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Tips for Paying Taxes as a Foreigner

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If you live and work in Thailand for any period during the financial year, you will need to pay personal income tax (PIT). It is the responsibility of the individual to do this by the end of March each year. This may seem like a daunting task, especially for people who have lived in countries where they have never had to do this. In reality, it is quite straight-forward and there is a very comprehensive set of guidelines on the Thai Government’s Revenue website, to help you correctly calculate how much tax you need to pay after any deductions you are entitled to make.

 

Who is eligible to Pay Tax?


Personal Income Tax (PIT) is a direct tax levied on the income of a person. Any person residing in Thailand for periods aggregating 180 days or more in a year, is for tax purposes, considered a resident and is liable to pay PIT on all income, whether earned in Thailand or overseas. A non-resident, someone who resides in Thailand for less than 180 in a year, is still liable for PIT but only on income derived from sources in Thailand. The Thai government has double tax agreements in place with over 50 countries at this time, to ensure that you are not taxed twice on income earned in another country. A full list can be found on the website along with explanatory notes on how this agreement works.
 
Anyone working in Thailand must have their own tax ID number. To obtain a tax ID number, present ID such as your passport, work permit or ID card at one of the regional tax offices. Most of the tax offices have English speaking staff and will be happy to assist with any queries.

 

Taxable Income


Income liable for PIT is call assessable income and covers both incomes received in cash and in benefits, such as rent-free accommodation. Assessable income is divided into 8 categories:
 

1. Income from personal services to employers

 

2. Income by virtue of jobs or services rendered

 

3. Income from goodwill, copyright, franchise other rights

 

4. Income from dividends, interest on savings with Thai banks

 

5. Income from letting property or hire-purchase contracts

 

6. Income from liberal professions

 

7. Income from construction or contracts of work

 

8. Income from business, commerce, agriculture, industry or transport
 

Deductions and allowances


A full list of deductions allowed for the calculation of PIT can be found at the Revenue department website: www.rd.go.th/
 
Most people liable to pay PIT will be able to claim a deduction from income via employment. This is set at 40% of your annual income but not exceeding 60,000 Baht. In addition to this there are a number of personal allowances, depending on your circumstances.
 
Each person is entitled to a personal allowance of 30,000 Baht. However, if you are aged 65 or over your personal allowance rises to 190,000 Baht. Additionally, you are able to claim 30,000 Baht if you are married and your spouse does not work. For each child under the age of 25 years of age who is studying, you are able to claim 15,000 per child, up to maximum of 3 children. If you or your spouse’s parents are aged 60 or over and earn less than 30,000 baht you can claim 30,000 baht per parent. Refer to the Tax office website for full details.
 
Note that any income derived from interest from savings or investment bonds can be excluded in any PIT calculations, if it has been taxed at source at a rate of 15%. Dividends from shares can also be excluded, if the company paying the dividend, deducted tax at source at the rate of 10%

 

Rates of Tax


After calculating your personal allowances and deductions, these should be subtracted from your gross income in the tax year to determine your PIT rate. Tax is tiered as shown in the table below.
 

 

INCOME (BAHT)

RATE OF TAX

Up to 150,000

Exempt

150,000 - 300,000

5%

300,000 - 500,000

10%

500,000 - 750,000

15%

750,000 -1,000,000

20%

1,000,000 - 2,000,000

25%

2,000,000 - 4,000,000

30%

Over 4,000,000

35%

As an example, if you are a single person earning 900,000 Baht per annum, you can deduct 60,000 from your income via employment and 30,000 as your personal allowance. The next 150,000 is taxed at 0% leaving an actual taxable income of 660,000 Baht. You will pay 5% on 150,000 Baht, 10% on the next 200,000 Baht, 15% on the next 250,000 Baht and 20% on the remaining 60,000 Baht. The total PIT payable on this will be 77,000 Baht. Note that you still need to submit a tax return form, even if you have calculated you are exempt from any PIT.
 

How to Pay


The Thai tax year runs from 1st January to 31st December. Any person liable for PIT must file a tax return, and make payments to the revenue department by the last day of March in the following tax year. In some circumstances, such as a tax payer who derives income from a liberal profession in the first six months of the tax year, they must file a half yearly tax return by the end of September in that current tax year.  Many companies will tax your income at source and this will need to be deducted when filing your tax return. Evidence of payment will need to be provided, along with evidence of other allowances and deductions you have claimed. Note that even if you have been deducted tax at source you still need to file a tax return.

You can file your tax return by going to one of the regional tax offices and completing the form or online from the tax office website. The tax return forms are in Thai, so unless you are able to read Thai, you will need an accountant or someone you know who is a native speaker and understands the taxation process to help you.