Tax-How To Pay Less?

[coffeeman]

What is the best way to pay less tax?

I know terrible thing to say

My job told me I will have to pay almost 30% in tax.

I am wondering if there is a way to pay less?

my company has offices around the world, but I will work and live in thailand.

anyway to get it down to 15% or less ?

thanks

[Mario2008]

As not visa related your question might be better off in the business section. Moved.

Tax is determined on your individual circumstances.

[samran]

you can invest up to 500,000 baht per year (max 15% of your income in long term funds) before tax which will lower your assessable amount. You'll need to old them at least 5 calander years (in reality 3 years and 2 days if you invest on 31 December each year).

If you've got kids, or are married, they are some more deductions. Certain life insurance products as well...

[mahjongguy]

I am curious about the progressive tax rates.

Taxable Income (baht) Marginal Taxable Income (baht) tax Rate(%) 0 - 150,000 (2008 onwards) 150,000 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

If the OP earns a bit over 1,000,000 in the year, is the whole amount taxed at 30%? Or is the tax calculated as:

0% of 150,000 + 10% of 350,000 + 20% of 500,000 + a bit at 30% ?

According to the definition of "marginal", it should be the latter, giving an effective tax rate somewhere close to 15%, so I don't see why the employer would withhold 30%.

[Soutpeel]

you could also do a double contract with your company, some will do it, some not....you draw a salary in Thailand slightly over the minimum required for your nationality to get your WP and pay tax on that and get the rest in an offshore account tax free paid in by one of your companies branch offices.

Of course we get to the debate of the legality of this.. but it does go on in Thailand for sure

[Maestro]

What is the best way to pay less tax?

I know terrible thing to say

My job told me I will have to pay almost 30% in tax.

There is nothing terrible about that. On the contrary, it is an intelligent thing to do to learn about the tax rules and take advantage of all deductions to which one is entitled.

There is useful information about the tax calculation here on the website of Thailand's revenue department: http://www.rd.go.th/publish/6045.0.html. I haven't done a calculation to see what you would have to earn to pay 30% of tax, but if you are a bachelor, at a senior management level earning some 400,000 Baht per month or more you might well fall into that bracket.

P.S. Perhaps the 30% mentioned to you includes the payroll deduction for your share of Social Security contributions. I don't know how much that is but somebody will surely come along and give that information.

//Edit: For the new tax rates valid from 2013 see this post: http://www.thaivisa.com/forum/topic/637015-tax-how-to-pay-less/page-2#entry6371982

[meand]

30% sounds way too high. If you make 1 million baht a year your tax should be around 12%. It depends on your deductions too.

If you are making quite a bit more than 1 million baht a year, then it is well possible the 30% could be correct. Then it is almost a must to invest as another poster laid out. The hard part is, if you aren't here for long term, it is difficult to invest for 5 years (or 3).

This is perhaps why so many empty condos are built, people buying them up and getting a tax shelter from the purchase?

[Satcommlee]

It sucks!! Tell me about it.. Thailand ain't a Tax Haven!

you could also do a double contract with your company, some will do it, some not....you draw a salary in Thailand slightly over the minimum required for your nationality to get your WP and pay tax on that and get the rest in an offshore account tax free paid in by one of your companies branch offices.

Of course we get to the debate of the legality of this.. but it does go on in Thailand for sure

This is by far the best solution, I know a few doing it. Just wish it was possible for me!

[Soutpeel]

It sucks!! Tell me about it.. Thailand ain't a Tax Haven!

you could also do a double contract with your company, some will do it, some not....you draw a salary in Thailand slightly over the minimum required for your nationality to get your WP and pay tax on that and get the rest in an offshore account tax free paid in by one of your companies branch offices.

Of course we get to the debate of the legality of this.. but it does go on in Thailand for sure

This is by far the best solution, I know a few doing it. Just wish it was possible for me!

[JusMe]

If your only concern is paying less tax, then earn less.

[Time Traveller]

The easiest way to pay less tax is either earn less, or move to a country that has lower tax rates. If you don't want to do this then simply start your own company and employ yourself through the company. The company tax rate is only 20% and you'll have many deductions and can pay your self a small income that minimizes personal income tax rates. Better than 30%

[utalkin2me]

If your only concern is paying less tax, then earn less.

