:: Taxation in Thailand

B. Special exemption from VAT

Operators earning less than 600,000 baht a year
Sale or import of agricultural products, livestock, and agricultural inputs, such as fertiliser, and feed
Sale or import of published materials and books
Auditing, legal services, health services and other professional services
Cultural and religious services
Educational services
Services provided by employees under employment contracts
The sale of goods as specified by Royal Decree
Goods exempt from import duties under the Industrial Estate Authority of Thailand (IEAT) Act
Domestic transport (excluding airlines) and international transport (excluding air and sea lines).

C. Specific Business Tax (SBT)
A specific business tax of approximately three percent is imposed, in lieu of VAT, on the following businesses:

Commercial banks and similar businesses
Insurance companies
Financial securities firms and credit fonciers

Type of business/Tax rate
Banking or similar business; finance, securities and credit foncier business - 3%
Insurance (life or insurance against loss) -2.5%3%
Pawnshop - 2.5%
Sale of immovable property in a commercial manner for profits - 3%

• Sales on the stock exchange
• Sales of non-movable properties
• Pawn shops.

The SBT is computed on the monthly gross receipts at the following rates:

D. Remittance Tax
Remittance tax applies only to profits transferred or deemed transferred from a Thailand branch to its head office overseas. It is levied at the rate of 10 percent of the amount to be remitted before tax, and must be paid by the remitting office of the offshore company within seven days of the date of remittance.

However, outward remittances for the purchase of goods, certain business expenses, principal on loans to different entities and returns on capital investment, are not subject to an outward remittance tax. The tax does not apply to dividends or interest payments remitted out of Thailand by a company or partnership; these are taxed at the time of payment.

Section 70 of the Revenue Code addresses in come paid to foreign juristic persons. When a company or partnership incorporated under a foreign law and not carrying on business in Thailand receives "assessable income" paid either from or in Thailand, the payer is usually required to deduct income tax at a rate of 15 percent of the gross remittance. In 1992, standard deductions were abolished, making the flat 15 percent rate effective on all assessable income except for dividend income, on which the 20 percent withholding tax was reduced to 10 percent.

 


There is no withholding tax on capital gains or on the share of profit paid to foreign investors in mutual funds, of in the SET. Physical remittance of funds may not be necessary in order to incur either the dividend or interest tax liabilities, which may be incurred by making book entries.

3. Personal Income Tax
Every person, resident or non-resident, who derives assessable income from employment or business in Thailand, or has assets located in Thailand, is subject to personal income tax, whether such income is paid in or outside of Thailand. Exemptions are granted to certain persons, including United Nations. Officers, diplomats and certain visiting experts, under the terms of international and bilateral agreements. 

Personal income tax is applied on a graduated scale as follows:

Net Annual Income (Baht) 

Tax Rate 

0 -  80,000 - 0%
80,001 -   100,000 - 5%
100,001 - 500,000 - 10%
500,001 - 1,000,000 - 20%
1,000,001 - 4,000,000 - 30%
>4,000,001 - 37%

Individuals residing for 180 days or more in Thailand for any calendar year are also subject to income tax on income from foreign sources if that income is brought into Thailand during the same taxable year that they are a resident.

Exchange control laws stipulate that all foreign exchange earned by a resident, whether or not derived from employment or business in Thailand, and brought into Thailand, must be sold to or deposited with commercial banks within 15 days, unless permission for an extension is granted.

Personal income taxes and tax returns must be filed prior to the end of March of the year following the year in which the income was earned.

A standard deduction of 40 percent, but not in excess of 60,000 baht, is permitted against income from employment or services rendered or income from copyrights. 

Standard deductions ranging from 10 percent to 85 percent are allowed for other categories of income. In general, however, taxpayers may elect to itemise expenses in lieu of taking standard deductions on income from sources specified by law. 

Other types of taxable income and the rate of standard deduction include:

Interest, dividends, capital gains on the sale of securities: Forty percent but not exceeding 60,000 baht.
Rental income: Ten percent to 30 percent depending on type of property leased.
Professional fees: Sixty percent for income from medical practice, 30 percent for others.
Income derived by contractors: Seventy per cent.
Income from other business activities: Sixty-five percent to 85 percent depending on the nature of the business activity.