Taxation In Thailand

Written by admin on May 14th, 2011

 assume employment for the first time, and for returning to his place of origin at termination of  employment;Per diem or transportation expenses;Medical expenses paid by an employer for his employee and/or the employee’s spouse, ascendants and descendants;Income from the sale of immovable property acquired by bequest or by way of a gift (but a sale of  immovable property made for commercial purposes must be included in assessable income);Profit from the sale of residential property, if the profit is spent on purchasing another residential  property within 1 year before or after the date of sale;Gains on sale of shares traded on the Stock Exchange of Thailand;Interest income may be excluded for the purposes of computing personal income tax, when the interest has been subject to 15% withholding tax at source; andDividend income may be excluded for the purposes of computing personal income tax, when the  dividends have been subject to 10% withholding tax at source. Standard DeductionsStandard deductions are allowed against personal income as follows:

Type of Assessable Income
Standard Deduction
Income from employment
40% of income but not exceeding 60,000 Baht
Income from copyright
40% of income but not exceeding 60,000 Baht

Type of Assessable Income
Standard Deduction
Income from rent
30% for buildings and wharves, 20% for
agricultural land, 15% for other types of land, 30%
for vehicles and 10% for other property
Income from liberal professions
60% for medical professionals and 30% for other
Income from contract of work whereby the
contractor provides essential materials besides
70% of income or actual expenses
Income from business, commerce, agriculture,
industry, transport and other activities
65-85% of income depending on the type of
income or actual expenses

Standard AllowancesIn addition to standard deductions, the following standard allowances are allowed:
Taxpayer allowance
30,000 Baht
Spouse allowance
30,000 Baht
Child allowances
15,000 Baht for each child (maximum of 3
Education allowances
2,000 Baht for each child studying in Thailand
Parent and parent-in-law maintenance allowances
30,000 Baht for each parent and parent-in-law
being cared for
Parent and parent-in-law health insurance
Amount paid, but not exceeding 15,000 Baht for
each parent and parent-in-law
Life insurance premiums
Amount paid, but not exceeding 50,000 Baht for
the taxpayer and 10,000 Baht for spouse
Approved provident fund contributions
15% of income, but not exceeding 300,000 Baht
for taxpayer and 10,000 Baht for spouse
Retirement mutual fund contributions
15% of income, but not exceeding 300,000 Baht
for taxpayer
Long term equity funds
15% of income, but not exceeding 300,000 Baht
for taxpayer
School welfare funds
Amount paid, but not exceeding 300,000 Baht for
Home mortgage interest allowance
Amount paid, but not exceeding 100,000 Baht
Social security contributions
Amount paid for taxpayer and spouse
Charitable donations
Amount paid but not exceeding 10% of income
after deductions

Personal Withholding TaxAll employers in Thailand are required to deduct withholding tax from all payments of salary and wages,  hire of work, office of employment or services rendered using the progressive rates of personal income tax, and remit such deductions to the Revenue Department within 7th day of the following month.

Employers are required to issue Withholding Tax Certificates to employees by 15th February each year or within 1 month of termination of employment

Personal Income Tax ReturnsAll individuals are required to file an annual personal income tax return by 31 March each year. Any  additional tax must be paid at the same time. In the event tax has been over-withheld a refund may be claimed.
Value Added TaxMost businesses are required to register for VAT, the exceptions being:
Those business operations subject to specific business tax; andExempt business such as agriculture, sale of newspapers, educational establishments, etc;Rates of VATThere are two rates of VAT as follows:

0% rate for export of goods and services; and10% standard rate (which has been temporarily reduced to 7%) for sales of goods and provision of  services in Thailand and import into Thailand. Liability to VATLiability to VAT for sale of goods arises at the time of delivery of goods unless transfer of ownership,  receipt of payment or issuance of a tax invoice occurs prior to delivery.

Liability to VAT for provision of services arises at the time the service fee is received, unless a tax invoice is issued earlier or the service is used before payment is made.
Tax InvoicesVAT operators are required to issue tax invoices to their customs and such tax invoices must be serially  numbered. The tax invoice must include the particulars and the information stipulated in the Revenue  Code.

Credit NotesWhere the value of the goods or services sold to a customer has to decrease, a credit note is issued to the customer. This credit note must also include the particulars and the information stipulated in the Revenue Code.

VAT ReturnsMonthly returns must be completed and filed by the 15th day of each month (in respect of the preceding  month’s VAT transactions). The net VAT amount is required to be paid to the Revenue Department at the same time, and is calculated as the amount of output VAT (VAT charged to customers) less input VAT (VAT incurred on goods and services purchased).

For imported goods, the VAT is collected by the Customs Department, which issues a tax receipt. This tax receipt then becomes input VAT and is claimed against output VAT in the monthly VAT returns.
Certain input VAT cannot be claimed as an offset against output VAT. These include input VAT on  entertainment expenses, input VAT on passenger vehicles, input VAT where a proper tax invoice is not available or where the tax invoice is incorrect or incomplete, and input VAT where a tax invoice has been issued by a person not authorised to do so.
If input VAT exceeds output VAT, the excess input VAT is carried forward and offset against future month’s VAT returns or an application can be made for a refund of the excess input VAT.

VAT RecordsInput and output VAT records must be maintained and these must detail all the VAT transactions occurring during the month. In addition, operators who carry out sale of goods are required to maintain a goods and raw materials record.
VAT on Imported ServicesFor payment of services provided by foreign companies not carrying on business in Thailand, such as  payments for management fees, royalties and technical service fees etc, the recipient of the services in Thailand is required to pay the VAT.

The VAT on the offshore payments is remitted to the Revenue Department by the 7th day of the following  month, and the receipt issued by the Revenue Department is treated as input VAT and claimed in the  monthly VAT return for the month that the VAT is paid.
Specific Business TaxCertain business transactions are subject to specific business tax (SBT) rather than VAT. Such business  transactions and their SBT rates are as follows:

Type of Business Transaction
SBT Rate
Banking businesses
Finance, securities and credit foncier businesses
Life insurance businesses
Pawn broker businesses
Businesses with transactions similar to commercial banking
Sale of immovable property in a commercial manner of for profit

SBT is applied on the monthly gross receipts, and a monthly tax return must be filed on or before the 15th day of the following month and the SBT concurrently paid.
Excise TaxExcise tax is levied on petroleum and oil products, non-alcoholic beverages, liquor, beer and tobacco,  certain air-conditioners, certain light fittings, crystal, passenger cars, yachts and pleasure craft, perfume  and cosmetics.
Stamp DutyThe execution of 28 different types of documents and instruments specified in the Stamp Duty Schedule  are subject to stamp duty (SD).
The rates of SD applying to some of the more common types of documents and instruments are as follows:
Type of Document or Instrument
SD Rate
Lease of land, building, other construction or floating house
Transfer of share, debenture, bond, certificate of indebtedness
issued by a company, association or organisation
Hire purchase of property
Hire of work contract
Loan of money or agreement for a bank overdraft
0.05% but subject to a maximum of
10,000 Baht
Policy of insurance against loss
Other policies of insurance
Receipt issued in connection with a transfer of or a creation of
any right in an immovable property
Receipt issued in connection with a sale, letting out on hire
purchase or transfer of ownership in a vehicle

House and Land TaxHouse and land tax is levied by local authorities and is paid on the value of houses not occupied by the owner, industrial and commercial buildings and the land in connection therewith.

The rate of tax is 12.5% of the annual rental value of the property, which is defined as the amount for which the property can be let from year to year.
Local Development TaxLocal development tax is assessed on the appraised value of land (but not including land with building  structures situated thereon), such value being

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