Paying Income Tax In Thailand

[vegas]

I am being paid in USD from outside Thailand and looking at the scales, my tax rate will be pretty high. Is there any way to soften this a bit by breaking salary down into allowances such as accommodation etc.?

[Theyreallrubbish]

I am being paid in USD from outside Thailand and looking at the scales, my tax rate will be pretty high. Is there any way to soften this a bit by breaking salary down into allowances such as accommodation etc.?

I was paid a smaller base salary and everything else in my life was paid for by the company precisely to avoid taxes as there was no taxes on benefits in kind.

(I also had an unlimited expense account with no receipts required as another way of getting cash tax free.)

This was several years ago though so I don't know if they've changed the tax law.

[vegas]

Well, that was what I wass thinking, an allowance for my apartment and then the rest in salary. But is the apartment allowance still taxed?

[Theyreallrubbish]

Well, that was what I wass thinking, an allowance for my apartment and then the rest in salary. But is the apartment allowance still taxed?

For me it wasn't taxed. Neither was my car, or fuel, or electricity or water bills or phone bills or restaurant bills or visa expenses and travelling on vacation.

If you get most of your living expenses paid you can bring your salary right down.

As I said, this was all several years ago so you'd need to check with an accountant what they've done in the meantime about exploiting the no benefit in kind tax rules

[Tomkagai]

I am being paid in USD from outside Thailand and looking at the scales, my tax rate will be pretty high. Is there any way to soften this a bit by breaking salary down into allowances such as accommodation etc.?

I may be missing something here but why dont you get paid into an account outside Thailand ?, say Singapore (no tax as non-resident)

[vegas]

I am being paid in USD from outside Thailand and looking at the scales, my tax rate will be pretty high. Is there any way to soften this a bit by breaking salary down into allowances such as accommodation etc.?

I may be missing something here but why dont you get paid into an account outside Thailand ?, say Singapore (no tax as non-resident)

The company won't do it.

[stumonster]

I am being paid in USD from outside Thailand and looking at the scales, my tax rate will be pretty high. Is there any way to soften this a bit by breaking salary down into allowances such as accommodation etc.?

I may be missing something here but why dont you get paid into an account outside Thailand ?, say Singapore (no tax as non-resident)

The company won't do it.

get them to pay the local tax then

[worldfun]

it doesn't matter where you're resident or being paid into as long as you're 'working in LOS' you're eligible for taxing be it tax evasion or tax optimisation!

[vegas]

say what?

[PattayaParent]

I think he means that even if your salary is paid offshore you're still liable for Thai tax on it as you're working in Thailand.

[richard_smith237]

While I was working for a Multi-national company I was paid monthly into two accounts.

A fixed salary was established based on what a Thai would earn in a similar position. This was paid into a Thai account and tax was paid on this. The remainder a significantly larger amount of the salary was paid to an offshore account.

When being paid from overseas this should be easy to do. Could a similar arrangement be made with your company ?

[vegas]

No. The company has stated unequivocally that they will not pay offshore. Looks like I am stuck with the high tax rate.

[thaihome]

While I was working for a Multi-national company I was paid monthly into two accounts.

A fixed salary was established based on what a Thai would earn in a similar position. This was paid into a Thai account and tax was paid on this. The remainder a significantly larger amount of the salary was paid to an offshore account.

When being paid from overseas this should be easy to do. Could a similar arrangement be made with your company ?

Most MNC are stopping this practice worldwide as Revenue Depts are getting much more clever in seeing through it. The problem is how you get the revenue offshore to cover the cost the offshore company is incurring.

Most MNC are now on full disclosure with a tax equalization package that is suppose to make you equal to what your tax would be in home country.

All amounts paid are taxable income, housing, cost of living, cars, school, home leaves, etc. Only thing not is reimbursement for business trips

TH

[monty]

I personally think income tax is relatively fair!

With the standard allowances and deductions for a single man without children you can get paid in excess of 4,100,000 Baht/year, and you'll be taxed a tad over 1,000,000 Baht, which is around 25% overall.

Anything earned over 4,000,000 Baht (after deductions and allowances) gets taxed at a rather high 37%, but it actually doesn't influence the overall tax rate a whole lot, since they use progressive rates in Thailand.

Earn 5,000,000 taxable and you'll pay 1.410.000 Baht in taxes, or slightly over 28%...

I think you'll pay substantially more in most Western countries on salaries of that amount.

Of course there several ways to reduce taxable income, at 4,000,000 Baht income you are allowed to invest and deduct up to 300,000 Baht in approved provident funds and another 300,000 Baht in long term equity funds, further reducing your tax liability by a sizable amount...

More info at the Thai revenue department's website.

