Income Tax

[Kananga]

Apologies if this has been posted recently, I am assuming it would have been but the search brought up over 1000 results!

I am considering moving to Thailand. My current employer has an office in Bangkok. They are a multinational company. What income tax would I be expected to pay and is it taken at source?

Any information would be appreciated.

[Soutpeel]

Depend how much you are earning....but coud be up to 35-40% odd percent, yes its taken at source.

If you are coming here on an expat package, see it they will double contract you ie X amount paid in Thailand to cover your Thai expenses and taxed in Thailand on the lower amount, balance paid in somewhere like Singapore or Hong kong and not taxed

Some companies will do it other will not.

[Kananga]

Depend how much you are earning....but coud be up to 35-40% odd percent, yes its taken at source.

If you are coming here on an expat package, see it they will double contract you ie X amount paid in Thailand to cover your Thai expenses and taxed in Thailand on the lower amount, balance paid in somewhere like Singapore or Hong kong and not taxed

Some companies will do it other will not.

Thanks thats a good point. I would be coming from Singapore so pay a percentage of the salary to a Singapore bank account and a percentage to Thailand and then only get taxed on the amount paid in Thailand? Good thinking. I'll look into it.

I found a site which shows the scale. Worked out my income tax would be about 27%. A lot higher than the 12% I pay now! Using a home/host payment method I reckon I could get it down to 15%.

Thanks again.

[Soutpeel]

Depend how much you are earning....but coud be up to 35-40% odd percent, yes its taken at source.

If you are coming here on an expat package, see it they will double contract you ie X amount paid in Thailand to cover your Thai expenses and taxed in Thailand on the lower amount, balance paid in somewhere like Singapore or Hong kong and not taxed

Some companies will do it other will not.

Thanks thats a good point. I would be coming from Singapore so pay a percentage of the salary to a Singapore bank account and a percentage to Thailand and then only get taxed on the amount paid in Thailand? Good thinking. I'll look into it.

I found a site which shows the scale. Worked out my income tax would be about 27%. A lot higher than the 12% I pay now! Using a home/host payment method I reckon I could get it down to 15%.

Thanks again.

Are you Singaporian ?.....then look at an offshore account in Hong Kong

[Kananga]

Depend how much you are earning....but coud be up to 35-40% odd percent, yes its taken at source.

If you are coming here on an expat package, see it they will double contract you ie X amount paid in Thailand to cover your Thai expenses and taxed in Thailand on the lower amount, balance paid in somewhere like Singapore or Hong kong and not taxed

Some companies will do it other will not.

Thanks thats a good point. I would be coming from Singapore so pay a percentage of the salary to a Singapore bank account and a percentage to Thailand and then only get taxed on the amount paid in Thailand? Good thinking. I'll look into it.

I found a site which shows the scale. Worked out my income tax would be about 27%. A lot higher than the 12% I pay now! Using a home/host payment method I reckon I could get it down to 15%.

Thanks again.

Are you Singaporian ?.....then look at an offshore account in Hong Kong

No, British. But I am a Singapore resident.

[Soutpeel]

No, British. But I am a Singapore resident.

Therefore liable for Tax in Singapore, you would be better setting your offshore account up in Hong Kong, as no tax would be payable in HK as you are not a resident, this is all on the proviso that your company is prepared to do a "double contract for you...some will, some won't..

Obviously for the Thailand end the salary declared on the WP and the tax you are paying need to be "realistic" , typically in the THB 80,000 to THB 100,000/month bracket

[Kananga]

No, British. But I am a Singapore resident.

Therefore liable for Tax in Singapore, you would be better setting your offshore account up in Hong Kong, as no tax would be payable in HK as you are not a resident, this is all on the proviso that your company is prepared to do a "double contract for you...some will, some won't..

Obviously for the Thailand end the salary declared on the WP and the tax you are paying need to be "realistic" , typically in the THB 80,000 to THB 100,000/month bracket

Thanks again. Although if I moved to Thailand I would no longer be a Singapore resident. I would probably have about THB 190,000 paid in Thailand for monthly living costs and the remainder kept offshore as you say. Our company HQ is based in HK so I can't see it being a problem. You've just saved me about 30,000 baht a month! Cheers!

Edited March 9, 2011 by Kananga

[thaihome]

Though Soutpeel is correct about the split contracts it worth noting that they are illegal if the person in fact works solely in Thailand. I think you will find that few MNC will do these anymore for direct employees. Most agencies that supply contract employees to MNC will still do them, some do them even when being paid entirely onshore at a large markup supposedly to pay for the Thai tax.

