Thailand has relatively low taxes, including a low corporate income tax, a progressive income tax, and a low VAT, all of which make the nation appealing to businesses. Transportation, banking, finance, and real estate are just a few of the important main sectors that are entitled to additional duties and specific regulations. Foreigners who live and work in Thailand must be ready to file taxes in both this country and their home countries, according to the Revenue Department of the Thai Ministry of Finance. Although there are many parallels between the duty systems in Thailand and the United States, you should educate yourself on the fundamentals before you start working or earning money in this state.
Thailand’s principal taxes
The three main taxes collected by Thailand’s revenue department are:
- Corporate Income Tax.
- Personal Income Tax.
- Value Added Tax.
Businesses operating here are typically entitled to a 20% standard flat corporate stipend levy rate and net taxable profits, which include business/trading stipend, passive income, and capital gains or losses subtracted from the costs incurred to produce these revenues, are taxed at this rate. Resident corporations are limited companies and partnerships that were formed in this state and registered with the Thai Ministry of Commerce. While non-resident businesses are only entitled to Thailand-specific taxation on wages earned abroad, they are subject to corporate stipend levy on all income earned worldwide.
Lower corporate taxes
If their net profits are under 3 million bahts, small businesses with paid-up capital under 5 million bahts can benefit from a 15% income duty reduction. Additionally, several unique corporate income duties are given to businesses that engage in certain activities:
- Banks are subject to a 10% net profit duty on earnings from international banking facilities.
- The duty rate for foreign businesses engaged in international transportation is 3% of gross receipts.
- 10% of gross receipts is the duty rate for foreign corporations receiving dividends from Thailand.
- 15% of gross receipts is the duty rate for foreign businesses that do not conduct business.
- Foreign businesses are subject to taxation at the rate of 10 percent.
Dividends, interests, royalties, advertising fees, service, and professional fees, and prizes are some examples of earnings that is subject to a varying withholding duty that is applied at the source of these revenues.
Individual income tax
Personal income tax is levied on income earned in Thailand by both residents and non-residents. Depending on the number of revenues, the tax rate ranges from 0% to 35%. Housing, transportation, and other non-cash benefits are all included in the definition of taxable income, which is expressed in both cash and kind. However, residents are also subject to taxation on any foreign income they bring into the nation. If a person spends 180 days or more in Thailand during a calendar year, they are considered to be a resident of Thailand.
Value Added Tax
In Thailand, a standard rate of 7% VAT is imposed on the sale of all goods, the rendering of all services, and the import of goods. All businesses with a yearly turnover of no more than 1.8 million bahts are eligible for a notable VAT exemption.
Particular business tax
Some companies are exempt from the VAT but are still subject to the specific business tax. They are typically levied in addition to local tax rates of 10%, ranging from 0.1% to 3%. Among these businesses are:
- Banking and financial services.
- Lifetime insurance.
- Trading in pawns.
- Properties such as real estate and other types of movable business.
- A royal order restricts the operation of other businesses.
Thailand income taxes for retirees
Regarding expat retirees and taxes here, the Thai embassy is very clear: “Only earnings earned inside Thailand shall be subject to tax during retirement”. As a result, you won’t be required to pay levies on any income you received from abroad. Additionally, retirees in Thailand are exempt from paying personal income duties. Keep in mind that if you have a retirement visa, you cannot work in Thailand.
