Tax Structure in Thailand  

    

  

PERSONAL TAX

Personal Income Tax (PIT) is a direct tax levied on income of a person.  A person means an individual, an ordinary partnership, a non-juristic body of person, a deceased person and an undivided estate. In general, a person liable to PIT has to compute his tax liability, file tax return and pay tax, if any, accordingly on a calendar year basis.

 

1.  Taxable Person

Taxpayers are classified into "resident" and "non-resident".  "Resident" means any 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, however, subject to tax only on income from sources in Thailand.

 

2.  Tax Base

2.1  Assessable Income

Income chargeable to the PIT is called "assessable income".  The term covers income both in cash and in kind.  Therefore, any 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, are also treated as assessable income of the employee for the purpose of PIT.

Assessable income is divided into 8 categories as follows:

(1)  income from personal services rendered to employers;

(2)  income by virtue of jobs, 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 sales or hire-purchase contracts;

(6)  income from 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.

 

2.2  Deductions and Allowances

Certain deductions and allowances are allowed in the calculation of the taxable income.  Taxpayers shall make deductions from assessable income before the allowances are granted. Therefore, taxable income is calculated by:

 

TAXABLE INCOME = assessable income - deductions - allowances 

  

                Deductions allowed for the calculation of PIT

     

Type of Income

Deduction

 

Income from employment

40% but not exceeding 60,000 Baht

 

Income received from copyright

40% but not exceeding 60,000 Baht

 

Income from letting out of property on hire:

 

 

  -  Building and wharves

30%

 

  -  Agricultural land

20%

 

  -  All other types of land

15%

 

  -  Vehicles

30%

 

  -  Any other type of property

10%

 

Income from liberal professions

30% except for the medical profession where 60% is allowed

 

Income derived from contract of work whereby the contractor provides essential materials besides tools

actual expense or 70%

 

Income derived from business, commerce, agriculture, industry, transport, or any other activities not specified earlier

actual expense or 65-85% depending on the types of income

    

                 Allowances (Exemptions) allowed for the calculation of Personal Income Tax

 

Types of Allowances

Amount

 

Personal allowance
    -  Single taxpayer
    -  Undivided estate
    -  Non-juristic partnership or body of persons
Spouse allowance
Child allowance (child under 25 years of age and studying at educational institution, or a minor, or an adjusted incompetent or quasi-incompetent person)


30,000 Baht for the taxpayer
30,000 Baht for the taxpayer's spouse
30,000 Baht for each partner but not exceeding 60,000 Baht in total
30,000 Baht
15,000 Baht each (limited to three children)

 

Education (additional allowance for child studying in educational institution in Thailand)
Life insurance premium paid by taxpayer or spouse
Approved provident fund contributions paid by taxpayer or spouse

2,000 Baht each child
Amount actually paid but not exceeding 50,000 Baht each

Amount actually paid but not exceeding 10,000 Baht each

 

Home mortgage interest
Social insurance contributions paid by taxpayer or spouse
Charitable contributions

Amount actually paid but not exceeding 50,000 Baht
Amount actually paid each
Amount actually donated but not exceeding 10% of income after standard deductions and allowances

 

2.3  Tax Credit for Dividends

Any taxpayer who domiciles in Thailand and receives dividends from a juristic company or partnership incorporated in Thailand is entitled to a tax credit.   In computing assessable income, a taxpayer shall gross up his dividends by the amount of the tax credit received.  The amount of tax credit is then creditable against his tax liability. 

 

   Tax credit = dividend   x  corporate tax rate/(100-corporate tax rate)

  

3.  Tax Rates

3.1  Progressive Tax Rates

Personal income tax rates applicable to taxable income are as follows.

 Tax rates of the Personal Income Tax

Taxable Income

Tax Rate (%)

0 - 150,000 ( 2008 onwards)

Exempt

150,001 - 500,000

10

500,001 - 1,000,000

20

1,000,001 - 4,000,000

30

4,000,001 and over

37

 

In the case where income categories (2) - (8) mentioned in 2.1 are earned more than 60,000 Baht per annum, taxpayer has to calculate the amount of tax by multiplying 0.5% to the assessable income and compare with the amount of tax calculated by progressive tax rates. Taxpayer is liable to pay tax at the amount whichever is greater. 

