Tax rates when doing business in Thailand

Business in Thailand

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The 2 main types of tax that are levied on the INDIVIDUAL are Personal Income Tax (PIT) and Withholding Tax (WHT), which are important to note when you’re doing business in Thailand. In the previous article we discussed that there are various rates of tax charged depending on the individuals income, where it is generated from as well as their personal status.  The varying rates and rules for both of these taxes are dealt with in greater detail below.

Personal Income Tax (PIT)

PIT is a direct tax levied on an individual.  The taxpayer who is doing business in Thailand is liable to pay this to the Revenues Department as well as filing a tax return on an annual basis.  Taxpayers are classed as either “resident” and “non resident”.  For tax purposes a resident is anyone living in Thailand for more than 180 days each year.  A resident is liable for tax earned in Thailand via their business, as well as a portion of income earned from foreign sources and brought into Thailand.  A non resident is liable for income earned in Thailand only.

Taxable income is calculated in the following manner: Assessable Income minus Deductions minus Allowances.  Details of Deductions and Allowances are given below (source: http://www.rd.go.th/publish/6045.0.html):

Deductions allowed for the calculation of PIT

Type of Income Deduction
a. Income from employment 40% but not exceeding 60,000 baht
b. Income received from copyright 40% but not exceeding 60,000 baht
c. Income from letting out of property on hire
            1) Building and wharves 30%
            2) Agricultural land 20%
            3) All other types of land 15%
            4) Vehicles 30
            5) Any other type of property 10%
d. Income from liberal professions 30% except for the medical profession where 60% is allowed
e. Income derived from contract of work whereby the contractor provides essential materials besides tools actual expense or 70%
f. Income derived from business, commerce, agriculture, industry, transport, or any other activities not specified in a. to e. actual expense or 65% – 85% depending on the types of income

Allowances (Exemptions) allowed for the calculation of PIT

Types of Allowances Amount
Personal allowance
            Single taxpayer 30,000 baht for the taxpayer
            Undivided estate 30,000 baht for the taxpayer’s spouse
            Non-juristic partnership or body of persons 30,000 baht for each partner but not exceeding 60,000 baht in total
Spouse allowance 30,000 baht
Child allowance (child under 25 years of age and studying at educational institution, or a minor, or an adjusted incompetent or quasi-incompetent person) 15,000 baht each
(limited to three children)
Education (additional allowance for child studying in educational institution in Thailand) 2,000 baht each child
Parents allowance 30,000 baht for each of taxpayer’s and spouse’s parents if such parent is above 60 years old and earns less than 30,000 baht
Life insurance premium paid by taxpayer or spouse Amount actually paid but not exceeding 100,000 baht each
Approved provident fund contributions paid by taxpayer or spouse Amount actually paid at the rate not more than 15% of wage, but not exceeding 500,000 baht
Long term equity fund Amount actually paid at the rate not more than 15% of wage, but not exceeding 500,000 baht
Home mortgage interest Amount actually paid but not exceeding 100,000 baht
Social insurance contributions paid by taxpayer or spouse Amount actually paid each
Charitable contributions Amount actually donated but not exceeding 10% of the income after standard deductions and the above allowances

PIT is a progressive tax, basically meaning the more you earn, the higher the amount of tax that you will pay in a similar manner to most western countries.  The rates are relatively easy to understand as most people will be familiar with the practice.  Earned income between THB0 – THB150,000 is tax exempt; income between THB150,001 – THB500,000 is charged  at 10%; THB500,001 – THB1,000,000 is charged at 20%; THB1,000,001 – THB4,000,000 is charged at 30% and any amount over and above this is charged at 37%

 Withholding Tax (WHT)

WHT for the individual is somewhat easier to calculate.  The tax is generally taken at source at a rate of between 5 and 37%.  The payment should be made to the District Revenue Office and shall be credited against the individual PIT liability at the time of filing.

The information provided is correct at the time of writing but is subject to change.  It is always advisable to speak to an expert to get correct, up to date advice prior to commencing your business in Thailand.