Do Teachers Pay Taxes?

[nicknbg1981]

Hello! Im moving to Thailand in Janurary and I was told something odd, farang dont pay taxes on anything and dont pay taxes out of their salary, is this true?

[Ijustwannateach]

I believe there is something from the Treaty of Amity (if still in force) or elsewhere that excused Americans from paying taxes for 1 or 2 years, and the British Council workers also get a tax break- but otherwise we foreign teachers do indeed pay taxes!

[Scott]

From the time your work permit is issued, you will pay taxes--provided you are earning a salary.

Teachers who are employed illegally often don't pay taxes, but I have heard of a school that doesn't employ teachers legally but still deducts taxes. I wonder just who the tax man is?

Also, a lot of people don't pay taxes on outside earning because they don't declare them.

[SeanMoran]

I believe there is something from the Treaty of Amity (if still in force) or elsewhere that excused Americans from paying taxes for 1 or 2 years, and the British Council workers also get a tax break- but otherwise we foreign teachers do indeed pay taxes!

It is my understanding that Americans aren't excused from taxes, but that we can get a tax refund within the first 2 years of employment (since we are paying taxes in Thailand, and paying US taxes on our Thai income). It's a complicated process, though, and often requires hiring a lawyer or accountant.

If you never get paid any money for doing the teaching, then you don't need no accountant, you can't afford a lawyer's bill, and there ain't no taxes.

Nothing from nothing leaves nothing.

Money aside as nothing, teaching is everything. The tax is paid over and over again every night between classes for the next week's lesson plans.

Internet cafès cost 20-30thb per hour, but it is the time that is the most taxacious.

[aussiebebe]

The OP doesn't mention where he comes from but if you look at http://www.thailandtax.com/teacher-refund.html you'll read

Teachers that were residents of countries that have a tax treaty with Thailand and have stayed in Thailand not exceeding 2 years are eligible to claim a tax refund on tax withheld from their salary.

There is probably no shortage of Thai lawyers willing to assist, for a fee, of course.

A teacher refund claim normally takes 3 months or more, but depends entirely on the schedule of the Revenue Department office where the refund is requested. Our fee to assist with a teacher refund claim is 40,000 Baht and we require a 50% deposit prior to beginning the work.

So, you wait around in Thailand for 3 months and are then told you have overstayed; ie don't bother.

The OP should try to find employment with a school which will process the correct visa documents (Non-Imm a work permit and a teacher licence. Tax will be deducted and tax returns will be filed, either by the employee or with help from the business. Some schools will provide no help with visa, work permit etc and yet still deduct tax (WARNING!) This isn't helpful as you'll have no tax records and won't be eligible for Social security scheme which covers some medical costs if you are sick.

The first 100,000baht you earn is exempt, 100-500k is taxed at 10%, 500k-1,000,000 is taxed at 20% and over that is 30%. You can get certain amounts exempted from being taxed for various things like being married, having children, paying housing loans etc, but they are relatively small sums.

A question often asked by foreigners is 'What do I get in return?' and the answer is 'Very little'. Like it or lump it. However, if you drive and buy fuel, you'll benefit from subsidized fuel such as Gasohol (petrol blended with ethanol), cooking gas, LPG is subsidized and for a period last year, water bills for residential properties were free. Thats all I can think of.

Teachers who say they pay no tax will work privately, or for a language centre. These opportunities won't afford the teacher a work permit or visa, but if you find an employer that will do your paperwork, you can create freelance opportunities, illegally but no-one checks, which pay cash, no tax.

[Ijustwannateach]

^Right. It isn't that we are excused because we are taxed elsewhere- in that regard, the U.S. is unusual in requiring its citizens to be taxed on income earned elsewhere, though few teachers earn enough actually to owe taxes after the overseas exclusion- but because of the tax treaty.

[QED]

The first 100,000baht you earn is exempt, 100-500k is taxed at 10%, 500k-1,000,000 is taxed at 20% and over that is 30%. You can get certain amounts exempted from being taxed for various things like being married, having children, paying housing loans etc, but they are relatively small sums.

Not correct.

The first 150,000 is tax free, plus a single person will get 90,000 in deductions and allowances giving a total of 240,000 before you pay any tax. The other allowances mentioned can also be added if applicable.

Hence you can earn at least 20k per month before you pay tax, so I guess the answer to the OP is no, the majority of teachers don't pay tax

http://www.rd.go.th/publish/6045.0.html

[shamus]

Teachers shouldn't pay taxes.

How could the world have evloved without schools? Teachers are responsible for facilitating our evolution. Education depts. should make adverts depicting this, might increase fresh applicants - not including P.E teachers

IMO

[nicknbg1981]

Hold the phone! I pay American taxes??!! How is that possible, I will be living in Thailand!!

[Scott]

Whether you PAY taxes in the US (or any other country) depends on the laws in the country. US citizens are required to FILE income tax reports each year. Teachers seldom would have to pay taxes on their overseas earnings as a teacher.

Where I work, the taxes are withheld from our pay each month. At the end of the tax year, we receive a portion back. But we most certainly do pay taxes. It's not a lot, but we do pay.