Right... working half a year, then half a year off works well here.... if you can pull it off.

[monkeycountry]

I am curious about the progressive tax rates.

Taxable Income (baht) Marginal Taxable Income (baht) tax Rate(%) 0 - 150,000 (2008 onwards) 150,000 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

If the OP earns a bit over 1,000,000 in the year, is the whole amount taxed at 30%? Or is the tax calculated as:

0% of 150,000 + 10% of 350,000 + 20% of 500,000 + a bit at 30% ?

According to the definition of "marginal", it should be the latter, giving an effective tax rate somewhere close to 15%, so I don't see why the employer would withhold 30%.

While I do not recall the exact numbers, it is calculated as the latter of your examples. On top of this there are a bunch of possible deductables depending on your individual situation. Personal allowance, social security, life insurance, kids, long term mutual funds etc. These are all deducted from your total yearly income before the tax rate is calculated.

And do not worry if your employer initially deducts too much or too little from your salary. At the end of the year it will all be added together, and if you paid too little during the year you will have to pay the difference, if you paid too much, you will get a personal cheque with the difference from the revenue dept.

[Thereisnoif]

you could also do a double contract with your company, some will do it, some not....you draw a salary in Thailand slightly over the minimum required for your nationality to get your WP and pay tax on that and get the rest in an offshore account tax free paid in by one of your companies branch offices.

Of course we get to the debate of the legality of this.. but it does go on in Thailand for sure

I do not know a single expat on a decent package who declares more than the minimum local income to the Thai taxman, and get all the rest offshore.

[coffeeman]

ok it looks like I have to pay 21%

.

ok of course no one likes to pay the tax man. I could of used that BHT in NANA LOL

so can someone tell me, what kind of tax refunds will I get?

what can I declare , what can I do to get as much of the money back as I can?

what about pension? social security? do I have to pay into this too?

thanks..

also, who has responsibility to pay the tax? does my boss deduct the tax from my salary and pay it?

or does he pay me the full amount and I pay it?

[utalkin2me]

There are some good posts in this thread about what gets deducted. Life insurance, children, spouse, spouse parents above 60, child's education, approved mutual fund (probably one of the best if you plan to be here long term).

I think different companies handle taxes differently. Ha. I pay my own taxes. I think many places pay their employees taxes for them??

Here is the #1 go to link

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

Also, this was posted a while back on Thaivisa.....

[F4UCorsair]

Die??

[Frovin]

I SO MUCH wish I could say something more diplomatically than: 'You are such a Whiner!'

However I have to admit that was my immediate reaction, when I read your call for help on reducing your taxes. Not that I in principle cannot appreciate your quest to reduce the amount to be paid - but the focus you give the percentage is what bothers me. 'Tax evasion' is a national sport in my country, next to soccer - however it also has to be seen in light of the general tax levels.

I am a Dane. In Denmark, taxes are high. A tax level of 30% would be 'PARADISE' here. Even people who receive social benefits or pensions have to pay taxes that are way above the 30% you mention.

So therefore, I cannot help thinking that your point of view is almost like the one of a spoiled child... I would love to get DOWN to a tax level of 30%, if that was possible. The total average tax burden here is 49.1%; in Romania it is the lowest in the EU with a 28.6% level. The average EU citizen pays 39.9%.

You might claim that since we are talking about Thailand, tax paying in Denmark is out of relevance. On the contrary! Compared to Denmark, the purchasing power of our money is 3-5 times higher if spent in Thailand. And I am sure this goes for people of US, UK and other nationalities as well! And if a person lives in Thailand, pays the taxes there, spends money for the daily life there - there will be more surplus to save or spend at home in the countries we - each and everyone - come from. Right?

So why be whining about 30% tax?

I simply cannot understand you.

