Income Tax Calculation..Please Help!

[sickofit]

Someone pleeeaaaseeee help!!

I looked through so many websites about income tax rate in Thailand, but description is all the same....

My salary is definitely fall between 500,001~1,000,000 which tax rate is 20%.

But when I look at my pay slip, I never paid that high tax rate.

I've been working in Bangkok for over 4 years now, and have changed job 3 times.

For the first 2 jobs, my average tax rate was about 7~8% (calculated based on pay slip: salary-tax paid)

But now I am working for new company which I only worked for a month, and they suddenly cut 20% for tax!!

I asked for explanation from HR but his answer is "because my salary range is 500,001~1,000,000 "

So here are my questions.

1. I understand that annual salary of 500,001~1,000,000 is subject to 20% tax, but is there some missing equation here? Any other way to calculate? Or is this the way to calculate?? Really??

If your salary is 100,000/month, you see the pay slip with tax 20,000?? Because that is what happening to me!!

If so, why I was never charged that high tax rate during the past 4 years. (again, my annual salary always has been in 500,001~1,000,000 range)

2. Since I only worked for 1 month (December) with this new company, shouldnt they count this 1 month salary as annual and calculate tax based on that??

Please someone help me!! I am sooo furious because I changed job with better salary, but my salary is suddenly less than before just because of 20% tax rate.

I doubt if my HR knows what they are really doing.....

FYI, I have nothing for tax deduction.. no LTF, insurance..none.

[phaethon]

I don't know about LOS, but in the UK an average single Joe is not taxed on the first (IIRC) £6,475 of income, so if you earn £20k your taxable income would only be £20000-£6,475=£13,525, and that's before any other pre-tax deductions like national Insurance etc.

So, perhaps you're looking at your total gross income and not the actual taxable income?

Just a guess.

[StreetCowboy]

Its like this.

This is my experience only, and I am not qualified to give advice:-

Tax is assessed annually.

You have certain tax allowances: Personal allowance + salary tax allowance + dependents.

This amount of your salary attracts no tax.

Then successive bands of salary attract progressively higher tax.

As you say, your top rate of tax is 20%.

Your previous employer would calculate your monthly accrued liability to tax, and deduct this from your salary. Presumably assuming that you would work in the job for 12 months and spreading out the taxation burden equally across each month.

Your new employer may be assuming that you have already 'used up' your tax allowances and lower tax bands (i.e. that you have already earned more than 500,000 plus your allowances) and therefore that anything they pay you falls into the 500-1,000 K band.

After the end of the year, you will be required to submit a tax form stating exactly what you have earned from all sources of employment etc. and determining your precise liability to tax for that year. You may have over-paid or underpaid by some amount, and this may be refunded / demanded or may be subtracted from / added to next year's tax liability.

My experience:

I left my job in Thailand part way through the year.

My company had been paying tax as they anticipated it would be accrued as if I was going to work for the entire year (i.e. spreading the allowances and lower rates over 12 months).

However, because I left part way through the year, I did not 'use up' all my allowances and lower rates, I effectively paid too much tax.

So when the end-of-year calculation was done, I had paid too much tax, and this was refunded in the following year.

I was fortunate that my previous employer was very helpful, and also that I still had a Thai bank account into which to receive the refnd cheque.

SC

[Tywais]

Calculating your tax liability is straight forward. Personal Income Tax. If they are charging you a flat 20% for your entire income then they are doing it wrong. It does mean though you will get a pretty large tax refund at the end of the tax year.

Tax rates of the Personal Income Tax

Taxable Income

(baht) arginal Taxable income

(baht) Tax Rate (%)

0 - 150,000 (2008 onwards) 150,000 0% (Exempt)

150,001 - 500,000 350,000 10%

500,001 - 1,000,000 500,000 20%

1,000,001 - 4,000,000 3,000,000 30%

4,000,001 and over 37%

[sickofit]

Thank you all for the replies.:jap:

I (my dumbass HR) probably overpaid the tax......

If that's the case, can I really get the tax refund on March??

I have never seen anyone received tax refund around me in Thailand.....

I assumed govt will never return even if you overpay in this country.

StreetCowboy, in what timing did you get your tax back? Did they just deposited in your bank account??

[StreetCowboy]

Thank you all for the replies.:jap:

I (my dumbass HR) probably overpaid the tax......

