Tax refund when switch from Progressive rate to Flat 15% in middle of the year

[akda]

Hi Everyone,

 

I have a query regarding my tax situation after switching employers.

From January to July, while working with Employer 1, I was under the progressive tax rate, and Employer 1 deducted tax based on this rate.

The total tax deducted by Employer 1 is 650K THB for the entire year.

 

Starting in August, I will be moving to Employer 2, where I will be under a flat 15% tax rate. If I calculate my tax based on this flat rate, it amounts to 480K THB.

Seems, I have tax refund of 170K THB.

 

Given that Employer 1 has already deducted tax based on the progressive rate, will I be eligible for a tax refund after I switch to the flat 15% rate?

 

Thank you for your assistance.

 

[thomasfielk]

Just out of curiosity, what is this flat 15% tax rate? Is it for specific occupuations?

[Johno57]

This whole tax thing that is evolving will drive every body out of the country...they thought of taxing tourists 200 bht on entry , but then decided against it , whereas that would have worked better than driving LT residents and investors  away..

[soalbundy]

On 7/8/2024 at 7:05 PM, akda said:

Hi Everyone,

 

I have a query regarding my tax situation after switching employers.

From January to July, while working with Employer 1, I was under the progressive tax rate, and Employer 1 deducted tax based on this rate.

The total tax deducted by Employer 1 is 650K THB for the entire year.

 

Starting in August, I will be moving to Employer 2, where I will be under a flat 15% tax rate. If I calculate my tax based on this flat rate, it amounts to 480K THB.

Seems, I have tax refund of 170K THB.

 

Given that Employer 1 has already deducted tax based on the progressive rate, will I be eligible for a tax refund after I switch to the flat 15% rate?

 

Thank you for your assistance.

 

650K tax that is huge, don't you have any deductions to make?

[akda]

17 hours ago, thomasfielk said:

Just out of curiosity, what is this flat 15% tax rate? Is it for specific occupuations?

Not sure for specific occupation.

I work for a big IT company which is under BOI.

 

There are two types of tax rate first is progressive tax and second is 15% flat.

 

In progressive tax rate, it is taxed slab wise. This can deduct upto 35% after couple of million THB.

Higher the salary, higher taxes.

 

About 15% flat rate. No matter how much you earn it will be taxed flat 15%.

So lets assume monthly gross is 250K THB. Take home would be 212,500 THB after deducting 15% tax(37,500 THB).

 

[akda]

2 hours ago, soalbundy said:

650K tax that is huge, don't you have any deductions to make?

This is after all deduction.

I pay 10% of base as provident fund.

[Expat4life66]

17 hours ago, thomasfielk said:

Just out of curiosity, what is this flat 15% tax rate? Is it for specific occupuations?

When I worked for a BOI / Region Holding Company, 15% was the tax on expats supporting tax entities outside Thailand (e.g., Malaysia, Phils) and possibly Thailand as well.    We had some expat individuals that only worked for one Thai entity, say a market GM or market CFO that were taxed at the same progressive rate all Thais are taxed.   

[Expat4life66]

On 7/8/2024 at 7:05 PM, akda said:

Hi Everyone,

 

I have a query regarding my tax situation after switching employers.

From January to July, while working with Employer 1, I was under the progressive tax rate, and Employer 1 deducted tax based on this rate.

The total tax deducted by Employer 1 is 650K THB for the entire year.

 

Starting in August, I will be moving to Employer 2, where I will be under a flat 15% tax rate. If I calculate my tax based on this flat rate, it amounts to 480K THB.

Seems, I have tax refund of 170K THB.

 

Given that Employer 1 has already deducted tax based on the progressive rate, will I be eligible for a tax refund after I switch to the flat 15% rate?

 

Thank you for your assistance.

 

 

For Employer 1, if you were working for a Thai only BOI /  a Thailand legal entity, you were charged the correct progressive rate. 

 

For Employer 2 if you are now working for a BOI / Region Holding Company and supporting legal entities for you company outside of Thailand and possibly also Thai Legal entities you would be eligible for the  15% flat tax on wages, Pfund is post-tax and if applicable, car allowance.  There are no deductions allowed with this rate, unlike the progressive rate that is eligible for deductions.

 

Without knowing additional details of your situation and assuming what I wrote above is close to correct, the answer is no you won’t be able to claim a refund, because you were taxed correctly.   You will also file two separate tax returns because you will receive two 50 Tawi (like a US W2) from two different employers. 