The Thai Revenue dept is becoming pretty sophisticated in detecting when a person is being paid offshore. The issue is how does the Thai entity pay for the offshore portion. Unless the offshore entity is willing to take the loss (no revenue for the cost incurred) then it is pretty easy to spot.

A Singaporean (or someone resident there) is only liable for Singapore tax on income earned in Singapore. We have done split contracts in Singapore for years, but they did check your passport to be sure you were actually out of the country for the income you were excluding.

TH

[PoorSucker]

Here you go:

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

[Kananga]

Here you go:

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

Thanks.

I would actually be paid by our head office in HK. I would just be using the Bangkok office as my base. The revenue stream which my salary and benefits are paid out of comes from HK not Thailand. Therefore it should be fairly easy for head office to just pay a portion of my total income to Thailand office and the Thai office pay me which would be my official salary there which I would declare for tax and the remainder paid directly to another bank account in HK which would tax exempt as I am not a HK resident.

Is this correct?

[Soutpeel]

Thanks.

I would actually be paid by our head office in HK. I would just be using the Bangkok office as my base. The revenue stream which my salary and benefits are paid out of comes from HK not Thailand. Therefore it should be fairly easy for head office to just pay a portion of my total income to Thailand office and the Thai office pay me which would be my official salary there which I would declare for tax and the remainder paid directly to another bank account in HK which would tax exempt as I am not a HK resident.

Is this correct?

Correct

[PattayaParent]

Though Soutpeel is correct about the split contracts it worth noting that they are illegal if the person in fact works solely in Thailand. I think you will find that few MNC will do these anymore for direct employees. Most agencies that supply contract employees to MNC will still do them, some do them even when being paid entirely onshore at a large markup supposedly to pay for the Thai tax.

<SNIP>

It would depend on who was responsible for paying the tax, the company or the employee.

If the company they are happy to reduce their tax bill.

[PoorSucker]

For extension of stay based on employment there is a minimum income you must have and pay taxes on in Thailand.

The minimum salary requirements are different for each nationality.

Australia, Canada, Europe, Japan, USA

50,000 baht/month

Hong Kong, Singapore, South Korea, Taiwan

45,000 baht/month

Other Asian Countries not listed, Central and South America, eastern Europe, Mexico, Russia, South Africa, and Turkey

35,000 baht/month

Africa, Burma, Cambodia, Laos, Vietnam

25,000 baht/month

[Soutpeel]

For extension of stay based on employment there is a minimum income you must have and pay taxes on in Thailand.

The minimum salary requirements are different for each nationality.

Australia, Canada, Europe, Japan, USA

50,000 baht/month

Hong Kong, Singapore, South Korea, Taiwan

45,000 baht/month

Other Asian Countries not listed, Central and South America, eastern Europe, Mexico, Russia, South Africa, and Turkey

35,000 baht/month

Africa, Burma, Cambodia, Laos, Vietnam

25,000 baht/month

Although the above is correct from a legal stand point, the labour offices around BKK have "higher expectations" for certain job catagories and to prevent further scrutinity at a later stage if you intend to go the double contract route always better to state a salary higher and have been told 80 to 100k month is the "magic" number and of course if at a later stage a person decides to do PR in Thailand, they would have needed to have been paid a minimum of THB 80k month in terms of that application so would be covered on that front at well.

[Kananga]

For extension of stay based on employment there is a minimum income you must have and pay taxes on in Thailand.

The minimum salary requirements are different for each nationality.

Australia, Canada, Europe, Japan, USA

50,000 baht/month

Hong Kong, Singapore, South Korea, Taiwan

45,000 baht/month

Other Asian Countries not listed, Central and South America, eastern Europe, Mexico, Russia, South Africa, and Turkey

35,000 baht/month

Africa, Burma, Cambodia, Laos, Vietnam

25,000 baht/month

Although the above is correct from a legal stand point, the labour offices around BKK have "higher expectations" for certain job catagories and to prevent further scrutinity at a later stage if you intend to go the double contract route always better to state a salary higher and have been told 80 to 100k month is the "magic" number and of course if at a later stage a person decides to do PR in Thailand, they would have needed to have been paid a minimum of THB 80k month in terms of that application so would be covered on that front at well.

Thanks. I would most likely declare a salary of around THB 200K in Thailand for housing and living costs and keep the rest offshore.

[Soutpeel]

For extension of stay based on employment there is a minimum income you must have and pay taxes on in Thailand.

The minimum salary requirements are different for each nationality.

