 (if not separately taxed).

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

• Parent Support Allowance: THB 30,000 per parent (aged over 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 (straight-line or accelerated).

• Contributions to employee welfare funds.

• Loss carry forward (up to 5 years).

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).

• Income Tax Return Form:

  • PND 91: For employees.

  • PND 90: For individuals with mixed income.

B. Corporate Tax Filing

• Filing deadlines:

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

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

• Corporate tax is paid based on net profit, with quarterly advance payments.

VIII. Tax Audits and Compliance

A. Revenue Department Authority

• Conducts tax audits based on risk profiling or random selection.

• Taxpayers may be required to provide:

  • Financial statements.

  • Bank records.

  • Invoices and receipts.

B. Penalties for Non-Compliance

• Failure to File: 1.5% interest per month on unpaid tax.

• Late Filing: THB 1,000 – 2,000 fine.

• Underreporting of Income: Up to 100% penalty on underpaid tax.

IX. Double Taxation Agreements (DTAs)

• Thailand has DTAs with over 60 countries, providing relief from double taxation.

• DTAs reduce withholding tax rates on dividends, interest, and royalties.

• Tax residents of DTA countries may claim benefits by submitting a Certificate of Residence.

X. Conclusion

The Thailand Income Tax system is a complex but well-structured regime that applies to both individuals and corporations, with detailed rules on taxable income, deductions, exemptions, and compliance. Given the progressive nature of personal income tax and the broad scope of taxable income, taxpayers must ensure accurate calculation and timely filing.