[nicknbg1981]

Can anyone give me a percentage of what would be taken out? I am american, and im expecting a salary of around 30,000 bhat

[lanny]

First, let me say that my expertise is with US taxes, not Thai taxes. That said, I know that the US-Thai tax treaty contains a provision that exempts teachers and researchers from Thai income tax for two years. I believe there are similar provisions in the UK treaty, as well.

If you do the paper work properly (and many schools help in this) no tax will be withheld. If not, you may have to file a Thai tax return to claim a refund.

This does not exempt you from US taxes. You still must file a US tax return and pay any tax due. At the rate most teachers are paid, you will not owe any tax because your income will be low enough to qualify for the Foreign Earned Income Exclusion. If you don'e qualify for the FEIE, you can still claim the Foreign Tax Credit for taxes paid to Thailand.

[colspeed]

I pay my own taxes once a year by going to the tax office.

Last year I declared 250,000 Baht and was asked for around 1,000Baht. Don't worry too much about it!

[Scott]

I don't know exactly what the tax rate is in Thailand, but I would guess that different schools (and businesses for that matter) handle it differently. Tax is withheld for all our teachers at the rate of about 1,800 baht per month. At the end of the year, we receive a refund, usually. Last year it was in the neighborhood of 4,800 baht. The school does the taxes for us, but what they do is exclusively based on our earnings at the school.

I believe the US tax starts after earning US$90,000 in foreign income. You still have to pay taxes on money earned in the US. $90,000 is getting dangerously close to 3,000,000 baht, I don't know any teachers earning that kind of money from teaching in Thailand.

I am wondering if any other nationalities have tax issues regarding Thailand and their home country or other costs such as National Insurance Schemes, Government Pension/Retirement?

[mizzi39]

Hold the phone! I pay American taxes??!! How is that possible, I will be living in Thailand!!

I pay taxes here in Thailand because i am employed legally. i am not required to pay taxes in the States, because of the Treaty of Amity that we share with Thailand, so you cannot be taxed twice. The same goes for a Thai living and working in the states. As long as they are paying taxes while working in the states they are not required to pay taxes in Thailand. This is all covered under such treaty.

I would suggest all US citizens read the treaty of Amity. The treaty clearly states what your obligation is concerning taxes.

Edited November 25, 2009 by mizzi39

[Scott]

This thread is getting complicated. Paying and filing are two different things. I know of no treaty the gets you out of taxes. Taxes paid in a foreign country are deductible off your US taxes.

How many people do we have who are earning over $90,000 per year (as teachers, as this is a teaching forum) solely from their Thai teaching income?

[QED]

Can anyone give me a percentage of what would be taken out? I am american, and im expecting a salary of around 30,000 bhat

If you are a single guy with no children then your tax will work out like this:

60,000 baht allowable deduction on income from employment

30,000 baht personal exemption

150,000 baht exempt

TOTAL 240,000 non taxable, leaving 120,000 taxable.

Tax rate for income from 150,001 to 500,000 pa is 10%

Tax therefore equals 12,000 pa or 1,000 baht per month.

If you are married, have kids, elderly parents in law etc you can claim further allowances. Bear in mind the tax year here runs the same as the calendar year, so in your scenario if you started working in May you wouldn't be liable for any tax as your income in the tax year would only be 240,000.

You also will have to pay 750 per month social security, although this is discounted at the moment to 450 per month.

For those earning more Western type salaries here the tax regime is somewhat more punitive, with a top rate of 37% for income over 4 million baht, but for those on Thai type salaries the tax regime is fairly lenient. Most Thais have never heard of income tax as they do not earn 20k per month, or run their own businesses and avoid taxes altogether, so getting advice from Thais on the matter is usually a fruitless task.

When I started working here my tax was over 60k per month, and my g/f at the time was convinced that the company were stealing the money from me, she just couldn't grasp the principle of income tax as most have never encountered it before. God knows where they think the money to run the country comes from.

[nicknbg1981]

Im so confused.....I have no idea on whats going on! I dont pay taxes for the first two years,..correct? But then after 2 years I pay 1K bhat taxes a month, while i file my taxes in america which I wont owe because I dont make more then 90,000 USD...right? Did I get that? :-D

[mizzi39]

Im so confused.....I have no idea on whats going on! I dont pay taxes for the first two years,..correct? But then after 2 years I pay 1K bhat taxes a month, while i file my taxes in america which I wont owe because I dont make more then 90,000 USD...right? Did I get that? :-D

ARTICLE VI

1. Nationals and companies of either Party shall not be subject to the payment of taxes, fees or charges within the territories of the other Party, or to requirements with respect to the levy and collection thereof, more burdensome than those borne by nationals, residents and companies of any third country. In the case of nationals of either Party residing within the territories of the other Party, and of companies of either Party engaged in trade or other gainful pursuit or in non-profit activities therein, such taxes,

fees, charges and requirements shall not be more burdensome than those borne by nationals and companies of such other Party.