Australia, Canada, Europe, Japan, USA

50,000 baht/month

Hong Kong, Singapore, South Korea, Taiwan

45,000 baht/month

Other Asian Countries not listed, Central and South America, eastern Europe, Mexico, Russia, South Africa, and Turkey

35,000 baht/month

Africa, Burma, Cambodia, Laos, Vietnam

25,000 baht/month

Although the above is correct from a legal stand point, the labour offices around BKK have "higher expectations" for certain job catagories and to prevent further scrutinity at a later stage if you intend to go the double contract route always better to state a salary higher and have been told 80 to 100k month is the "magic" number and of course if at a later stage a person decides to do PR in Thailand, they would have needed to have been paid a minimum of THB 80k month in terms of that application so would be covered on that front at well.

Thanks. I would most likely declare a salary of around THB 200K in Thailand for housing and living costs and keep the rest offshore.

I would be coming in a bit lower than that

[Kananga]

Thanks

[groovyc]

I have a question related to the OP's situation, so I thought of bringing it up here.

Let me put it this way:

If the OP were to move to Thailand in, say, August and effectively reside less than

183 days for the 2011 tax year. Is he still liable for income tax for this year?

This has been bugging me for a while.

[OriginalPoster]

Though Soutpeel is correct about the split contracts it worth noting that they are illegal if the person in fact works solely in Thailand. I think you will find that few MNC will do these anymore for direct employees. Most agencies that supply contract employees to MNC will still do them, some do them even when being paid entirely onshore at a large markup supposedly to pay for the Thai tax.

<SNIP>

It would depend on who was responsible for paying the tax, the company or the employee.

If the company they are happy to reduce their tax bill.

Depends how ethical the MNC is. Some companies have policies against intentionally breaking local laws.

[PattayaParent]

Though Soutpeel is correct about the split contracts it worth noting that they are illegal if the person in fact works solely in Thailand. I think you will find that few MNC will do these anymore for direct employees. Most agencies that supply contract employees to MNC will still do them, some do them even when being paid entirely onshore at a large markup supposedly to pay for the Thai tax.

<SNIP>

It would depend on who was responsible for paying the tax, the company or the employee.

If the company they are happy to reduce their tax bill.

Depends how ethical the MNC is. Some companies have policies against intentionally breaking local laws.

I'm lucky mine have no ethics then

[OriginalPoster]

Though Soutpeel is correct about the split contracts it worth noting that they are illegal if the person in fact works solely in Thailand. I think you will find that few MNC will do these anymore for direct employees. Most agencies that supply contract employees to MNC will still do them, some do them even when being paid entirely onshore at a large markup supposedly to pay for the Thai tax.

<SNIP>

It would depend on who was responsible for paying the tax, the company or the employee.

If the company they are happy to reduce their tax bill.

Depends how ethical the MNC is. Some companies have policies against intentionally breaking local laws.

I'm lucky mine have no ethics then

That seems to be a common theme from people working in the Oil & Gas Industry.

Maybe I'm too cautious, but I wouldn't be comfortable with a split contract if my income was earned 100% in Thailand.

[samran]

That seems to be a common theme from people working in the Oil & Gas Industry.

Maybe I'm too cautious, but I wouldn't be comfortable with a split contract if my income was earned 100% in Thailand.

I genuinely think you are being too cautious. Not taxing 'non dom' income, though not common in every juristiction, is hardly rare. The UK is a pretty good example. Why do you think it is such a popular place to live for cashed up foreigners? The weather?

To my reading, Thailand's law works the same way. Offshore income not taxable so long as it isn't remitted in the same year. My The tax authorities happily give away large tax concessions to foreign companies wit BOI registration. All these laws a part of a common theme of making Thailand as friendly as possible tax wise for international investors as far as I can make out.

Edited August 2, 2011 by samran

[Soutpeel]

but I wouldn't be comfortable with a split contract if my income was earned 100% in Thailand.

Why ?

[KamnanT]

To my reading, Thailand's law works the same way. Offshore income not taxable so long as it isn't remitted in the same year. My The tax authorities happily give away large tax concessions to foreign companies wit BOI registration. All these laws a part of a common theme of making Thailand as friendly as possible tax wise for international investors as far as I can make out.