 

3.2  Separate Taxation

There are several types of income that the taxpayer shall not include or may not choose to include such income to the assessable income in calculating the tax liability.

 

Income from sale of immovable property

Taxpayer shall not include income from sales of immovable property acquired by bequest or by way of gift to the assessable income when calculating PIT.  However, if the sale is made for a commercial purpose, it is essential that such income must be included as the assessable income.  Nevertheless, from January 2003, gains from sales of residential buildings shall not be included as income if such gains are spent on purchasing a new home within 1 year before or after selling his primary residence.

 

Interest

Interest income may, at the taxpayer's selection, be excluded from the computation of PIT provided that a tax of 15 per cent is withheld at source. However, the following forms of individual's interest income are exempt from 15 per cent withholding tax;

1.  interest on bonds or debentures issued by a government organization, 

2.  interest on saving deposits in commercial banks if the aggregate amount of interest received is not more than 20,000 Baht during a taxable year,

3. interest on loans paid by a finance company,

4.  interest received from any financial institutions organized by a specific law of Thailand for the purpose of lending money to promote agriculture, commerce or industry. 

 

Dividends

Taxpayer who is a resident in Thailand and receives dividends or shares of profits from a registered company or a mutual fund which tax has been withheld at source at the rate of 10 per cent, may choose to exclude such dividends from the assessable income when calculating PIT.  However, in doing so, taxpayer will be unable to claim any refund or credit as mentioned in 2.3.

 

4.  Withholding Tax

For certain categories of income, the payer of income has to withhold tax at source, file tax return (Form PND.1, PND.2, or PND.3 as the case may be) and submit the amount of tax withheld to the District Revenue Office.  The tax withheld shall then be credited against tax liability of a taxpayer at the time of filing PIT return.  The following are the withholding tax rates on some categories of income.

 

Types of income

Withholding tax rate

1.  Employment income

5 - 37 %

2.  Rents and prizes

5 %

3.  Ship rental charges

1 %

4.  Service and professional fees

3 %

5.  Public entertainer remuneration

     -  Thai resident

     -  non-resident

 

5 %

5 - 37%

6. Advertising fees

2 %

   

5.  Tax Payment

Taxpayer is liable to file Personal Income Tax return (Form PND.90 or PND.91) and make a payment to the Area Revenue Branch Office within the last day of March following the taxable year. Taxpayer who derives categories of income (5) - (8) during the first six months of the taxable year is also required to file half - yearly return (Form PND.94) and make a payment to the Area Revenue Branch Office within the last day of September of that taxable year.  Any withholding or half-yearly tax, which has been paid, can be used as a credit against the tax liability at the end of the year.  

 

 

CORPORATE TAX

Corporate income tax (CIT), imposed base on “net profit” below is tax rate for year 2012, 2013 and onwards

 

Net Profie

Incentive for SME

Capital less than Baht 5 million

for year 2012

Incentive for SME

Capital less thanBaht 5 million

for year 2013 and onwards

Ordinary company

Capital less than Baht 5 million

for year 2012

Ordinary company

Capital less than Baht 5 million

for year 2013 to 2014

0 - 150,000

0%

0%

23%

23%

150,001 - 1,000,000

15%

15%

23%

23%

Over 1,000,000

23%

20%

23%

23%

 

 

        Note: For year 2008 - 2011, Corporate Income Tax (CIT) was imposed by tax rate as below table:

 

Net profit

Incentive for SME

Capital less than Baht 5 million

For year 2008 to 2011

Ordinary company

Capital less than Baht 5 million

For year 2008 to 2011

0 – 150,000

0%

30%

150,001 - 1,000,000

15%

30%

1,000,001 – 3,000,000

25%

30%

Over 3,000,000

30%

30%

 

Special Business Tax

SBT is calculated as a percentage of gross receipts.  The businesses subject to SBT and the applicable rates include:

 

SBT

Tax Base

Rate

Real estate business

Gross receipts

0.11%

Banking or similar business

Interest, discounts, service fees, other fees, profits from foreign exchange

3.3 %

Life Insurance

Interest, service fees and other fees

2.75%

Pawn Brokerage

Interest, fees, remuneration from selling overdue property

2.75%

Repurchase Agreement

The difference between selling price and repurchasing price

3.3 %

Factoring

Interest, discounts, service fees and other fees

3.3 %

SBT return must be submitted within 15 days of the following month.