[Soutpeel]

ok it looks like I have to pay 21%

so can someone tell me, what kind of tax refunds will I get?

what can I declare , what can I do to get as much of the money back as I can?

what about pension? social security? do I have to pay into this too?

thanks..

also, who has responsibility to pay the tax? does my boss deduct the tax from my salary and pay it?

or does he pay me the full amount and I pay it?

if you pay the correct amount of tax each year based on your package structure and deductables..you will get no refund...you dont owe the tax man anything and they dont owe you anything.

Thai operates a PAYE type tax scheme..ie you pay every month and at the end of the tax year if your have paid too much in by virture of salary/deductions you get the difference back, conversely if you havent paid enough they want more money off you..

You will pay into the social security funds every month, its about THB 750, pension is optional (company specific)

You are responsible for your tax, however the company may do your tax on your behalf (mine does) but you are still responsible for your tax, cant blame the company if they take too much or too little.

As to your last question, only your company can tell you how they do things

[Naroge]

ok it looks like I have to pay 21%

.

ok of course no one likes to pay the tax man. I could of used that BHT in NANA LOL

so can someone tell me, what kind of tax refunds will I get?

what can I declare , what can I do to get as much of the money back as I can?

what about pension? social security? do I have to pay into this too?

thanks..

also, who has responsibility to pay the tax? does my boss deduct the tax from my salary and pay it?

or does he pay me the full amount and I pay it?

The company is obliged to withhold the income tax from your monthly payments, and pay it to the tax authorities on your behalf. However, you are responsible to file your own income tax declaration the following year, so you better know exactly what is withheld every month. If they have withheld too little, you have to pay the balance, and vice versa.

Social security is paid by the company.

[Hyponeros]

You can buy a life insurance. You can then deduced to a maximum of thb100,000 of your salary.

You can buy LTFs to a maximum of 15% of your yearly salary and then deduct that amount from your salary.

For the life insurance the money needs to be blocked for 7 or 10 years. I can remember right now. For a few life Insurance only 2 payments are required but you still need to wait 7 or 10 years to get your money back. For the LTF the money will be blocked for 5 calendar years.

If you are married, you can deduct a certain amount from your salary, too. If your wife is Thai and her parents are alive and in Thailand and over 60 or 65 (need to check that again), you can deduct a certain amount for each of them.

Some people will probably say that life insurance or LTF are useless or stupid thing to do, or whatever, however, it is a legal way to save taxes.

I hope this helps.

[Soutpeel]

I SO MUCH wish I could say something more diplomatically than: 'You are such a Whiner!'

However I have to admit that was my immediate reaction, when I read your call for help on reducing your taxes. Not that I in principle cannot appreciate your quest to reduce the amount to be paid - but the focus you give the percentage is what bothers me. 'Tax evasion' is a national sport in my country, next to soccer - however it also has to be seen in light of the general tax levels.

I am a Dane. In Denmark, taxes are high. A tax level of 30% would be 'PARADISE' here. Even people who receive social benefits or pensions have to pay taxes that are way above the 30% you mention.

So therefore, I cannot help thinking that your point of view is almost like the one of a spoiled child... I would love to get DOWN to a tax level of 30%, if that was possible. The total average tax burden here is 49.1%; in Romania it is the lowest in the EU with a 28.6% level. The average EU citizen pays 39.9%.

You might claim that since we are talking about Thailand, tax paying in Denmark is out of relevance. On the contrary! Compared to Denmark, the purchasing power of our money is 3-5 times higher if spent in Thailand. And I am sure this goes for people of US, UK and other nationalities as well! And if a person lives in Thailand, pays the taxes there, spends money for the daily life there - there will be more surplus to save or spend at home in the countries we - each and everyone - come from. Right?

So why be whining about 30% tax?

I simply cannot understand you.

if your whinging about a 30% tax rate being too low, then I guess I had better not tell you what my average tax rate in Thailand is then...you will be grabbing your heart medication...

the key difference in europe is most countries run a socialist type system..ie "free" benefits for the people...who do you think pays for all of that...the tax payer....Thailand you get very little for your tax in terms of benefits...

The OP is not whinging, he is asking the best way to structure his package thereby incurring the least tax...so good for him...got nothing to do with purchasing power...europe versus Thailand..

One could suggest its you who is whinging...

