Some Good News For All Taxpayers In Thailand

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Thai Law: Some good news for all taxpayers
Olaf Duensing



Last year saw the beginning of a significant reduction of the corporate income tax rate in Thailand.

The long-established 30 per cent rate was reduced to 23 per cent for the year 2012, and further reduced to 20 per cent for the years 2013 and 2014 for all companies.

As recently as late 2012, the current government announced that it would not, however, reduce Thailand’s personal income tax (“PIT”) rates.

Shortly thereafter it reconsidered its position and announced that the PIT rates in Thailand also would be reduced with effect from 2013 forward.

As you may be aware, any person who derives income from services, employment or property in Thailand is required to pay PIT on that amount.

The total amount due is calculated for each calendar year and payable by the end of March of the following year. It should be noted that the tax liability for any such income is the same regardless of whether or not the income was actually paid within or outside of Thailand.

Furthermore, anyone who stays in Thailand for a total of 180 days or more in any calendar year is considered a “resident” for Thai income tax purposes.

Such an individual is then required to pay PIT on income that is derived from employment or property situated abroad; and that is brought into Thailand during the calendar year in which the income was received.

Here, once again, it makes no difference if such income is received within Thailand or outside it.

For the old and new tax brackets and rates see the accompanying tables.

PIT on wages is initially taxed by the law requiring your employer to withhold the relevant amount and pay it direct to the Revenue Department on a monthly basis.

Therefore, if you are a monthly salaried employee in Thailand you should be experiencing the benefits of this PIT reduction from your first monthly salary payment in 2013.

There is further good news with regard to PIT for married couples.

Previously, the Revenue Department considered and taxed any non-wage income made by a wife as additional income of the husband.

This meant that income was possibly subject to being taxed at a higher PIT rate than it would have been if the income were taxed as the wife’s own income.

However, last year the Constitutional Court held that this practice violates Thailand’s Constitution because it does not treat men and women equally. Thus, it is legally invalid.

The Revenue Department has now formally adjusted its rules and husband and wife are able to file their PIT tax returns separately. Please note, however, if husband and wife decide to file their PIT returns separately, each remains liable for any PIT unpaid PIT by the other.

Duensing Kippen is a multi-service boutique law firm specialising in property and corporate/commercial matters and arbitration and litigation proceedings. It is also the only firm in Thailand with three Members (MCIArb) of the Chartered Institute of Arbitrators. In addition it is the only such firm in Thailand that complements its property and corporate/commercial legal expertise with a core tax law practice. Duensing Kippen can be reached by email to [email protected] or by visiting duensingkippen.com

Source: http://www.thephuketnews.com/phuket-law-some-good-news-for-all-taxpayers-37508.php


-- Phuket News 2013-03-05

[EvilDrSomkid]

So, have the new PIT rates been made into an act yet or is this just rehashing of old news?

No announcement yet on the RD website.

[Locationthailand]

Cheaper to own a company and 'play' with that feeding oneself a minimum wage.

[davejones]

Cheaper to own a company and 'play' with that feeding oneself a minimum wage.

Cheaper to get paid overseas and avoid tax altogether.

Most Thais who work for a company can't set up their own company to get paid through, so what you say doesn't apply to hardly anyone.

[SlyAnimal]

<i>Such an individual is then required to pay PIT on income that is derived from employment or property situated abroad; and that is brought into Thailand during the calendar year in which the income was received.</i>

I assume, that this is a mistake. And that overseas property, as a non moveable asset, isn't included in what is taxable in Thailand? Or is this something where it is included, but then the double tax agreements with other countries effectively "contract out" of this provision?

Either way, it's interesting that most governments either try to spend less and decrease tax, or spend more and increase tax, with the occasional government trying to spend less and increase taxes. However the current Thai government, is able to spend more and decrease taxes, they really must be running the country well to do so without going even further into debt lol.

Not that I can really complain, as it'll save me money, and at the worst will bring down the value of the THB (Which will increase the spending power of money I send from abroad).

[AsiaCheese]

I read (once, somewhere...) that state pension income from abroad was tax exempt. Another rumor had it that it's tax exempt when it's brought into the country in a year later than the year it was received abroad. Any flesh to those bones?

[davejones]

<i>Such an individual is then required to pay PIT on income that is derived from employment or property situated abroad; and that is brought into Thailand during the calendar year in which the income was received.</i>

But there is no way for them to know whether the income you bring into the country is from what you earned this year. Anyway, easy way around it is to bring in the income in a later tax year. To know, they'd have to have all your bank records to see the money coming into and out of your account. Even then, it wouldn't be clear in most cases.

