thai nationals and tax returns

[STD Warehouse]

Is it true that the consensus feeling is that a majority of Thai nationals do not file tax returns who are required to file them?

 

I feel that like many things here the rules are not enforced, in reality, would you think this is true in regards to thais filing tax returns?

 

very curious about this.

 

 

[Mike Lister]

1 minute ago, STD Warehouse said:

Is it true that the consensus feeling is that a majority of Thai nationals do not file tax returns who are required to file them?

 

I feel that like many things here the rules are not enforced, in reality, would you think this is true in regards to thais filing tax returns?

 

very curious about this.

 

 

About 11% of the population file a tax return, only about 6% pay Personal Income Tax, about 4% have tax deducted from source, by the employer. The major tax revenue is indirect taxes such as VAT and sales tax, corporate taxes are the biggest contributor. The Thai Revenue is actively seeking to increase the tax net. The workforce is about 38 million out of a population of around 72 million, the size of the grey market (or unofficial) labor market is around 48% of the total labor force.

[STD Warehouse]

2 minutes ago, Mike Lister said:

About 11% of the population file a tax return, only about 6% pay Personal Income Tax, about 4% have tax deducted from source, by the employer. The major tax revenue is indirect taxes such as VAT and sales tax, corporate taxes are the biggest contributor. The Thai Revenue is actively seeking to increase the tax net. The workforce is about 38 million out of a population of around 72 million, the size of the grey market (or unofficial) labor market is around 48% of the total labor force.

very interesting, how do you know these 11% number? is there a source?

 

So I guess they just don't enforce filing tax returns? I mean it would be quite simple to audit someone like they would do in the UK or US, but they don't want the confrontation I guess....

[Mike Lister]

Just now, STD Warehouse said:

very interesting, how do you know these 11% number? is there a source?

 

So I guess they just don't enforce filing tax returns? I mean it would be quite simple to audit someone like they would do in the UK or US, but they don't want the confrontation I guess....

I don't have a source to hand but you can easily google news articles and similar where these stats are quoted.

 

The average earnings in Thailand are very low but the tax exemptions, allowances and deductions are quite high. It is easily possible to register as self employed and sell a product that you make and turn over 1 million baht per year in sales and generating income of 50K per month but paying tax of only 8k per year. The allowances are very generous, which, when combined with creative accounting, makes the tax return  easily avoidable for most. But the Revenue is getting better at detecting tax evasion, especially now that much of the finance picture is electronic.

[STD Warehouse]

47 minutes ago, Mike Lister said:

I don't have a source to hand but you can easily google news articles and similar where these stats are quoted.

 

The average earnings in Thailand are very low but the tax exemptions, allowances and deductions are quite high. It is easily possible to register as self employed and sell a product that you make and turn over 1 million baht per year in sales and generating income of 50K per month but paying tax of only 8k per year. The allowances are very generous, which, when combined with creative accounting, makes the tax return  easily avoidable for most. But the Revenue is getting better at detecting tax evasion, especially now that much of the finance picture is electronic.

 

where i live because it a high demand tourist area, every Thai would easily earn enough to be required to file a tax return, but no one does. I just find it strange the the authorities don't audit people here, at least where I live.

[Mike Lister]

2 minutes ago, STD Warehouse said:

 

where i live because it a high demand tourist area, every Thai would easily earn enough to be required to file a tax return, but no one does. I just find it strange the the authorities don't audit people here, at least where I live.

The average income, countrywide is circa 16,000 per month, Thai people can live far more inexpensively than we can. Given my earlier statement about the earnings of self employed people and their rate of taxation, earning 50k a month is easily doable whilst not paying tax. Income of 50k per month puts them in the upper percentile and they will file a return. So conceivably, locals in tourist areas can still earn a decent wage and still escape taxation. The other aspect is that a majority of locals don't live in tourist areas, most are rural poor who are difficult to audit for tax. There are plenty of stories about Revenue inspectors watching trade at market stalls and counting customers and calculating income, it's not as though they do nothing, it's just that it's very difficult.

