Payroll Deductions

[Valjean]

Coming to work in Thailand soon and working on my budget. I'm a US citizen who will work for Thai company paid in baht. Here's the question:

What are the mandatory tax deductions my employer must make? For instance in the US there's Income Tax which is calculated in some way on your annualized earnings nominal tax rate + Social Security + Medicare.

Is the Thailand Income Tax calculated on the rates here based on what your nominal rate would be on an annualized basis?

http://www.rd.go.th/publish/6000.0.html

Are there equivalents such Social Security or Medicare that are going to get deducted?

What are ways to reduce the deductions? I'm going to file US return as I have to. In theory I don't get double taxed in the process. There is a danger if the Thai withholding is in excess of my final US taxes then I'm potently overpaying and neither government is going to give me the money. This would come to play if I was taxed in Thailand at the highest rate without deductions but deductions and tax credits I can apply in the US reduce my total taxes.

Have I confused everyone or just me??

Thanks,

[Humphrey Bear]

Why work direct?

Why not form a consultancy and get paid off-shore, with a local portion at the legal minimum (I think it's 60k per month for US citizens, along with the Japanese).

If you get a US-level salary you will be heavily taxed over here. I do not know what double-taxation agreements will reduce your tax payments by, but once the government has got it (all governments) you'll nver see it again.

If the company you are going to work for has any nous, they will halp you in this matter. If not, don't work for them!

Social Security and insurance are at 5% and 0.6% respectively - employer pays.

Edited May 26, 2005 by Humphrey Bear

[Indo-Siam]

You have two deductions - social fund, and personal income tax.

The social fund deduction is 5% of salary, but with a cap of 750 baht.

The personal income tax deduction depends on your salary, and also your family situation. It typically amounts to 6-9% of salary, for salaries between 50,000 and 100,000 baht per month.

Cheers!

Steve

Indo-Siam

[jumbo]

Coming to work in Thailand soon and working on my budget.  I'm a US citizen who will work for Thai company paid in baht.  Here's the question:

What are the mandatory tax deductions my employer must make? For instance in the US there's Income Tax which is calculated in some way on your annualized earnings nominal tax rate + Social Security + Medicare. 

Is the Thailand Income Tax calculated on the rates here based on what your nominal rate would be on an annualized basis?

http://www.rd.go.th/publish/6000.0.html

Are there equivalents such Social Security or Medicare that are going to get deducted?

What are ways to reduce the deductions?  I'm going to file US return as I have to.  In theory I don't get double taxed in the process.  There is a danger if the Thai withholding is in excess of my final US taxes then I'm potently overpaying and neither government is going to give me the money.  This would come to play if I was taxed in Thailand at the highest rate without deductions but deductions and tax credits I can apply in the US reduce my total taxes. 

Have I confused everyone or just me?? 

Thanks,

<{POST_SNAPBACK}>

Valjean

Somehtings are not as clear;

Who is your employer in Thailand, same as in US but the local entity??

Why are you scared for double taxing and why should you be taxed in the US??

for more clear information please email me

regards

Jumbo

[Valjean]

My employer in Thailand is a wholly-owned subsidiary of US-based company. In this company there are ex-pat positions and local positions. For career or life experience reasons many people choose to live in another country (including non-US to the US) for the local company on a local wage plan. The idea above of a consultancy was good but in this case the company wouldn’t do it, there are too many people for side deals as well as reasons why you want to stay in full-time employment (for instance stock).

The US is different than most countries I believe in that it taxes their citizens no matter where they live and work. When we work out of the US we pay the local tax then when we file a US tax return there are provisions that provide credits for the foreign taxes paid that in theory avoid any double taxation. One gotcha is if the foreign taxes paid exceed the US taxes owned. Then the US isn’t going to pay you back for taxes paid elsewhere; your US tax owed would be 0 but your overall tax rate would be higher. Not really double taxation as over taxation you might say (that’s a fine point indeed). To Humphrey Bear’s point above this is what I worry about because it is a US-level salary. So my goal is to minimize Thai deductions as I’d rather owe the US some money at the end of the year than having over-paid.

The HR department is slowly but surely getting me this info but I suspect it will be until I got my first paycheck that I’d really know. The responses and help are appreciated – thanks.

[Gary A]

I worked in Thailand with a Thai work permit for about six years. I don't remember exactly how it works but I paid NO US taxes. You will be exempt up to 60 or 70,000 US dollars provided you are living in Thailand for like 330 days or more per year. I was taxed by the Thai government but the taxes were a lot less than they would have been in the USA.

[Sydney_Tom]

This link may help I found it on ThaiVisa a while ago trying to answer the question myself

=tax]Thai Tax Rates

Doesn't mean your employer will deduct te correct amount though

[~G~]

The US is different than most countries I believe in that it taxes their citizens no matter where they live and work. 

same system in my country.

One gotcha is if the foreign taxes paid exceed the US taxes owned. 

I don't know how high is your salary, but this is unlikely to happen. Compare the tax levels in Thailand and the US for the same sum of money.

Edited May 28, 2005 by ~G~

[Valjean]

Thanks all this has been helpful.