[LivinLOS]

Furthermore, anyone who stays in Thailand for a total of 180 days or more in any calendar year is considered a “resident” for Thai income tax purposes.

Such an individual is then required to pay PIT on income that is derived from employment or property situated abroad; and that is brought into Thailand during the calendar year in which the income was received.

Here, once again, it makes no difference if such income is received within Thailand or outside it.

Years ago, when I was concerned about taxation from the west and it would have been advantageous to establish a tax residency here.. I went to the tax office and told them I wished to pay income tax here.

They asked me about my work permit.. I didnt have one.. They then told me without a WP, and hence some kind of Thai tax ID / number.. I could not pay tax in thailand, they would have no way to process or track it ??? I pushed as hard as I could, making it clear I was full time resident, and that I had income from overseas earnt while here (not working) and they simply could not process it and sent me on my way..

Turning down money !! Blew me away.

[kurnell]

I am still paying the same rate. No change in the foreseeable future

[JeffAstle]

Usually one says 'tax exempt'.

Either way, the tax rates have been cut for this year but it has not come into effect yet, as of Feb pay packets. Not sure why.

[lemoncake]

any tax cut is always good news, no matter how much it saves

[Searat7]

This country is going to go broke soon with all of their expensive populist programs (especially Rice) and declining tax revenue. Corporate rates were reduced too.

[RedQualia]

Furthermore, anyone who stays in Thailand for a total of 180 days or more in any calendar year is considered a “resident” for Thai income tax purposes.

Such an individual is then required to pay PIT on income that is derived from employment or property situated abroad; and that is brought into Thailand during the calendar year in which the income was received.

Here, once again, it makes no difference if such income is received within Thailand or outside it.

Years ago, when I was concerned about taxation from the west and it would have been advantageous to establish a tax residency here.. I went to the tax office and told them I wished to pay income tax here.

They asked me about my work permit.. I didnt have one.. They then told me without a WP, and hence some kind of Thai tax ID / number.. I could not pay tax in thailand, they would have no way to process or track it ??? I pushed as hard as I could, making it clear I was full time resident, and that I had income from overseas earnt while here (not working) and they simply could not process it and sent me on my way..

Turning down money !! Blew me away.

Untrue. I have no work permit. I pay Thai income taxes.

[lemoncake]

This country is going to go broke soon with all of their expensive populist programs (especially Rice) and declining tax revenue. Corporate rates were reduced too.

No Need to worry, Thailand is rich, before you know it, they might even introduce a decent pension for the people

[Miami Bob]

<i>Such an individual is then required to pay PIT on income that is derived from employment or property situated abroad; and that is brought into Thailand during the calendar year in which the income was received.</i>

I assume, that this is a mistake. And that overseas property, as a non moveable asset, isn't included in what is taxable in Thailand? Or is this something where it is included, but then the double tax agreements with other countries effectively "contract out" of this provision?

Either way, it's interesting that most governments either try to spend less and decrease tax, or spend more and increase tax, with the occasional government trying to spend less and increase taxes. However the current Thai government, is able to spend more and decrease taxes, they really must be running the country well to do so without going even further into debt lol.

Not that I can really complain, as it'll save me money, and at the worst will bring down the value of the THB (Which will increase the spending power of money I send from abroad).

Lowering taxes on both personal and corporate stimulates and grows the economy which in the longer run increases total tax revenues.

[12DrinkMore]

This country is going to go broke soon with all of their expensive populist programs (especially Rice) and declining tax revenue. Corporate rates were reduced too.

Nonsense.

Only countries that do not have control over their sovereign currency (Italy, Greece, Spain; handcuffed by the EUR) or have vast debt in foreign currencies (such as Germany in the 1920's, or Argentina) can go broke.

The US will not go broke, the UK will not go broke. They can continue to issue wads of USD's and GBP's to pay off the government debts. It may devalue the currency (look at the GBP's piss-poor performance), but this is due to running a trading deficit for decades and pumping up the economy through private debt issuance leading to the property boom and ultimate bust (which has yet to fully take place)

And so it is the same with Thailand. With large forex reserves, little foreign debt to speak of, trading surpluses and a very flexible and resourceful workforce, Thailand and most other Asian countries are in excellent financial health.

