CHAPTER 12

PERSONAL TAXES

The rules regarding personal taxation appear in the Revenue Code, and in notifications, decrees, and regulations issued under the Code. 

Identification numbers All persons who work in Thailand or have taxable income must apply for a taxpayer's identification number which is issued upon presentation of a Thai identification card or foreign passport and evidence of the need for the number.

Concept of residence Taxpayers are classified into resident and non-resident. Resident means a person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand on a cash basis, regardless where the money is paid, as well as on the portion of income from foreign sources that is brought into Thailand.

A non-resident is subject to tax only on income from sources in Thailand.

Who is liable to pay personal income tax? Natural persons and ordinary partnerships (but not registered ordinary partnerships and limited partnerships) are liable to pay personal income tax.

Assessable Income  Income liable to personal incomer tax includes income both in cash and in kind, including benefits provided by an employer or other persons, such as a rent-free house or the amount of tax paid by the employer on behalf of the employee.

Assessable income is divided into 8 categories as follows:

1. income from personal services to an employer;

2. income by virtue of positions or services rendered;

3. income from goodwill, copyright, franchise, other rights, annuity or income in the nature of annual payments derived from a will or any other juristic Act or judgment of the Court;

4. income in the nature of dividends, interest on deposits with banks in Thailand, shares of profits or other benefits from a juristic company, juristic partnership, or mutual fund, payments received as a result of the reduction of capital, a bonus, an increased capital holdings, gains from amalgamation, acquisition or dissolution of juristic companies or partnerships, and gains from transferring of shares or partnership holdings;

5. income from letting out of property on hire and from breaches of installment sale or hire-purchase agreements;

6. income from the liberal professions;

7. income from construction and other contracts of work;

8. income from business, commerce, agriculture, industry, transport or any other activity not specified earlier.

Non-taxable income The following are examples of non-taxable income:

1. Support received from a person who pays Thai taxes.

2. Bona fide gifts and inheritances from Thai or foreign sources.

3. Proceeds from the sale of property not in the course of business (such as the sale of an art collection or used

car).

4. Proceeds from the sale of immoveable property, acquired by inheritance or gift, provided that the sale is not for

commercial purposes.

5. With effect from 1 January 2003, a gain from the sale of a residential building is excluded from taxable income,

provided the gain is spent on purchasing a new home within one year before or after the sale of the principal

home.

6. Income subject to tax in a tax treaty country.

7. Income earned abroad more than two years prior to its being brought into Thailand or income earned abroad by a

person who does not reside in Thailand for more than 180 days in the year that the income is brought into

Thailand.

8. Saving account interest up to a certain amount and certain interest on Thai government bonds.

9. Medical and workman's compensation benefits.

Permitted deductions from gross income Employees and most self‑employed persons who provide non-professional personal services or earn copyright royalties, are entitled to claim a 40% standard deduction from their gross salary or service income, not exceeding Baht 60,000.

Professionals and other self‑employed persons may choose a standard deduction ranging up to 85% of their gross income depending on its nature. Persons may elect to itemize their expenses in lieu of taking the standard deduction.

Personal allowances In addition to the standard or itemized deductions, the taxpayer is entitled to deduct from gross income the following personal allowances (these allowances apply with effect from January 1, 2004, except where mentioned):

1. A personal allowance of Baht 30,000.

2. A personal allowance of Baht 30,000 for a non‑working spouse provided the taxpayer is a resident of Thailand, (that is, resides in Thailand for more than 180 days in a calendar year) or his wife and child live in Thailand.

3. Baht 15,000 for each child born in or before 1979, and 15,000 Baht for each child born after 1979, up to a maximum of three children.

4. For any eligible child in 3 above, who is a student in a school in Thailand (including international schools), an additional deduction of Baht 2,000 is allowed.

5. Life assurance premiums paid by the taxpayer or his spouse, in the amount actually paid but not exceeding 50,000 Baht for each spouse, and only in respect of policies issued by a Thai insurance company.

6. Approved provident fund contributions, up to a maximum allowance of 300,000 Baht may be claimed, but the allowance claimed must not exceed 15% of income.

7. Mortgage interest, limited to actual interest paid, not exceeding 50,000 per year and only in respect of one property.