I believe the expression used in tax legislation is "Thai-source income". Income from employment in Thailand is Thai-source income regardless of where it is paid, so if the OP's job is in Thailand he/she is liable for Thai personal income tax on the lot. The practical question of whether or not the Revenue Department would be able to determine that a portion of salary was being paid offshore is a separate issue - maybe, maybe not. If the OP goes the split contract route, at a minimum it would be wise to avoid any transfers of offshore income to Thailand, for two reasons. First, "non-Thai source income" is not taxable in Thailand as long as it isn't remitted to Thailand in the year it is earned - transfering it to Thailand in the same calendar year would make in taxable locally regardless of source. Secondly, evidence of transfers from an overseas account could lead Revenue Department auditors to ask more questions about the source of those funds.

If the OP does genuinely plan on spending a substantial portion of his/her time working outside of Thailand (e.g. 3 months a year spent working in HK), then there could be a legitimate claim for split income (e.g. in this case 75% in Thailand and 25% offshore). But living and working in Thailand 90% of the time and only declaring a much smaller percentage of income locally? Possible in practice but very difficult to defend if discovered.

[Soutpeel]

To my reading, Thailand's law works the same way. Offshore income not taxable so long as it isn't remitted in the same year. My The tax authorities happily give away large tax concessions to foreign companies wit BOI registration. All these laws a part of a common theme of making Thailand as friendly as possible tax wise for international investors as far as I can make out.

I believe the expression used in tax legislation is "Thai-source income". Income from employment in Thailand is Thai-source income regardless of where it is paid, so if the OP's job is in Thailand he/she is liable for Thai personal income tax on the lot. The practical question of whether or not the Revenue Department would be able to determine that a portion of salary was being paid offshore is a separate issue - maybe, maybe not. If the OP goes the split contract route, at a minimum it would be wise to avoid any transfers of offshore income to Thailand, for two reasons. First, "non-Thai source income" is not taxable in Thailand as long as it isn't remitted to Thailand in the year it is earned - transfering it to Thailand in the same calendar year would make in taxable locally regardless of source. Secondly, evidence of transfers from an overseas account could lead Revenue Department auditors to ask more questions about the source of those funds.

If the OP does genuinely plan on spending a substantial portion of his/her time working outside of Thailand (e.g. 3 months a year spent working in HK), then there could be a legitimate claim for split income (e.g. in this case 75% in Thailand and 25% offshore). But living and working in Thailand 90% of the time and only declaring a much smaller percentage of income locally? Possible in practice but very difficult to defend if discovered.

If a double contract is set up properly, very difficult for Thai tax office to track, especially if the offshore portion of the contract is not being remitted from inside Thailand, or even from the Thai entity........for all intents and purposes its not even a "Thai-source" income...

IMHO, if someone is claiming THB 80,000 + "salary" in the Thailand and paying the applicalbe tax, I dont think the tax office is too bothered what you are being paid offshore....

[PattayaParent]

To my reading, Thailand's law works the same way. Offshore income not taxable so long as it isn't remitted in the same year. My The tax authorities happily give away large tax concessions to foreign companies wit BOI registration. All these laws a part of a common theme of making Thailand as friendly as possible tax wise for international investors as far as I can make out.

I believe the expression used in tax legislation is "Thai-source income". Income from employment in Thailand is Thai-source income regardless of where it is paid, so if the OP's job is in Thailand he/she is liable for Thai personal income tax on the lot. The practical question of whether or not the Revenue Department would be able to determine that a portion of salary was being paid offshore is a separate issue - maybe, maybe not. If the OP goes the split contract route, at a minimum it would be wise to avoid any transfers of offshore income to Thailand, for two reasons. First, "non-Thai source income" is not taxable in Thailand as long as it isn't remitted to Thailand in the year it is earned - transfering it to Thailand in the same calendar year would make in taxable locally regardless of source. Secondly, evidence of transfers from an overseas account could lead Revenue Department auditors to ask more questions about the source of those funds.

If the OP does genuinely plan on spending a substantial portion of his/her time working outside of Thailand (e.g. 3 months a year spent working in HK), then there could be a legitimate claim for split income (e.g. in this case 75% in Thailand and 25% offshore). But living and working in Thailand 90% of the time and only declaring a much smaller percentage of income locally? Possible in practice but very difficult to defend if discovered.

If a double contract is set up properly, very difficult for Thai tax office to track, especially if the offshore portion of the contract is not being remitted from inside Thailand, or even from the Thai entity........for all intents and purposes its not even a "Thai-source" income...

IMHO, if someone is claiming THB 80,000 + "salary" in the Thailand and paying the applicalbe tax, I dont think the tax office is too bothered what you are being paid offshore....

And even more so in a company that is employing 100+ expats.

Plus the company can maybe claim that under dual taxation the employees offshore salary has tax deducted in the home country and the 'balance' is the Thai government share.

