The Grey or Unofficial Economy - Tax Implications

Numerous members have said that TRD should make Thai nationals pay tax, before making foreign residents pay and but they seem unwilling to do this. A regular tax poster took me to task (as is his frequent want and need) for saying that most Thai nationals don't earn enough to warrant filing a return, once TEDA is taken into account, so I dug into things more deeply.

The population is circa 70 million but the workforce is only 38 million, the rest are too young, too  old, too inform, too incarcerated or too something to be included.

About 11% of the population (7.7 mill) files a tax return but only around 6% pay tax. Most of that 11% will be from the workforce which  means 20% of the workforce files a return, a more reasonable sounding number.

Ah yes you say, but most people work cash in hand and don't declare their earnings. Possibly, but dig into that headline more deeply and all is not what it first appears.

The informal economy or grey market is said to equal 50% of GDP or around 8 trillion baht. Divide that amount by the number of people in the workforce and the average national wage of 15,000 baht per month increases to 30,000 baht.

BUT, over 55% of workers in the informal economy are agricultural workers, who earn two times lower than their counterparts in the formal economy. 

What all that leaves us with is around 25% of the workforce who have informal earnings that are not declared, those are the people the TRD needs to  target.

But the answer to the question, why don't Thai's file tax returns is simply answered, most of them don't earn enough to qualify to do so.

 "IF the average wage nationwide is 15k per month, most married couples with one child have enough in TEDA to qualify to not file a return".

Lastly, it's interesting that many foreigners who move to Thailand, do so for the lower cost of living. Yet they earn between three and six times the average wage but complain they are being made to pay tax when their much poorer hosts do not! Hmmm.

The size of Thailand's informal economy is estimated to be 48.4% of GDP (THB18.7 trill.) 

Please credit and share this article with others using this link: https://www.bangkokpost.com/business/general/2745121/call-for-better-integration-of-the-informal-economy. View our policies at http://goo.gl/9HgTd and http://goo.gl/ou6Ip. © Bangkok Post PCL. All rights reserved.

More than half of informal workers, 55.4%, are in the agricultural sector, earning nearly two times lower than their counterparts in the formal sector.

Please credit and share this article with others using this link: https://www.bangkokpost.com/thailand/general/2708701/over-half-of-thai-workers-in-informal-sector. View our policies at http://goo.gl/9HgTd and http://goo.gl/ou6Ip. © Bangkok Post PCL. All rights reserved.