2. Each Party, however, reserves the right to: (a) extend specific tax advantages only on the basis of reciprocity, or pursuant to agreements for the avoidance of double taxation or the mutual protection of revenue: and ( apply special provisions in extending advantages to its nationals and residents in connection with joint returns by husband and wife, and as to the exemptions of a personal nature allowed to non-residents in connection with income and inheritance taxes.

3. Companies of either Party shall not be subject, within the territories of the other Party, to the payment of taxes upon income not attributable to sources within such territories, or upon transactions or capital not attributable to the operations and investments thereof within such territories

4. The foregoing provisions shall not prevent the levying, in appropriate cases, of fees relating to the accomplishment of police and other formalities, if these fees are also levied on nationals of all third countries. The rates for such fees shall not exceed those charged such nationals of any third country.

OK, let me confuse you a little more. This is Article 6 which explains the tax agreement under the Treaty of Amity between Thailand and the US.Not sure about what treaties or agreement other counties have with Thailand, but since you are American this should apply to you. If you would like a copy of the full treaty please PM me.

[mizzi39]

Im so confused.....I have no idea on whats going on! I dont pay taxes for the first two years,..correct? But then after 2 years I pay 1K bhat taxes a month, while i file my taxes in america which I wont owe because I dont make more then 90,000 USD...right? Did I get that? :-D

OK, let me confuse you a little more. This is Article 6 which explains the tax agreement under the Treaty of Amity between Thailand and the US.Not sure about what treaties or agreement other counties have with Thailand, but since you are American this should apply to you. If you would like a copy of the full treaty please PM me.

ARTICLE VI

1. Nationals and companies of either Party shall not be subject to the payment of taxes, fees or charges within the territories of the other Party, or to requirements with respect to the levy and collection thereof, more burdensome than those borne by nationals, residents and companies of any third country. In the case of nationals of either Party residing within the territories of the other Party, and of companies of either Party engaged in trade or other gainful pursuit or in non-profit activities therein, such taxes,

fees, charges and requirements shall not be more burdensome than those borne by nationals and companies of such other Party.

2. Each Party, however, reserves the right to: (a) extend specific tax advantages only on the basis of reciprocity, or pursuant to agreements for the avoidance of double taxation or the mutual protection of revenue: and ( apply special provisions in extending advantages to its nationals and residents in connection with joint returns by husband and wife, and as to the exemptions of a personal nature allowed to non-residents in connection with income and inheritance taxes.

3. Companies of either Party shall not be subject, within the territories of the other Party, to the payment of taxes upon income not attributable to sources within such territories, or upon transactions or capital not attributable to the operations and investments thereof within such territories

4. The foregoing provisions shall not prevent the levying, in appropriate cases, of fees relating to the accomplishment of police and other formalities, if these fees are also levied on nationals of all third countries. The rates for such fees shall not exceed those charged such nationals of any third country.

Edited November 25, 2009 by mizzi39

[PeaceBlondie]

Is the Thai-USA Treaty of Amity currently in effect?

[mizzi39]

Is the Thai-USA Treaty of Amity currently in effect?

As of September 2009, Yes!

[Ijustwannateach]

Suffice to say: if you are working in Thailand, you are subject to Thai law and therefore you will pay taxes according to Thai law- lower salaries aren't taxed highly; most teachers will pay barely 10% or so- EXCEPT with the potential for a period of exception according to the treaty above.

If you are a US citizen, you are bound by US laws, which require you to file and to show evidence of your eligibility for a foreign tax exclusion of nearly $100k dollars. If you earn in excess of that, it is taxable by US law. Please go to the business forum (or a US tax forum) if you wish to protest this; it's not an issue of being a teacher in a foreign country but one of being a US citizen.

[nicknbg1981]

Suffice to say: if you are working in Thailand, you are subject to Thai law and therefore you will pay taxes according to Thai law- lower salaries aren't taxed highly; most teachers will pay barely 10% or so- EXCEPT with the potential for a period of exception according to the treaty above.

If you are a US citizen, you are bound by US laws, which require you to file and to show evidence of your eligibility for a foreign tax exclusion of nearly $100k dollars. If you earn in excess of that, it is taxable by US law. Please go to the business forum (or a US tax forum) if you wish to protest this; it's not an issue of being a teacher in a foreign country but one of being a US citizen.

I think i get it! I pay 10% and i just prove to the US government i dont make more then 100K usd Yes!!

[mizzi39]

Suffice to say: if you are working in Thailand, you are subject to Thai law and therefore you will pay taxes according to Thai law- lower salaries aren't taxed highly; most teachers will pay barely 10% or so- EXCEPT with the potential for a period of exception according to the treaty above.

If you are a US citizen, you are bound by US laws, which require you to file and to show evidence of your eligibility for a foreign tax exclusion of nearly $100k dollars. If you earn in excess of that, it is taxable by US law. Please go to the business forum (or a US tax forum) if you wish to protest this; it's not an issue of being a teacher in a foreign country but one of being a US citizen.

I think i get it! I pay 10% and i just prove to the US government i dont make more then 100K usd Yes!!

Yes. You can be assured that you will never even come close to making 100K USD in a year (or many years) teaching English in Thailand, so no worries.