Guide to Thailand’s Tax Systems and Rates in 2024

If you’re searching for a place where the tax rate is 0% (at least for the first bracket), then look no further. 

You may be looking to set up your business in Thailand, not only for its relatively central location in Asia but also because of its relatively straightforward and low-tax environment. You may even want to live here and need to know about the personal income tax system. 

This guide breaks down the key components of Thailand's tax structure. 

We'll explore how Thailand levies taxes on businesses, including value-added tax (VAT) and specific business tax (SBT). Additionally, you'll learn which types of income are subject to taxation, such as capital gains and certain foreign-sourced income. Finally, we'll look into the deductions available to help minimize your tax liability.

By the end of this guide, you'll have a solid foundation in Thai taxation, enabling you to make informed decisions for yourself and your business.

Thai-incorporated companies are subject to taxation on their global earnings. Foreign companies, meaning those established in foreign jurisdictions, are taxed on profits generated from conducting business within Thailand.

For individuals, you are taxed based on your gross income. However, if your income is remitted into Thailand in a different calendar year than when it was earned, it may not be considered taxable income in that accounting period. 

Thailand follows a self-assessed tax system, meaning you must estimate your own taxes and make the appropriate filing. If you file incorrectly, the Revenue Department, which operates under the Ministry of Finance, may take action to correct this – either require that you pay a fine with interest or, on rare occasions, give money back if you overpaid.

Corporate Income Tax Rate in Thailand

The Thailand tax rate for companies is progressive, meaning that the income tax rate increases as the assessable income increases. 

In simpler terms, the more money you make, the more you will be taxed. 

Personal Income Tax Rate in Thailand

While non-residents can own businesses, it is still common for business owners with companies incorporated in Thailand to end up living here. It is also common for them to pay themselves a remuneration through their company. If you plan on living here, then you will likely be considered a taxpayer, thus subject to the personal income tax. 

However, you will not be a taxpayer if you stay in Thailand only for the short term. You are considered a non-resident if you stay in Thailand for fewer than 180 days of the tax year. Note that for businesses, the calendar year and the tax year may differ, as the Revenue Department allows you to define your accounting period for the first year of your company incorporation.  

What Is Thailand’s Value-Added Tax (VAT)?

VAT in Thailand is a consumption tax applied to the sale of most goods and services. Though typically the VAT is 10%, Thailand currently levies a 7% Value-Added Tax (VAT) on most goods and services. The plan is to increase the rate back to 10% by September 2024. 

Most businesses making over 1.8 million baht a year need to register as VAT operators. 

What Is Specific Business Tax (SBT)?

Specific Business Tax is an alternative tax for certain businesses excluded from VAT. The rates and business activities included for SBT are as follows:

Understanding what income is taxable in Thailand is crucial for ensuring compliance with tax regulations and optimizing tax efficiency. In Thailand, both individuals and corporations are subject to different tax obligations based on the source and nature of their income. This section will clarify what income is taxable, the applicable tax rates, and potential exemptions.

Foreign-sourced Income for Individuals

For individuals, Thailand levies personal income tax on both residents and non-residents. Residents are taxed on their worldwide income, including income earned from foreign sources. Non-residents, on the other hand, are only taxed on income earned within Thailand. 

Note that an exemption exists if foreign-sourced income is not remitted into Thailand within the same calendar year it was earned. 

Thai-sourced Income for individuals

Non-residents are taxed only on income earned within Thailand. This includes all types of income, such as employment income, freelance remuneration, and other earnings. 

For residents, while all income is generally taxable, remember that it depends on when the foreign-sourced income is remitted into Thailand, as mentioned above. 

Corporate Income Tax 

Thai-incorporated companies are subject to corporate income tax on their worldwide income, including income earned from foreign sources. This means that if a Thai-incorporated company generates income abroad, that income is taxable in Thailand. In contrast, foreign companies operating in Thailand without being incorporated here are only taxed on the income generated from activities within Thailand. Additionally, foreign companies may be subject to a final withholding tax on certain types of income, such as interest, royalties, and dividends, depending on the presence of a double tax treaty between Thailand and the respective country.

Note that corporate income tax is levied on a company's annual net profit. Small and medium-sized enterprises (SMEs) with paid-up capital under THB 5 million and annual sales below THB 30 million may qualify for reduced tax rates. Otherwise, the rates remain the same as above.

Examples of Income That Is Not Taxed

Let’s say you are a resident and it is January 1st, 2025. Now you remit foreign-sourced income that was earned on January 2nd, 2024 into Thailand. That income would not be taxable as income in the year of 2024. 

Another example is if you are a non-resident of Thailand for tax purposes (meaning you were in Thailand for fewer than 180 days) and your income is later remitted into Thailand. That income would also not be taxable. 

How Is Capital Gains Taxed?

Capital gains in Thailand are typically treated as ordinary income and are subject to Thai tax. However, there are exemptions for gains on certain investments, such as those listed on the Stock Exchange of Thailand that are promoted by the Board of Investment (BOI) or in specific mutual funds. 

For businesses, you must file two returns at two different time periods.

Firstly, the annual tax return (Form PND 50) must be filed within 150 days after the end of the fiscal year. Additionally, you must also file the half-year tax return (Form PND 51), which is required for companies with net revenues in Thailand.

Individuals must file their personal income tax returns by March 31st of the following tax year.

Tax deductions play a critical role in minimizing tax liabilities, by decreasing the amount of Thai baht earned that is considered taxable income. Understanding these deductions can significantly impact the net income reported and the overall tax burden.

Corporate Income Tax Deductions

Thailand offers various tax deductions for businesses. Common deductions include ordinary business expenses, depreciation, and interest on business loans. 

Additional incentives exist for R&D, employee training, donations, and very specific expenses such as bio-degradable products or COVID-19-related costs.

Personal Income Tax Deductions

Individuals in Thailand can reduce their personal income tax through deductions for personal allowances, dependents, health and life insurance, mortgage interest, and charitable donations. 

Note that because your employer may have already paid the Revenue Department via withholding tax, you will need to file a claim for the deduction to receive your tax refunds. 

Relevant information about deductions is in Chapter 3 of the Thai Revenue Code.

H3: Board of Investment (BOI) Incentives for Businesses

Thailand's Board of Investment (BOI) offers substantial tax incentives for businesses from Hong Kong, China, Japan, and other Asian countries looking to establish operations in Thailand. 

These incentives can include corporate income tax exemptions or reductions, especially for companies with significant investments in Bangkok and other strategic locations in Thailand.