8. Approved equity funds, a maximum allowance of 300,000 Baht may be claimed, but the allowance claimed must not exceed 15% of income.

9. Social security fund contributions paid by the taxpayer or his/her spouse, in the amount actually paid by each person.

10. With effect from 1 January 2005, an allowance for the support of an elderly parent may be claimed, by a taxpayer in respect of his parents or parents in law. Only one taxpayer child may claim such allowance. The parent must be aged 60 years or more and must have income not exceeding 30,000 Baht per year. The taxpayer may also claim an allowance for the parents of his/her spouse (i.e. his/her in laws). The allowance is 30,000 Baht for each parent or parent in law.

A foreign taxpayer is eligible to claim such allowance, but only in respect of parents or parents in law who are Thai and fulfil the requirements above, or who are foreign but have a residence permit and live in Thailand.

New allowance proposed In 2006, a proposal was made to allow a taxpayer to deduct from gross income, premiums paid for medical insurance for elderly relatives, up to a certain amount.

Separate returns for spouses If both husband and wife work, they may file separate tax returns and divide their children's deduction among themselves. Spouses, however, may file a joint return and subject their combined income to the progressive rates.

Other deductions Limited amounts of contributions to approved charities are allowed.

Tax credit for dividends An individual domiciled and residing in Thailand and receiving dividends from any company organized under the laws of Thailand (whether a listed, public or private company) is subject to personal income tax withheld at source at 10%, but is entitled to claim a tax credit equal to 3/7ths of the dividend.

Reduced tax rates Interest earned is generally subject to a maximum tax rate of 15%. Older government bonds may be tax free or only partially subject to taxation. Savings account interest is tax free if less than Baht 10,000. If Baht 10,000 or over the entire amount is taxable. Severance pay is subject to reduced rates of taxation.

Income from the sale of land and buildings by natural persons not in the ordinary course of business, and not deemed to be the result of speculation, is subject to special rules which provide for reduced rates and a maximum tax rate equal to 20% of the gross sales price.

The withholding tax rate for dividends and shares of profit is 10%, but see Tax Credits above.

Non‑residents Income earned by non‑residents for services performed outside Thailand but paid from Thailand is generally subject to flat rate withholding tax of 15%. Dividends and shares of profit are subject to a flat rate 10%.

Tax on tax If the payor of income also pays the taxpayer's income tax, the tax itself is subject to income tax at the same rate as the basic income itself, for the year in which the basic income is paid. For example, if an employer pays salary to an employee in 2004 and then pays the employee’s tax (or tax on tax) in 2005 when the tax return is due, the tax on tax is due and payable at 2004 rates at the time that the 2004 tax return is filed.

Current personal income tax rates The following are the personal tax rates for 2006:

Income (Baht)	Taxable Income (Baht)	Tax rate	Tax payable (Baht)	Cumulative tax (Baht)
0 – 100,000	Nil	Nil	Nil	Nil
100,001– 500,000	400,000	10%	40,000	40,000
500,001- 1,000,000	500,000	20%	100,000	140,000
1,000,001- 4,000,000	3,000,000	30%	900,000	1,040,000
4,000,001 or more	variable	37%	variable	variable

Withholding Tax With regard to certain categories of income, the payer of the income has a duty to withhold tax at source, file a tax return and pay the tax due to the District Revenue Office.

The tax withheld is then credited against the tax liability of the taxpayer at the time of filing his personal income tax return. The following are the withholding tax rates on some categories of income. The most important examples of withholding tax are set out below:

Type of income	Withholding tax
Employment income	10 – 37%
Rents and prizes	5%
Service and professional fees	3%
Advertising fees	2%

Tax Payment A taxpayer is liable to submit a personal income tax return and make payment of income tax due to the Area Revenue Branch Office, before March 31 of the year following the year of assessment. A taxpayer who derives income in categories (5) - (8) above during the first six months of the taxable year is also required to file a half - yearly return and pay tax due to the Area Revenue Branch Office before September 30 in the year of assessment.

Any withholding or half-yearly tax that has been paid, can be used as a credit against the tax liability at the end of the year.

Revised 1 December 2006

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