If that's the case, can I really get the tax refund on March??

I have never seen anyone received tax refund around me in Thailand.....

I assumed govt will never return even if you overpay in this country.

StreetCowboy, in what timing did you get your tax back? Did they just deposited in your bank account??

My employer looked after it; I believe they sent a cheque, which my employer banked for me. It was third quarter by the time it was all sorted

Jonathan

[Tywais]

If that's the case, can I really get the tax refund on March??

Yes. I received one on my last filing, it arrived at my home address where the Tax Office sends my PND 91 forms. Can't remember how long, believe 2-3 months.

[KamnanT]

Yes, it's surprising how many payroll departments in Thailand don't understand income tax withholding. On more than one occasion, I've had to do the calculation myself and show them. And this is despite the Revenue Department providing printed tables showing exactly how much to withhold for a given amount of monthly salary and deductions!

Taking your example of someone being paid THB 100,000 per month and, for the sake of illustration, assuming they are married and have two school age children:

Income: 100,000 per month = 1,200,000 per year

Deductions: Personal Allowance 30,000 + Spouse Allowance 30,000 + Child Allowance (2 x 15,000) + Education Allowance (2 x 2,000) + Employment Income Deduction 60,000 + Social Security Tax Deduction 9,000 = 163,000.00

Taxable Income: 1,200,000 - 163,000 = 1,037,000

First 150,000 Tax Rate 0%

Next 350,000 Tax Rate 10% = 35,000

Next 500,000 Tax Rate 20% = 100,000

Last 37,000 Tax Rate 30% = 11,100

Tax Payable - 35,000 + 100,000 + 11,100 = 146,100 per year

Your payroll department should withhold 1/12th of this or 12,175 baht each monthly pay period, yielding an overall tax rate of 12.175%, not 20%. They should also confirm with you before you last pay of the year exactly what additional deductions you will be claiming (e.g. charitable donations, LTF, etc.) and adjust the final month's withholding to ensure the total withholding for the year exactly matches your tax payable. You still need to file a tax return every year, but ideally there should be no balance either to collect or refund unless you additional income or deductions that your payroll department didn't know about.

In 2008 I made an LTF contribution on the last possible day (Dec 31) so, of course, it wasn't accounted for in my last tax withholding. When I filed my tax return the following March, I was owed a 6-figure refund and it was a bit difficult to get it back. After 3 months, I received a letter from my local tax office asking for the original contribution receipt (I had filed my return online), then my file was transferred from the tax district where I live to the tax district where I work so that all of my employment and withholding details could be checked (again). It took six months and repeated phone calls to the officer handling my file, but I did eventually get the full refund in September. I think they were hoping that if they dragged it out long enough, I would forget about it. Lesson learned - to the greatest extent possible, get your withholding deductions adjusted to match your expected tax liability so that you don't end up with the Revenue Department owing you anything.

[sickofit]

Yes! We have to be really careful what our HR does with our money!

My HR deducted 20% flat from my first pay slip because dumbass thought I underpaid my tax this year!!

How much I made and how much tax I paid while with previous company is MY BUSINESS!!!

If I under paid tax, its NOT their business!!! Let Revenue Dept charge me later.

UGGGGGHHHHH!!!!

Scary part is HR get to control how much tax we pay!

Everyone should always let HR explain and justify the tax rate they are applying. Especially for the bonus.

[StreetCowboy]

Yes! We have to be really careful what our HR does with our money!

My HR deducted 20% flat from my first pay slip because dumbass thought I underpaid my tax this year!!

How much I made and how much tax I paid while with previous company is MY BUSINESS!!!

If I under paid tax, its NOT their business!!! Let Revenue Dept charge me later.

UGGGGGHHHHH!!!!

Scary part is HR get to control how much tax we pay!

Everyone should always let HR explain and justify the tax rate they are applying. Especially for the bonus.

No wonder you're sick, if you get so easily worked up about things...

SC

Oh - another possible explanation - could be that if you are in country for less than (say) six months you pay flat-rate tax, and your HR applied that rule - perhaps because they did not have the PAYE details from your previous employer?

Anyway, I am sure that everything will work itself out in the fullness of time, and it may turn out that you have inadvertently saved some money aside for a rainy day...