Provident Fund & LTF (500,000k limit)

[corkman]

Dear All,

I pay 5% of my salary to a provident fund which is organised by my company. This is about 190,000 Baht.

I also have an LTF fund that I set up myself. For tax saving purposes, do I calculate the amount I should pay to the LTF fund on the basis of 500,000 (about 40,000 per month) or on 310,000 (500,000 - 190,000 = 310,000 / 12 monthly payments)?

I realise I can pay more, but I want to limit my payment to the amount which saves me tax.

Thanks in advance.

Edited July 28, 2013 by corkman

[Ducnguyen]

I have the same issue and have been researching for the last few hours. I understand (from what I have been reading) that the provident funds will be calculated to the 500,000 limit for RMFs. It should not affect the limit for LTFs.

[corkman]

I have the same issue and have been researching for the last few hours. I understand (from what I have been reading) that the provident funds will be calculated to the 500,000 limit for RMFs. It should not affect the limit for LTFs.

Thanks for your reply Ducnguyen,

Googling key words RMF LTF Thailand has yielded some good info. So it would seem we can dodge a whole load of tax ;-)

One such web page states:

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Edited July 31, 2013 by PoorSucker
Copyrighted non attributed text removed

[Ducnguyen]

LTFs are a great choice but RMFs do not bring any benefit to me. You can only withdraw from RMFs without any tax penalty once you are 55. I just can't put 500k baht every year into a fund which I will only be able to withdraw after 30 years.

By the way, have you picked the LTFs yet? There are so many of them and I couldn't work out the differences.

[fletchsmile]

Hi Corkman,

yes your post #3 is correct. You can contribute the lower of 15% of your personal income or 500k (max) to each of LTF and RMF. For RMFs you must deduct other provident fund contributions. LTFs are not affected by contributions to RMFs or Provident funds and totally separate.

When working in Thailand and paying tax, I always max out on LTFs each year. They're a great way of building up THB assets in a very tax efficient way. I'm not a fan of RMFs as Duc says, you need to be 55 to withdraw without tax penalty. For younger expats, you really have to consider the inflexibility and time locked up, plus you may leave Thailand. Not too bad for someone in say their late 40's though, and solidly committed to here.

I'd recommend always taking an LTF out first, then the RMF if you really want to. The main advantage of the RMF over an LTF is a wider range investment choice, whereas LTFs are mainly Thai equities. If you build up too much of a concentration in Thai equities though, just sell some and buy something else to diversify once the 5 calendar years is up.

Cheers

Fletch

[scoutman360]

If my employer does a matching contribution to my Provident Fund, is the 500,000 baht limit apply to the combined contribution, or only my portion? I am asking because I want to supplement the difference with an external RMF to reach the maximum allowable.

[Misty]

If my employer does a matching contribution to my Provident Fund, is the 500,000 baht limit apply to the combined contribution, or only my portion? I am asking because I want to supplement the difference with an external RMF to reach the maximum allowable.

The Provident Fund tax deduction limits are Bt500,000 of only your contribution, or 15% of your salary income, whichever is lower. Your employer's contribution isn't part of the tax deduction you'd take on your PND91 Thai income tax form. If you google "Thai Provident Funds" and you should find articles on the net explaining this in more detail.

[Oorinara]

Life insurance premium up to 100k p.a. is deductible too. Could be off topic though.

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

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