 

For Employer 1 – you complete PND91 like Thais complete, you can use the e-file system to create an account and file using the link below as soon as you receive Employer 1 50 Tawi (you may have to chase this up with former employer)

https://www.rd.go.th/272.html

 

For Employer 2 if you are working for a BOI/ROH you most likely will complete a PND95 in Q1 2025 and have to file manually at a revenue office.  E-file wasn’t set up for this form when I last filed in the beginning of the year. 

 

Good Luck, hope this helps

[john donson]

if 650k is tax due, damn, you earning millions a year...

[akda]

5 hours ago, Expat4life66 said:

 

For Employer 1, if you were working for a Thai only BOI /  a Thailand legal entity, you were charged the correct progressive rate. 

 

For Employer 2 if you are now working for a BOI / Region Holding Company and supporting legal entities for you company outside of Thailand and possibly also Thai Legal entities you would be eligible for the  15% flat tax on wages, Pfund is post-tax and if applicable, car allowance.  There are no deductions allowed with this rate, unlike the progressive rate that is eligible for deductions.

 

Without knowing additional details of your situation and assuming what I wrote above is close to correct, the answer is no you won’t be able to claim a refund, because you were taxed correctly.   You will also file two separate tax returns because you will receive two 50 Tawi (like a US W2) from two different employers. 

 

For Employer 1 – you complete PND91 like Thais complete, you can use the e-file system to create an account and file using the link below as soon as you receive Employer 1 50 Tawi (you may have to chase this up with former employer)

https://www.rd.go.th/272.html

 

For Employer 2 if you are working for a BOI/ROH you most likely will complete a PND95 in Q1 2025 and have to file manually at a revenue office.  E-file wasn’t set up for this form when I last filed in the beginning of the year. 

 

Good Luck, hope this helps

 

Both current and new employer are under BOI.

Both companies registered/headquarter in Singapore.

[Expat4life66]

10 hours ago, akda said:

 

Both current and new employer are under BOI.

Both companies registered/headquarter in Singapore.

Your companies also have a Thailand Tax designation / employer number (the tax ID on your 50 Tawi).  That's the ID you use when filing taxes which is why you will file two returns.  

 

With my multinational set up as an International Business Center (IBC) (e.g., old RHC), which has over 1000 Tax enties around the world, what determined your tax status was what countries your role actually supported.  Say you were in IT and you specifically supported a Thailand company or 3rd party Thailand company, you would be taxed at the progressive rate.  It you were supporting multiple companies across the region in APAC you would be taxed at the IBC (15% rate).  

 

How Employer 1 was set up with BOI also matters, perhaps not an IBC thus everyone (including Thais) gets equal tax treatment.  If you have any doubts that you were taxed incorrectly, you should ask your Employer 1 Payroll / HR department for clarification.  If they made a mistake, they would have to reimburse you overpaid taxes and issue a new 50 Tawi Summary for you to file your Employer 1 return.  Tax withholding is heavily monitored / regulated by the Thailand BOI so the IBC rate is not applied incorrectly.  

[Expat4life66]

14 hours ago, john donson said:

if 650k is tax due, damn, you earning millions a year...

You would be surprised, Thais and Expats working for large multi nationals in Thailand make 30-40% more than the equivalent job in the US.  Combine that with 40 days off (vacation and holiday/flex) a year, generous car allowance, a 15% tax rate, 10% match on Provident Fund (like 401K) and the US foreign tax and housing credit its a no brainer for someone that has already paid into US SSO for the full 35 years and wants to work overseas later in their career.  

[thomasfielk]

On 7/11/2024 at 3:46 PM, Expat4life66 said:

When I worked for a BOI / Region Holding Company, 15% was the tax on expats supporting tax entities outside Thailand (e.g., Malaysia, Phils) and possibly Thailand as well.    We had some expat individuals that only worked for one Thai entity, say a market GM or market CFO that were taxed at the same progressive rate all Thais are taxed.   

 

So employees of BOI sponsored companies only pay 15% flat tax? Seems even better than the LTR Highly Skilled Proffesionals at 17%!

[Expat4life66]

23 minutes ago, thomasfielk said:

 

So employees of BOI sponsored companies only pay 15% flat tax? Seems even better than the LTR Highly Skilled Proffesionals at 17%!

BOI IBC (International Business Center) rate is 15% if your business activities for your BOI entity are costed to multiple tax enties in the Region (APAC).  Been that way since before I relocated here with my multi-national in 2015 and is still in place.  I always thought the new LTR rate was strange when they announced a 17% rate.