[lemoncake]

<i>Such an individual is then required to pay PIT on income that is derived from employment or property situated abroad; and that is brought into Thailand during the calendar year in which the income was received.</i>

I assume, that this is a mistake. And that overseas property, as a non moveable asset, isn't included in what is taxable in Thailand? Or is this something where it is included, but then the double tax agreements with other countries effectively "contract out" of this provision?

Either way, it's interesting that most governments either try to spend less and decrease tax, or spend more and increase tax, with the occasional government trying to spend less and increase taxes. However the current Thai government, is able to spend more and decrease taxes, they really must be running the country well to do so without going even further into debt lol.

Not that I can really complain, as it'll save me money, and at the worst will bring down the value of the THB (Which will increase the spending power of money I send from abroad).

Lowering taxes on both personal and corporate stimulates and grows the economy which in the longer run increases total tax revenues.

Absolutely, this is why most other countries first hike it up to as high as 50% and then do the cuts by 1% every election

[TerryLH]

"They asked me about my work permit.. I didnt have one.. They then told me without a WP, and hence some kind of Thai tax ID / number.. I could not pay tax in thailand, they would have no way to process or track it ???"

WP's have nothing to do with filing/paying/tracking taxes. It's the Tax Number that you can get by asking for it. The Revenue Department isn't in the business of checking for WP's. As RQ posted, you can file/pay taxes without a WP.

At one time, a long time ago, if you were here 180+ days you had to show tax stuff prior to leaving the country.

as far back as I can recall, money earned 'prior' years was not taxed. Money brought here the same year was taxable, but I've never heard of that being enforced. Doesn't mean it isn't, though.

Terry

[12DrinkMore]

Furthermore, anyone who stays in Thailand for a total of 180 days or more in any calendar year is considered a “resident” for Thai income tax purposes.

Such an individual is then required to pay PIT on income that is derived from employment or property situated abroad; and that is brought into Thailand during the calendar year in which the income was received.

Here, once again, it makes no difference if such income is received within Thailand or outside it.

Years ago, when I was concerned about taxation from the west and it would have been advantageous to establish a tax residency here.. I went to the tax office and told them I wished to pay income tax here.

They asked me about my work permit.. I didnt have one.. They then told me without a WP, and hence some kind of Thai tax ID / number.. I could not pay tax in thailand, they would have no way to process or track it ??? I pushed as hard as I could, making it clear I was full time resident, and that I had income from overseas earnt while here (not working) and they simply could not process it and sent me on my way..

Turning down money !! Blew me away.

Untrue. I have no work permit. I pay Thai income taxes.

It is very easy to get a tax identity in Thailand. I have no work permit but reclaim the taxes withheld on interest payments. Took me less that 30 minutes to "get into the system". Already my withheld tax has been repaid very efficiently for the year 2012, as it was last year and the year before that.

HOWEVER, I am not sure that I would get far with other tax authorities, as income earned abroad is not taxed in Thailand. And income, for example, earned on property in the UK, is subject to UK taxes. There are some double taxation agreements, but this is only to prevent tax being taken twice on the same income. I imagine the rather more rigorous tax officers abroad would insist on seeing that income earned in their jurisdiction is taxed.

[thaikahuna]

How will this affect those of us who are on Retirement Extensions? We derive our incime fromthe West yet we must prove an income of at least 65,000 per month or have 800,000 on deposit. As one who lives here full time I meet the 180 day criteria.

[Apache704]

How will this affect those of us who are on Retirement Extensions? We derive our incime fromthe West yet we must prove an income of at least 65,000 per month or have 800,000 on deposit. As one who lives here full time I meet the 180 day criteria.

I believe it depends whether your country has a Tax agreement with Thailand or not.

[Rosco911]

As far as I am aware this will not come into effect until next year.

This country is going to go broke soon with all of their expensive populist programs (especially Rice) and declining tax revenue. Corporate rates were reduced too.

Nonsense.

Only countries that do not have control over their sovereign currency (Italy, Greece, Spain; handcuffed by the EUR) or have vast debt in foreign currencies (such as Germany in the 1920's, or Argentina) can go broke.

The US will not go broke, the UK will not go broke. They can continue to issue wads of USD's and GBP's to pay off the government debts. It may devalue the currency (look at the GBP's piss-poor performance), but this is due to running a trading deficit for decades and pumping up the economy through private debt issuance leading to the property boom and ultimate bust (which has yet to fully take place)

And so it is the same with Thailand. With large forex reserves, little foreign debt to speak of, trading surpluses and a very flexible and resourceful workforce, Thailand and most other Asian countries are in excellent financial health.