[STD Warehouse]

18 minutes ago, Mike Lister said:

The average income, countrywide is circa 16,000 per month, Thai people can live far more inexpensively than we can. Given my earlier statement about the earnings of self employed people and their rate of taxation, earning 50k a month is easily doable whilst not paying tax. Income of 50k per month puts them in the upper percentile and they will file a return. So conceivably, locals in tourist areas can still earn a decent wage and still escape taxation. The other aspect is that a majority of locals don't live in tourist areas, most are rural poor who are difficult to audit for tax. There are plenty of stories about Revenue inspectors watching trade at market stalls and counting customers and calculating income, it's not as though they do nothing, it's just that it's very difficult.

yes i totally understand that most thais in the vast majority of the country do not earn much.

 

Its just where I live so many of my wife's friends would easily make 200k or more each month, but the authorities seem totally uninterested in looking into their earnings and related tax implications. Ive been living here for 22 years and I've never heard of a single case of either anyone filing a tax return or anyone being investigated. I mean counting customers at a market stall is one thing, but a Thai with no registered company and with 20 houses they rent for 30k per month each seems an obvious situation for the tax man to come knocking, but they don't. Just next door to where im sitting right now, there resturant easily takes in 40k per night, but definitely have no company and spend nothing on their business apart from 5 migrant workers on 10k a month each, but the tax man never comes. Its everywhere where i live, i just don't understand it. 

Edited March 6 by STD Warehouse

[Mike Lister]

1 minute ago, STD Warehouse said:

yes i totally understand that most thais in the vast majority of the country do not earn much.

 

Its just where I live so many of my wife's friends would easily make 200k or more each month, but the authorities seem totally uninterested in looking into their earnings and related tax implications. Ive been living here for 22 years and I've never heard of a single case of either anyone filing a tax return or anyone being investigated. I mean counting customers at a market stall is one thing, but a Thai with no registered company and with 20 houses they rent for 30k per month each seems an obvious situation for the tax man to come knocking, but they don't.

Perhaps those assets are owned through a company, which is likely. That means the balance sheet can be adjusted to suit.

[foreverlomsak]

20 minutes ago, Mike Lister said:

The other aspect is that a majority of locals don't live in tourist areas, most are rural poor who are difficult to audit for tax. There are plenty of stories about Revenue inspectors watching trade at market stalls and counting customers and calculating income, it's not as though they do nothing, it's just that it's very difficult.

In rural areas "very difficult" is a significant understatement, impossible would be nearer, the majority work for cash in hand on a casual basis, today for one farmer, tomorrow for another, maybe 2 days nothing as no crops to be picked or cleaned for market, next day maybe morning only, some on a daily rate and others on piece rates (eg by kg processed).

[Robin]

When the subject was brought up at the beginning of the year, I asked, through khun wife, who was paying tax, or had to file a tax return.  Answer was that nobody local did.  Wife, who runs a beauty shop, said that if RD wants a tax return, they come visiting and asking for it.  if they do not, then nobody is bothered about tax returns.  It seems that billions of Baht in potential revenue is lost this way.

Imagine the screams of protest if Thais were asked to pay tax on their income.  No government would have the courage to implement such a policy.

[Lopburikid]

On 3/6/2024 at 8:41 AM, STD Warehouse said:

Is it true that the consensus feeling is that a majority of Thai nationals do not file tax returns who are required to file them?

 

I feel that like many things here the rules are not enforced, in reality, would you think this is true in regards to thais filing tax returns?

 

very curious about this.

 

 

I would say that is correct. I think all the major investors like Toyota, JVC, Chaing, and all the others Pay large amounts of tax and their employees, as it will be deducted by the company. But as for the local's market stall, food vendors and even rental houses and apartments. I doubt it very much.

[Jenkins9039]

On 3/6/2024 at 8:41 AM, STD Warehouse said:

Is it true that the consensus feeling is that a majority of Thai nationals do not file tax returns who are required to file them?

 

I feel that like many things here the rules are not enforced, in reality, would you think this is true in regards to thais filing tax returns?

 

very curious about this.

 

 

Yes, and they earn enough money for the lower band tax.

 

Easier to go after low hanging fruit (foreigners). 

[Mike Lister]

6 minutes ago, Jenkins9039 said:

Yes, and they earn enough money for the lower band tax.

 

Easier to go after low hanging fruit (foreigners). 

You seem not to understand.

