Thailand’s New Tax on Foreign Income: An Overview from Siam Legal

Siam Legal International | Thailand Revenue Code

Section 41 of the Revenue Code

This provision requires an individual to pay income taxes to the Revenue Department of Thailand under the following conditions:

1. The individual is:
   1. A Thai citizen.
   2. A Thailand resident who filed taxes in the previous tax year.
   3. Foreigners living in Thailand for one or more periods totaling at least 180 days in any tax calendar year.
2. Receives income within or outside Thailand through:
   1. Employment (wage, salary, remuneration, etc.) under Section 40.
   2. Business operations under Section 40.
   3. Business operations of the employer under Section 40.
   4. Passive income or property (interests, dividends, rental income, goodwill, etc.) under Section 41 paragraph 2.

Thai citizens and foreigners who are permanent residents are subject to pay income tax, should they earn their annual income, at the following rates:

1. 0 to 150,000 THB is exempted from income tax.
2. 150,001 to 300,000 THB is subject to a 5% tax rate.
3. 300,001 to 500,000 THB is subject to a 10% tax rate.
4. 500,001 to 750,000 THB is subject to a 15% tax rate.
5. 750,001 to 1,000,000 THB is subject to a 20% tax rate.
6. 1,000,001 to 2,000,000 THB is subject to a 25% tax rate.
7. 2,000,001 to 5,000,000 THB is subject to a 30% tax rate.
8. 5,000,001 THB or more is subject to a 35% tax rate.

Revenue Department Begins Taxing Foreign-Sourced Income

As of 1 January B.E. 2567 (2024), the Revenue Department has enforced its department instruction P. 161/2566 to tax any Thai citizen or a foreigner with Thai residency, who receives an income within Thailand. Sources of income earned outside of Thailand are excluded from taxation, however.

This instruction falls under Section 41 paragraph 2 of the Revenue Code regarding income assessment, which considers sources of incomes within Thailand and overseas into account for an income tax.

However, there is an exemption from being subject to income tax in Thailand by meeting one of the following conditions:

1. The individual must not reside in Thailand for 180 days or more in a particular tax calendar year.
2. Invest on a foreign investment fund or Depositary Receipt.
3. Does not bring an income from overseas into Thailand.

Case Examples

Case 1: An individual who resided in Thailand for 300 days, worked in Thailand and received a wage from an employer in the United Kingdom. Therefore, this Thailand resident is subject to pay income taxes as his residency period is more than 180 days by the virtue of Section 41 of the Revenue Code.

Case 2: An individual residing in Australia who worked for the employer from Thailand and received a salary from such an employer. For this case, this individual is subject to pay an income tax for Thailand, as this individual receives the income from the employer who operates a business in Thailand, as defined by Sections 40 and 41 of the Revenue Code.

Case 3: An individual was assigned to work for a Japanese company based in Thailand for 90 days and received a salary for 3 months from the parent company in Japan. As a result, this individual is not subject to pay income tax in Thailand, but is subject to pay the tax in Japan because Thailand and Japan have a double tax agreement.

Double Tax Agreement (DTA)

This agreement exempts any individual residing in Thailand and the country where Thailand has signed the agreement with from paying income taxes on both countries. To clarify, an individual can pay income taxes in the country where the individual is currently residing. The DTA has several purposes regarding income tax:

1. Prevent double taxation for reducing financial burdens among individuals. 
2. Avoid conflicts on taxing rights ensuring income is taxed once or at a reduced rate. 
3. Ensure fair treatment on taxation from discrimination. 
4. Prevent tax evasion and fraud by sharing information with the contractual party.
5. Promote economic activity in stimulating cross-border transactions and investments between the treaty countries.

As of 9th October 2023, Thailand has signed the DTA with 61 countries. Nevertheless, the individual may be subject to double taxation in Thailand and the country where Thailand is not a contractual party to the DTA.

Armenia	Australia	Austria
Bahrain	Bangladesh	Belarus
Belgium	Bulgaria	Cambodia
Canada	Chile	China (People’s Republic)
Cyprus	Czechia	Denmark
Estonia	Finland	France
Germany	Hong Kong	Hungary
India	Indonesia	Ireland
Israel	Italy	Japan
Korea	Kuwait	Laos
Luxembourg	Malaysia	Mauritius
Nepal	Netherlands	New Zealand
Norway	Oman	Pakistan
Philippines	Poland	Romania
Russia	Seychelles	Singapore
Slovenia	South Africa	Spain
Sri Lanka	Sweden	Switzerland
Taiwan	Tajikistan	Turkey (Turkiye)
Ukraine	United Arab Emirates	United Kingdom
United States of America	Uzbekistan	Vietnam

 
Tax laws are often complex and subject to change, and it’s crucial to stay informed about these developments, especially when they can significantly impact your financial planning and obligations. Please consult with qualified tax professionals for personalized advice and to ensure compliance with the latest regulations. Remember, staying informed and seeking expert guidance are key steps in effectively managing your financial responsibilities, both domestically and abroad.