Personal Income Tax: Tax-deductible Employee Expenses

[toptuan]

Sorry if this has been asked before, but did my obligatory search without success...

Back in my home country, I kept receipts for all employee expenses (I was the employee) that were unreimbursed by the employer. These were tax-deductible at Personal Income Tax time (subject to a certain threshhold over which the expenses were deductible).

Is there any such creature in Thailand? For two years, I've carried all my employee-expenses receipts into the local tax office (I'm a teacher), and was just laughed at. They set aside my receipts, filled in the tax form without referring at all to my hard-won collection, and sent me on my way, owing the same amount of tax as if I had never had 1 Baht of non-reimbursable teacher's expense.

Is it that they just didn't understand my toddler Thai language? Or am I dreaming that the Thai might consider my "expenses to earn an income" as valuable as my home country does?

[lanny]

I am not an authority on Thai taxes -- U.S. taxes are my forte. However, I am not aware of any provision in Thai tax law to allow employees to deduct business expenses.

What you should to is have your employer treat a portion of your salary equal to your expenses as a reimbursement. When I worked for another firm a few years ago, my employer gave me a "salary" and an "expense allowance" each month. Every 6 months, we would total up my expenses (I gave them copies of the applicable receipts) and compared this to the allowance I had received. The excess allowance was added to my salary for that month and the tax withheld adjusted accordingly. So, in effect, they reduced my salary by the expenses, giving me the equivalent of a deduction on my personal return.

[samran]

There aren't too many deductions available to an individual here in Thailand. And from an economic prespective, there is a good argument for this - simplicty. Now, all we have to do it get enforcement and compliance up here, and Thailand would have a pretty good income tax system.

Enough of my rant. No there aren't any employment related detuctions. However you do get deductions for the following:

- Standard deduction of 40% of your income up to a max 60K

- marriage (30K)

- Child (15K)

- Childs education (2K)

- Life insurance premuim and provident fund contribution (up to 50K each)

- Long Term equity funds (up to 300K or 15% of your salary)

- Interest on a residential loan (50K)

- Social secutity contributions (max 9K per year)

- Donations to charity.

So that is about the scope of the deductions for an individual. If you have some money to spare, a long term equity fund (5 calendar year investment - three physical years in actuality) may be a useful tool, as the returns are tax free and the investment you make in the first year is offset as a desuction.

Obviously you need to check out the returns on each of the funds on offer and what they invest in, but those returns, combined with the reduced tax incidence, may provide a good overall return, especially if investing the money in a long term fund brings you down a tax threshold to an a lesser tax rate.

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[rishi]

... However you do get deductions for the following:

...

- Interest on a residential loan (50K)

...

I guess this is off-limit to foreigners inasmuch no bank would give residential loans to foreigners (right?).

However, in my (our) company my wife is on the payroll with a salary just below the taxable limit. We do have a residential loan in my wife's name. Does this mean I can safely give her a raise (as to increase tax-deductable company expenses) corresponding to those 50k, she can deduct from her personal income?

[samran]

... However you do get deductions for the following:

...

- Interest on a residential loan (50K)

...

I guess this is off-limit to foreigners inasmuch no bank would give residential loans to foreigners (right?).

However, in my (our) company my wife is on the payroll with a salary just below the taxable limit. We do have a residential loan in my wife's name. Does this mean I can safely give her a raise (as to increase tax-deductable company expenses) corresponding to those 50k, she can deduct from her personal income?

no idea about your idea...sorry!

[toptuan]

Thanks everyone, especially information shared by Samran. Very helpful. Well, at least it does what Samran says: simplifies my life!

[Wekhin]

... However you do get deductions for the following:

...

- Interest on a residential loan (50K)

...

I guess this is off-limit to foreigners inasmuch no bank would give residential loans to foreigners (right?).

However, in my (our) company my wife is on the payroll with a salary just below the taxable limit. We do have a residential loan in my wife's name. Does this mean I can safely give her a raise (as to increase tax-deductable company expenses) corresponding to those 50k, she can deduct from her personal income?

Yes, you can. It is a way to go. The raise should be close to the amount of interest to be paid in a year because 50K is maximum deductible, not a lum-sum.