From January 1, 2024, Thailand’s Revenue Department has rolled out new tax regulations affecting how foreign income is taxed. This significant change, outlined in Departmental Instruction No. Paw 161/2566, aims to ensure that income earned abroad is properly taxed when it is brought into Thailand.
Who is Affected?
The new rules apply to:
- Thai citizens.
- Thai residents who filed taxes in the previous year.
- Foreigners who have lived in Thailand for at least 180 days in a year.
Income that falls under this regulation includes wages, business income, and passive income such as interest, dividends, and rental income.
Tax Rates
The tax rates for annual income are progressive:
- Up to 150,000 THB: Exempt
- 150,001 to 300,000 THB: 5%
- 300,001 to 500,000 THB: 10%
- 500,001 to 750,000 THB: 15%
- 750,001 to 1,000,000 THB: 20%
- 1,000,001 to 2,000,000 THB: 25%
- 2,000,001 to 5,000,000 THB: 30%
- Over 5,000,000 THB: 35%
Major Changes
Before this new regulation, Thai residents only paid taxes on foreign income if it was brought into Thailand in the same year it was earned. This created a loophole that the new rules aim to close. Now, all foreign income must be declared and taxed in the year it is earned, irrespective of when it is brought into Thailand. This change ensures a fairer tax system by making sure all income, whether earned domestically or internationally, is subject to taxation.
Examples
- Long-term Stay and Foreign Employment: A Thai resident who spends more than 180 days in Thailand and earns a salary from the UK must pay Thai income tax on that salary.
- Foreign Resident with Thai Employer: A person living in Australia who is paid by a Thai employer must pay Thai tax on that income.
- Short-term Assignment: An individual working for a Japanese company in Thailand for less than 180 days will not be subject to Thai tax due to the Thailand-Japan double tax agreement.
Double Tax Agreement (DTA)
Thailand has agreements with 61 countries to prevent double taxation. These agreements allow individuals to pay tax in the country where they are residing, which helps avoid the financial burden of being taxed twice on the same income.
Conclusion
It’s essential to stay informed about these changes and seek professional advice to manage tax obligations effectively. These new regulations highlight the need for compliance and careful financial planning for anyone with foreign income. For personalized advice, consult with a qualified tax professional.
For more information, visit Sukhothai Inter Law or contact us at:
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- Phone: +662 212 6866-7
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- Email: info@sukhothaiinterlaw.com