I guess from your last statement that you are not an employer in Thailand. ''A very flexible and resourceful workforce''

Edited March 6, 2013 by Rosco911

[tpiety2]

So, have the new PIT rates been made into an act yet or is this just rehashing of old news?

No announcement yet on the RD website.

Dr. Evil, how evil can you really be? It's so refreshing to see: then, than, their, there, they're, your, you're etc.

I thought nobody knew the diff.

[Chua]

Some countries have "no double tax" treaties with Thailand. In those cases, income earned in a foreigner's home country is taxed only there and income earned in Thailand is taxed only in Thailand -- regardless of where the individual resides.

[Maestro]

I have deleted an English grammar question and the replies to it. There are other forums on the web for such questions, eg groups.google.com/group/alt.english.usage if you can can't find an answer to a particular question about the use of the English language with a web search or in a dictionary.

[Arkady]

This is just a sop to offset criticism that companies have had a big
tax reduction but not individuals. Companies' tax savings are going to
amount to a full 10 percentage points.

A quick back of the envelope calculation tells me on a taxable salary of B1 million after all deductions and allowances the taxpayer will save 2 percentage points of tax. Not much really and only a small percentage of taxpayers earn that much. For most the saving is going to be only 1 percentage point or less.

If VAT goes back to its normal rate of 10%, which they will have to do eventually, the tax savings of virtually all individual taxpayers will be more than wiped out.

[JimGant]

I read (once, somewhere...) that state pension income from abroad was tax exempt. Another rumor had it that it's tax exempt when it's brought into the country in a year later than the year it was received abroad. Any flesh to those bones?

Per the US-Thailand tax treaty, government pensions paid to Thailand-resident US taxpayers are not taxable by Thailand. However, no such clause exists for non-government pensions. So, such pensions brought into Thailand in the year received probably would be subject to Thai PIT (unless they literally mean "derived from employment or property," meaning only earned income -- wages -- or rental income -- but not pensions). In any event, if your country's tax treaty with Thailand is unclear on pensions, best not to direct deposit such pensions into your Thai bank account........

....... not that Thai revenuers are able to, or clever enough, to collect such information from Thai banks. Yet....... However, with financial information sharing agreements coming about internationally (FATCA being the most obvious) -- and if Thailand sniffs a possible new source of taxes from all these Western dudes -- well, best to filter all your incoming money through a personal homeland bank account. And preferably one that is stocked with more than just your transient pension money, since one day your homeland bank may just be sending information on your account to Thailand (most of the government to government FATCA agreements are reciprocal).

[candypants]

having a company, and having worked for a few here as well, i would have to say that the amount of tax you pay is entirely dependant on which type of visa you wish to achieve, the freedom you wish to move with, and the people willing to help you do it.

there is an easy path, but the words "in my country" will not help you get there.

when once i was legit, my 'partner' was astonished to understand that the tax i paid annually was pretty much equivalent to what she could hope to make in her own employment in the same year

do i feel entitled?

NO.

am I pissed as a fart?

YES

Edited March 7, 2013 by candypants

[JimGant]

Some countries have "no double tax" treaties with Thailand. In those cases, income earned in a foreigner's home country is taxed only there and income earned in Thailand is taxed only in Thailand -- regardless of where the individual resides.

That doesn't exactly square with:

Furthermore, anyone who stays in Thailand for a total of 180 days or more in any calendar year is considered a “resident” for Thai income tax purposes. Such an individual is then required to pay PIT on income that is derived from employment or property situated abroad; and that is brought into Thailand during the calendar year in which the income was received.

Sounds like they have the right to tax your worldwide income, in the absence of a tax treaty (again, whether "unearned income" is also subject to Thai tax isn't exactly clear).

And even with a tax treaty, it's not always clear which country has "first dibs" on taxing which income. Fortunately, even if the US had no tax treaty with Thailand, most double taxation would be prevented by the Internal Revenue Code, which provides for tax credits against foreign taxation.

[FunFon]

The US will not go broke, the UK will not go broke.

-

Give 'em enough time, if they keep making the same mistakes and the fundamentals take a sharp turn, common people losing faith in the validity of our funny-money pyramid schemes, total distrust of the banking system, anything is possible long-term. Never say never.

-

They can continue to issue wads of USD's and GBP's to pay off the government debts. It may This will 100% sure continue to devalue the currency (look at the GBP's piss-poor performance), but this is due to running a trading deficit for decades and pumping up the economy through private debt issuance leading to the property boom and ultimate bust (which has yet to fully take place)