How to Handle and Decrease Your Thai Income Taxes While Working in Thailand

When working in Thailand, you must pay income taxes. Depending on your salary, taxes can be less than…

When working in Thailand, you must pay income taxes.

Depending on your salary, taxes can be less than a thousand baht or over ten thousand baht.

This article will show you what you need to know about taxes and how to decrease your taxes while working in Thailand.

Who Needs to Pay Personal Income Tax?

Simply speaking, anyone who makes income while living in Thailand must pay income tax.

This includes people who make money from abroad while living in Thailand, with two main exceptions:

  • your annual income is less than 150,000 baht
  • your home country has a double tax treaty with Thailand

150,000 baht

150,000 baht per year is the maximum amount of income that’s under tax exemption. If you make more than this per year, you have to pay taxes.

Double Tax Treaty

Thailand has a double tax treaty with most countries in the world. If you already pay income taxes in your home country then you don’t have to pay taxes in Thailand, and vice versa.

Big Misunderstanding on 180 Days Rule

Many people think that if they live in Thailand for less than 180 days per year, they won’t have to pay Thai income tax.

This is partially true. It only applies to those who make money from abroad and live in Thailand less than 180 days.

For example, if you make money overseas and live in Thailand 179 days out of the year, you don’t need to pay Thai income tax.

But if you live in Thailand for 180 days or more, you need to pay taxes.

And even if you live in Thailand for less than 180 days but make your money in Thailand, you also need to pay Thai income tax.

How Much Do You Need to Pay?

Thailand’s personal income tax is calculated by your annual income minus your tax deduction, multiplied by your tax rate.

Thailand has a progressive tax system with the following rates:

  • 0-150,000 baht exempt
  • 150,000 – 300,000 baht 5%
  • 300,000 – 500,000 baht 10%
  • 500,000 – 750,000 baht 15%
  • 750,000 – 1,000,000 baht 20%
  • 1,000,000 – 2,000,000 baht 25%
  • 2,000,000 – 4,000,000 baht 30%
  • over 4,000,000 baht 35%

Assuming your annual income is 600,000 baht a year and your tax deduction is 60,000 baht, the total amount subject to tax is 540,000 baht.

This means you have to pay 33,500 baht of personal income tax.

Here’s the calculation:

  • between the income range of 0 – 150,000 baht, you don’t have to pay anything
  • between the income range of 150,000 – 300,000 baht, you have to pay 7,500 baht
  • between the income range of 300,000 – 500,000 baht, you have to pay 20,000 baht
  • between the income range of 500,000 – 540,000 baht, you have to pay 6,000 baht

How to Decrease Your Taxes

There are a five* ways you can decrease how much you pay in personal income tax.

  • personal expenses
  • insurance
  • investment
  • donation
  • other

*There are more tax deduction available. But we don’t add them here because they’re only for Thais.

Personal Expenses

There are six expenses you can use for tax deductions:

  • expenses for you: 60,000 baht
  • expenses for your spouse: 60,000 baht
  • expenses for your kid(s): 30,000 baht per kid
  • expenses for baby Delivery: not over than 60,000 baht
  • expenses for your parent(s): 30,000 baht per parent
  • expenses for taking care of people with disabilities: 60,000 baht

Expenses for You

This deduction is for everyone. When you file taxes you get a 60,000 baht deduction.

Expenses for Your Spouse

If you’re legally married and your spouse doesn’t make any income, you’ll get a 60,000 baht deduction.

If your spouse isn’t Thai, he/she must live in Thailand for more than 180 days of the taxable year.

Expenses for Your Kid(s)

If you have kids, you get a 30,000 baht deduction for each kid under these conditions:

  • your kid(s) must be younger than 20 years old OR between 21 and 25 years old but currently studying in a university or diploma school
  • your kid(s) must make less than 30,000 baht annual income

Expenses for Baby Delivery

This is a new tax deduction introduced in 2018. If you have a baby, you can use the actual cost as a tax deduction. The maximum deductible amount is 60,000 baht.

You can use the actual cost of baby delivery as a tax deduction.

Expense for Your Parent(s)

If you take care of your parents or your spouses’ parents and they are older than 60 and make less than 30,000 baht a year, you get a 30,000 baht tax deduction per parent.

They need to be in Thailand for more than 180 days on the taxable year.

This means if you take care both of your parents and your spouses’ parents, you get a 120,000 baht deductible per year.

But this tax deduction can only be used by one spouse.