[worldfun]

Correct :-)

Unless perhaps if some international tax treaty forces you to pay tax in your companies home country e.g. typically if you're a real expat temporary working in LOS?

Then you may be exempt in LOS...

[flying]

Just curious but do many make 4 million baht a year in Thailand? What line of work is that?

I was just surprised to see that. .....That is like 126k USD which is a pretty good income here

[Tomkagai]

Just curious but do many make 4 million baht a year in Thailand? What line of work is that?

I was just surprised to see that. .....That is like 126k USD which is a pretty good income here

The was majority of expats in the Thai O&G game are on around US$ 150,000 per year upwards, as if their packages are structured right, will be paying very little tax on this amount as well

[StreetCowboy]

Just curious but do many make 4 million baht a year in Thailand? What line of work is that?

I was just surprised to see that. .....That is like 126k USD which is a pretty good income here

The was majority of expats in the Thai O&G game are on around US$ 150,000 per year upwards, as if their packages are structured right, will be paying very little tax on this amount as well

I think that this is normally done by paying the expat from his home country, by his home country employer. The home country employer is not required to make a declaration to the Thai tax authorities, and so it is up to the employee to declare all his earnings to the Thai tax authorities. The fraction that is paid by the local Thai subsidiary is declared to the authorities, and is the minimum necessary to justify a work permit. Housing allowance, school fees, travel allowance are all taxable.

And I imagine that they rely on being able to bribe their way out of trouble if the tax authorities ever come knocking.

I would be interested to know any legal ways of reducing the tax burden; maybe by getting some of mysalary paid in my wife's name? but then difficult, since she doesn't have a work permit...

SC

[robanywhere]

Just curious but do many make 4 million baht a year in Thailand? What line of work is that?

I was just surprised to see that. .....That is like 126k USD which is a pretty good income here

The was majority of expats in the Thai O&G game are on around US$ 150,000 per year upwards, as if their packages are structured right, will be paying very little tax on this amount as well

I think that this is normally done by paying the expat from his home country, by his home country employer. The home country employer is not required to make a declaration to the Thai tax authorities, and so it is up to the employee to declare all his earnings to the Thai tax authorities. The fraction that is paid by the local Thai subsidiary is declared to the authorities, and is the minimum necessary to justify a work permit. Housing allowance, school fees, travel allowance are all taxable.

And I imagine that they rely on being able to bribe their way out of trouble if the tax authorities ever come knocking.

I would be interested to know any legal ways of reducing the tax burden; maybe by getting some of mysalary paid in my wife's name? but then difficult, since she doesn't have a work permit...

SC

I work for a MNC in the Oil/Gas business, and have worked in several countries over the years. My MNC has always used the tax equalization scheme (paying theoretical taxes equivalent to what we would have paid had we stayed in our home country) while the MNC paid the host and home country taxes on our behalf. I generally have to sign off on both the home and host country tax returns, and they always are a full disclosure of my income -- wages, benefits, any housing/cost-of-living allowances.

I know of some contract service employees that have the arrangement mentioned above, whereby they are paid by the contract services company in both Thailand at local wage levels and also a greater offshore supplementary wage into an offshore account. This seems like a bit of a sham to only report the Thai wage amount, and I don't believe any large reputable MNC would pay compensation in this manner.

[AFKAFSinLOS]

No idea of your view on investments in Thailand, but one thing to consider is Long Term Investment Funds LTFs

You can invest up to THB 500,000 a year and get tax relief at your marginal rate of tax. So if you pay tax at 37%, you can effectively get THB 185k a year free back in tax from the Thai Revenue. The downside is there is equity risk and you have to hold thru 5 calendar years.

It effecttively gets you in at around 2/3s the market price depending on your tax rate. So providing you can hold for 5 years, the Thai stock market would have to fall 37% before you even start to lose money. Personally I also think the upside is good, and have been earning around 20%+ p.a. doing this before factoring in the extra tax gains. Bear in mind stocks rise as well as fall, and you could lose money. eg this year down a few %, but that's not much considering you get tax relief of up to 37%...

Edited May 4, 2008 by AFKAFSinLOS

[singa-traz]

Well, that was what I wass thinking, an allowance for my apartment and then the rest in salary. But is the apartment allowance still taxed?

For me it wasn't taxed. Neither was my car, or fuel, or electricity or water bills or phone bills or restaurant bills or visa expenses and travelling on vacation.

If you get most of your living expenses paid you can bring your salary right down.

As I said, this was all several years ago so you'd need to check with an accountant what they've done in the meantime about exploiting the no benefit in kind tax rules

This is no longer the case, and those "hidden" benefits are taxable.

Business expenses that you can justify, are not.