 

Nobody is intentionally going after foreigners for tax. Foreigners were always required to file tax returns here, if they met the criteria and many did, especially anyone using the income method for their visa. They have been given a pass until now but only as a result of changes to the rule affecting tax returns by locals, rather than tax returns by foreigners.

 

As for earning enough money to file a return and pay tax.

 

The tax rules allow Thai people to work as self employed, which have very generous deductions and allowances. It's easily possible for them to earn 1 million baht per year in sales and net a monthly income of 50k baht, without paying any tax, legally. Foreigners aren't allowed to do that because they may not work, without a work permit.

 

[Surasak]

13 minutes ago, Jenkins9039 said:

Yes, and they earn enough money for the lower band tax.

 

Easier to go after low hanging fruit (foreigners). 

As Mike Lister says,  'the balance sheet can be adjusted to suit.'

[moe666]

On 3/6/2024 at 8:59 AM, Mike Lister said:

I don't have a source to hand but you can easily google news articles and similar where these stats are quoted.

 

The average earnings in Thailand are very low but the tax exemptions, allowances and deductions are quite high. It is easily possible to register as self employed and sell a product that you make and turn over 1 million baht per year in sales and generating income of 50K per month but paying tax of only 8k per year. The allowances are very generous, which, when combined with creative accounting, makes the tax return  easily avoidable for most. But the Revenue is getting better at detecting tax evasion, especially now that much of the finance picture is electronic.

Be carefull with the creative accounting. My wife worked for a business which paid tax and used thetax deduction. My wife had told the boss to take photos of the promotional parties she had written deductions for, the boss didn't take any photos. The tax man shows up one day and says we do not believe your written deductions, what proof do you have. Well none, we didn't take photo. They were hit with 25,000b fine.

[Mike Lister]

8 minutes ago, moe666 said:

Be carefull with the creative accounting. My wife worked for a business which paid tax and used thetax deduction. My wife had told the boss to take photos of the promotional parties she had written deductions for, the boss didn't take any photos. The tax man shows up one day and says we do not believe your written deductions, what proof do you have. Well none, we didn't take photo. They were hit with 25,000b fine.

Even without the creative accounting, it's a simple matter for most people to earn 50k per month and pay no tax, such are the allowances etc.

[AgMech Cowboy]

Interesting how a tax report document came to be known as a "tax return" when so little of the time money is actually returned.

[Mike Lister]

2 hours ago, AgMech Cowboy said:

Interesting how a tax report document came to be known as a "tax return" when so little of the time money is actually returned.

It doesn't actually mean to give money back. The term, tax return, means to report back to the Tax Department on the amounts of your income.

[khunPer]

On 3/6/2024 at 2:41 AM, STD Warehouse said:

Is it true that the consensus feeling is that a majority of Thai nationals do not file tax returns who are required to file them?

 

I feel that like many things here the rules are not enforced, in reality, would you think this is true in regards to thais filing tax returns?

 

very curious about this.

According to new articles shared in ASEAN NOW about 6 percent of Thais are registered for income tax and circa 4 percent pays income tax.

[bbi1]

On 3/6/2024 at 8:41 AM, STD Warehouse said:

Is it true that the consensus feeling is that a majority of Thai nationals do not file tax returns who are required to file them?

 

I feel that like many things here the rules are not enforced, in reality, would you think this is true in regards to thais filing tax returns?

 

very curious about this.

 

 

I'm pretty sure with my guess that all these prostitutes don't fill tax returns or pay tax, even though their income is definitely very, very high compared to the general working Thai person.

[Mike Lister]

20 minutes ago, khunPer said:

According to new articles shared in ASEAN NOW about 6 percent of Thais are registered for income tax and circa 4 percent pays income tax.

11% are registered for tax, 6% pay tax and only 4% pay tax via a PAYE equivalent.

[Mike Lister]

Just now, bbi1 said:

I'm pretty sure with my guess that all these prostitutes don't fill tax returns or pay tax, even though their income is definitely very, very high compared to the general working Thai person.

A person registered as self employed, can make a lot of money without having to pay tax.

[spambot]

1 hour ago, Mike Lister said:

A person registered as self employed, can make a lot of money without having to pay tax.

Mnnnnn - Its a good point about the Tax allowances for working Thai's. These working allowance will be mostly unavailable to expats on a retirement Visa. This will make it more beneficial to optimise efforts for a Tax investigation on expats since they will likely not pose this same complication.