 

Tax Submission

 

Particulars

Nature

Scope

Frequency

 

PND.1

Withholding personal income tax returns

Preparation, Submission  and Filling

Monthly

 

PND.1 Kor

Withholding personal income tax returns (Special)

Preparation, Submission  and Filling & issuing Tax Certificate to the employees

Annual

 

PND.2

Withholding Income Tax Return (Dividend, etc.)

Preparation, Submission  and Filling

Monthly

 

PND.3, PND.53

Withholding corporate income tax returns  (Domestic)

Preparation, Submission  and Filling

Monthly

 

PND.54

Withholding income tax remittance returns (Foreign)

Preparation, Submission  and Filling

Monthly

 

PND.50

Corporate Income Tax returns

Preparation, Submission  and Filling

Annual

 

PND.51

Corporate Income Tax returns

Preparation, Submission  and Filling

Half yearly

 

PND.90

Personal Income Tax returns

Preparation, Submission  and Filling

Annual

 

PND.91

Personal Income Tax Returns

Preparation, Submission  and Filling

Annual

 

PND.94

Personal Income Tax Returns

Preparation, Submission  and Filling

Half yearly

 

PP.30

Value Added Tax Returns

Preparation, Submission  and Filling

Monthly

 

PP.36

Value Added Tax Remittance Returns

Preparation, Submission  and Filling

Monthly

 

PT.40

Specific Business Tax Returns

Preparation, Submission  and Filling

Monthly

 

 

  Form Purpose Form
  PND.1 Tax Form if the company had withheld the tax for salary of the staff.
  PND.1 Kor. Tax Form if the company had withheld the tax for acquisition of salary of the staff.
  PND.2 Tax Form if the company had withheld the tax for dividend, etc.
  PND.3 and PND.53 Tax Form if the company had withheld the tax for services, rental, hiring, transportation, insurance, management fee, consulting, and etc (should to study withholding tax in Thailand).
  PND.54 Tax Form if the company had withheld the tax from the company or juristic partnership incorporated under foreign laws and not carrying on business in Thailand but receiving assessable income from commission, fee of goodwill, dividend, share of profits or any other gain derived which is paid from or in Thailand.
  PND.50 Annual Tax Return Form.  This tax must be submitted to the Revenue Department within 150 days after the fiscal year has ended along with the audited financial statements.  Case of ending period is December, the deadline for Corporate Income Tax in Thailand is around end of May.
  PND.51 Mid-Year Tax Return Form. This is the company’s corporate tax for 6 months (half year) of the fiscal year which must be filed to the Revenue Department within 2 months after the half year. (e.g. if the fiscal year of the company is ended on December, half year is June that means PND.51 must be submitted within August).
  PND.90 Taxpayer receiving income from employment and the professions of law, medicine during the period January to December, must file and pay personal income tax before the last day of March every year.
  PND.91 Taxpayer receiving income from employment during the period January to December, must pay personal income tax before the last day of March every year.
  PND.94 is a half–year tax form of PND.90, during the period January to June, must file a half-year return and pay personal income tax by September each year.
  PND.30 is Value Added Tax form.  This tax (PND.30), based on 7% of sales or purchase detailed in tax invoice must be submitted within 15 days of the following month otherwise, the company will have to pay for penalty and surcharge.  In case that there is no VAT incurred for the month, the company must still submit the blank VAT form with the zero amount of tax to comply with the Thai taxation law.
  PND.36 Value added tax remittance returns form.  Based on 7% for supplier providing services overseas and such services are used in Thailand and must be submitted within 7 days of the following month.
  PND.40 is Special Business Tax form.  SBT is calculated as a percentage of gross receipts.

 

Source: Revenue Department; Thailand (www.rd.go.th)

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