[Soutpeel]

you are responsible to file your own income tax declaration the following year,

not strictly true, my company does all the filing etc for me...all I get every year is a letter from the taxman saying I am "clear" for that year...in 12 years here never had anything back from them and never had to pay in addtional.

[candypants]

I am curious about the progressive tax rates.

Taxable Income (baht) Marginal Taxable Income (baht) tax Rate(%) 0 - 150,000 (2008 onwards) 150,000 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

If the OP earns a bit over 1,000,000 in the year, is the whole amount taxed at 30%? Or is the tax calculated as:

0% of 150,000 + 10% of 350,000 + 20% of 500,000 + a bit at 30% ?

According to the definition of "marginal", it should be the latter, giving an effective tax rate somewhere close to 15%, so I don't see why the employer would withhold 30%.

agreed, that is how it has always worked for me. i have been taxed at the higher rate and filed at the incremental rate and received far more than expected back

[candypants]

you are responsible to file your own income tax declaration the following year,

not strictly true, my company does all the filing etc for me...all I get every year is a letter from the taxman saying I am "clear" for that year...in 12 years here never had anything back from them and never had to pay in addtional.

i suspect had you been willing to file yourself, you might have recieved a fair amount back

[Huayrat]

Dont pay any its that smple and enjoy a Happy relaxing life

[Naroge]

you are responsible to file your own income tax declaration the following year,

not strictly true, my company does all the filing etc for me...all I get every year is a letter from the taxman saying I am "clear" for that year...in 12 years here never had anything back from them and never had to pay in addtional.

Strictly legally speaking, you and only you are responsible for your tax filing. In practice though, many companies handle this for the farangs. If the income during the year is fairly constant it is possible to use the last withholding tax in December to balance out the yearly tax withheld so that nothing will be paid or received after final tax filing the following year.

[utalkin2me]

^I agree. And I think what has been said about responsibility is true. In other words, your company may in fact file for you, but if something went wrong, YOU would have to deal with it, and it would be your problem (if your employer chose not to help you anyway). That is the way I understand it anyway.

I just wanted to say that there is nothing wrong with wanting to pay less tax. In fact, most governments I would say want to encourage workers to put their money in certain places, so they give them a tax break for doing so - usually to the benefit of all (eg charities come to mind). There are people who get some seriously questionable tax breaks/loopholes, but the more power to them. I just don't see anything wrong with understanding tax laws, and trying to make them work for you.

[Soutpeel]

you are responsible to file your own income tax declaration the following year,

not strictly true, my company does all the filing etc for me...all I get every year is a letter from the taxman saying I am "clear" for that year...in 12 years here never had anything back from them and never had to pay in addtional.

Strictly legally speaking, you and only you are responsible for your tax filing. In practice though, many companies handle this for the farangs. If the income during the year is fairly constant it is possible to use the last withholding tax in December to balance out the yearly tax withheld so that nothing will be paid or received after final tax filing the following year.

I dont pay withholding tax..I pay income tax, not quite the same thing..I have a tax number...withholding tax is something else

[Arkady]

30% tax over Bt 1 m was last year's rate. For 2013 all personal tax rates are reduced and Bt 1-2 is 25%. Of course that is a marginal rate and only applies to income over Bt 1 m. Thai personal income tax rates have been lowered a lot over the years and are now pretty reasonable with many personal deductions you can opt for like life insurance, long-term equity and retirement funds that make a huge difference. When I first came here there was a top marginal rate of tax of around 57% over Bt 1m, vs today's top rate of 35% over Bt 4m. Of course, foreign companies paid a lot expats offshore to avoid the iniquitous top rate of tax in the bad old days but that's another story. Otherwise few top earners would have agreed to work in Thailand and have much less take home pay than elsewhere and the companies would have had to tax equalise them like American companies do or did which is very expensive for the company and made it not worth hiring an expat at all. Very few dare companies now and no real need to do it any more. So the Thai RD makes more from expats by charging less. The same would apply, if they reduced the taxes on wine!

For 2013 tax rates see: http://www.kpmg.com/TH/en/IssuesAndInsights/ArticlesPublications/TaxNews/Documents/Tax%20Alert%20-%20Dec20.pdf