[Kananga]

Hi its the OP again. I have done more investigating and found that by declaring life insurance as well as various provident funds, long term equity funds (Which I have already) spouse and child deductions as well as mortgage interest (I plan to buy a property shortly after arrival anyway) my actual tax rate for an annual income over 4 million is under 20%.

I'm happy to pay this and know I am completely legal at the same time.

Thanks everyone for your inventive solutions :-)

[SolarOhm]

Hi its the OP again. I have done more investigating and found that by declaring life insurance as well as various provident funds, long term equity funds (Which I have already) spouse and child deductions as well as mortgage interest (I plan to buy a property shortly after arrival anyway) my actual tax rate for an annual income over 4 million is under 20%.

I'm happy to pay this and know I am completely legal at the same time.

Thanks everyone for your inventive solutions :-)

[SolarOhm]

Kananga you might care to do some numbers and work out what you are actually throwing away. If you throw away 200,000 a year that amount could double every 3 to 4 years - so in 3 years it is 400k, in 6 years 800k and in 12 years 1.4mill.

As you are throwing away 200k a year then from year 12 on you will be throwing away 1.4mill every year for an eternity. after 10 years that is 14mill ... Nice to be blaise about giving up that sort of money.

However it gets even worse. As you at present are losing 200k a year then you should have no hesitation gearing 200k a year (with a non-recourse investment loan) so you can in fact be investing 400k a year and accelerate the returns - bringing the big money closer by 3 years.

To make it even worse - as it is effectively FREE money for you then you shuld have no trepidation about gearing the investments every 3 years based on the growth of your equity accumulation in the investment capital.

For example:

Year 1 save 200k in tax and borrow 200k against it (non-recourse - so you have nothing to lose except the tax which you are currently gladly giving away)

Year 4 it is worth 800k so you borrow an additional 400k so your capital becomes 1.2mill.By the end of year 6 your investment has grown to 2.4mill with loans totaling 600k. You could pay off the loans and net 1.8 mill within 6 years - or continue to escalate your capital.

Instead of only investing capital which you currently have after tax why not make an extra 1.8mill every year from year 6 on and double or quadruple that from year 6 on? Year 9 you could have 4.8mill of additional revenue coming in every year or gear up to be producing 9.6mill a year ...

That is the sort of money you are REALLY throwing away - by NOT closing your hand on the 20% tax you are currently paying.

Playing with only the tax money certainly could help in supplement your present investments and provide funds for you to give to charities or family.

The government is certainly not able to make use of it the way you could if you invested it!

Edited August 16, 2011 by SolarOhm

[Kananga]

Kananga you might care to do some numbers and work out what you are actually throwing away. If you throw away 200,000 a year that amount could double every 3 to 4 years - so in 3 years it is 400k, in 6 years 800k and in 12 years 1.4mill.

As you are throwing away 200k a year then from year 12 on you will be throwing away 1.4mill every year for an eternity. after 10 years that is 14mill ... Nice to be blaise about giving up that sort of money.

However it gets even worse. As you at present are losing 200k a year then you should have no hesitation gearing 200k a year (with a non-recourse investment loan) so you can in fact be investing 400k a year and accelerate the returns - bringing the big money closer by 3 years.

To make it even worse - as it is effectively FREE money for you then you shuld have no trepidation about gearing the investments every 3 years based on the growth of your equity accumulation in the investment capital.

For example:

Year 1 save 200k in tax and borrow 200k against it (non-recourse - so you have nothing to lose except the tax which you are currently gladly giving away)

Year 4 it is worth 800k so you borrow an additional 400k so your capital becomes 1.2mill.By the end of year 6 your investment has grown to 2.4mill with loans totaling 600k. You could pay off the loans and net 1.8 mill within 6 years - or continue to escalate your capital.

Instead of only investing capital which you currently have after tax why not make an extra 1.8mill every year from year 6 on and double or quadruple that from year 6 on? Year 9 you could have 4.8mill of additional revenue coming in every year or gear up to be producing 9.6mill a year ...

That is the sort of money you are REALLY throwing away - by NOT closing your hand on the 20% tax you are currently paying.

Playing with only the tax money certainly could help in supplement your present investments and provide funds for you to give to charities or family.

The government is certainly not able to make use of it the way you could if you invested it!

That sounds great, so how exactly am I supposed to live and work in Thailand and keep the income tax I owe the Thai government for myself? I have already highlighted I will make use of the tax breaks, which should net me a 200,000 tax return each year.