[Mike Lister]

15 minutes ago, spambot said:

Mnnnnn - Its a good point about the Tax allowances for working Thai's. These working allowance will be mostly unavailable to expats on a retirement Visa. This will make it more beneficial to optimise efforts for a Tax investigation on expats since they will likely not pose this same complication.

It's not complicated. A self employed Thai can take a standard deduction and deduct 60% of their cost of sales which means only 40% is assessible to tax. By the time Exemptions and allowances are applied, there's little left to tax. If anyone has heard this before, look away now.....but my wife runs a business this way and makes 50k a month tax free....it';s far too easy and far too generous. 

[Robin]

After living in Thailand for many years, I get the impression that few governments dare to implement any unpopular policies, even if they have a mandate to do so.  Since many (most) Thais do no pay any tax at the present, it would not be popular to make the pay, even a small sum.  Not difficult to make a start.  Walk through any village or town and ask at every business or shop.  If they do not have any accounts or have not filed these, hit them with an estimated tax.  demand.  if this is paid, double it for the next year, and so on for every year.  Once RD hits on the sum actually being earned, accounts will soon be produced.  Oh the screams of protest!  Would any government dare to continue?

[spambot]

16 minutes ago, Mike Lister said:

It's not complicated. A self employed Thai can take a standard deduction and deduct 60% of their cost of sales which means only 40% is assessible to tax. By the time Exemptions and allowances are applied, there's little left to tax. If anyone has heard this before, look away now.....but my wife runs a business this way and makes 50k a month tax free....it';s far too easy and far too generous. 

Just identifying the percentages for taxation allowance is missing my point, calculating numbers in a spreadsheet is not complicated. I was referring to when a Tax is being considered for a formal case investigation. Inspectors are aware of collecting evidence and building a case can be complicated. If the suspect is considered as not truthful and for example its believed they are selling more than stated, where spoils/wastage are less than claimed etc. Investigations can be grey area considerations and this requires more work in determining what is truthful. It would be far more beneficial to optimise efforts for any Tax investigation when none of these grey areas exist. With an expat the consideration are more black and white and hence become quicker, easier and more productive to investigate. 

[Mike Lister]

1 hour ago, Robin said:

After living in Thailand for many years, I get the impression that few governments dare to implement any unpopular policies, even if they have a mandate to do so.  Since many (most) Thais do no pay any tax at the present, it would not be popular to make the pay, even a small sum.  Not difficult to make a start.  Walk through any village or town and ask at every business or shop.  If they do not have any accounts or have not filed these, hit them with an estimated tax.  demand.  if this is paid, double it for the next year, and so on for every year.  Once RD hits on the sum actually being earned, accounts will soon be produced.  Oh the screams of protest!  Would any government dare to continue?

That's exactly the case, I think. Successive governments have ploughed huge amounts into supporting the poor with populist polices over the past two decades, Yingluk almost broke the bank doing that. It's now a major shift that Revenue is expanding the tax net, that hasn't been actively promoted before ever. This is only being pursued because of advancements in technology which make it easier for Revenue to monitor bank accounts and electronic point of sale transactions. It will be interesting to see how this develops but one thing is certain, the 48% of the workforce that exists in the informal  (or grey) economy, is in for a shock.

[HuaHinNew]

Thailand runs significantly on the cash system, especially at the lower socioeconomic levels. 

[rickudon]

My wife runs a shop. She has to pay for various licences, or opt to do accounts and pay VAT. She pays for the licences ( at least one of which is self declared turn over related). She obviously chooses the cheapest level. Their are no real accounts, most is cash purchases. She doesn't even know how much profit she makes!

She isn't registered for income tax; but i doubt if she makes much more than 10,000 baht a month profit.

[Yumthai]

19 hours ago, rickudon said:

My wife runs a shop. She has to pay for various licences, or opt to do accounts and pay VAT. She pays for the licences ( at least one of which is self declared turn over related). She obviously chooses the cheapest level. Their are no real accounts, most is cash purchases. She doesn't even know how much profit she makes!

She isn't registered for income tax; but i doubt if she makes much more than 10,000 baht a month profit.

If she has declared and pays VAT then that means she generates an annual turnover exceeding THB 1.8 million.