For example, if you claim that you take care of your spouse’s dad, your spouse can’t claim the same on their taxes.

Expenses for Taking Care of People with Disabilities

If you take care of people with disabilities, you get 60,000 baht tax deduction per person.

But the disabled need to have less than 30,000 baht income per year and medical certificate from a recognized medical institute.

This tax deduction can be combined with other benefits. For example, if the person with disabilities is your spouse and makes less than 60,000 baht per year, you get 120,000 baht tax deduction in total.

Insurance

There are three insurance types you can use for tax deduction:

  • up to 9,000 baht for social security
  • up to 100,000 baht for life insurance
  • up to 15,000 baht for health insurance

Social Security

Everyone who works in Thailand must pay Thai Social Security. It’s 750 baht a month, 9,000 baht a year, in which the company deducts from your salary and pays to Thai Social Security on your behalf.

You can use the whole amount you pay into social security as a tax deduction.

Thai Social Security is another tax deduction you can use.

Life Insurance

You can get up to a 100,000 baht tax deduction for buying the life insurance from an insurance company in Thailand.

The life insurance must provide at least 10 years coverage with less than 20% money back per year.

Health Insurance

You can get up to a 15,000 baht tax deduction from buying health insurance for yourself or for your parents from an insurance company in Thailand. It can be any health insurance plan.

If buying for your parent, you get the deduction if they live in Thailand for more than 180 days per year.

Investment

LTFs and RMFs are the two main tax deductions in this category. Each comes with up to a 500,000 baht tax deduction.

LTFs

LTFs, or long-term equity funds, are a great way to reduce taxes. You can buy LTFs from any bank as much as you want.

But the maximum tax deduction is going to be 15% of your annual income with the maximum tax deduction amount at 500,000 baht.

For example, if your annual income is 600,000 baht, only 90,000 baht can be used for tax deduction.

However, you need to hold LTFs for at least seven calendar years before you sell them.

RMFs

RMFs are similar to LTFs with the maximum tax deduction of 15% of your annual income, or 500,000 baht per year.

But it’s not an optimal choice for expats since:

  • you need to buy at least 5,000 baht worth every year
  • you must be at least 55 years old before you can sell them

Donations

When you donate to legit organizations recognized by the Thai Revenue Department, you can use those donations to reduce your taxes.

What you need to do is ask for a donation receipt and file it during tax season.

The maximum tax deduction amount is 10% of your annual income after using other tax deduction.

For example, if you have 600,000 baht annual income with a 60,000 tax deduction, the maximum tax deduction from donation is 10% of 540,000 baht, which is 54,000 baht.

If you donate to educational institutes, sport societies, and hospitals, the tax deduction is 2 times of the actual donation. For example, if you donate 1,000 baht, you get a 2,000 baht tax deduction.

The Revenue Department lists the educational institutes and sport societies on their website. They include over 50,000 educational institutes and 71 sport societies under the Sports Authority of Thailand.

For hospitals, you can donate to any government hospital in Thailand, including medical schools and the Thai Red Cross Society.

If you donate to other social organizations, including temples and volunteer foundations, the tax deduction is the same as actual donation.

Other

There are other types of tax deductions. They’re subject to change every year depending on government policy.

The interesting tax deduction types under this category are:

  • paying up to 100,000 baht in mortgage interest
  • spending up to 15,000 baht while traveling in Thailand
  • spending up to 15,000 baht when shopping in Thailand

Mortgage Interest

If you pay interest on your mortgage in Thailand, you can use the interest you pay as a tax deduction, with the maximum amount being 100,000 baht per property and per person.  

For example, if you have a mortgage on a condo you can either use the maximum 100,000 baht tax deduction for yourself or split it 50,000 each to you and your spouse.

Or if you have multiple mortgages, the maximum amount you can use for tax deduction per place is 100,000 baht.

Traveling in Thailand

Traveling in Thailand comes with 15,000 baht tax deduction if:

  • you travel to specific provinces listed by the Revenue Department, which they update every year
  • you travel during a specific period listed by the Revenue Department, which they update every year
  • you pay for hotels or tours registered with the Tourism Authority of Thailand

If you want to use this tax deduction benefit, make sure you ask for a tax invoice from hotel you stay in or the tour service you use.

You can’t use invoices from hotel booking sites like Agoda or Booking.

Shopping

This is similar to traveling. You get a 15,000 baht tax deduction if:

  • you shop during a specific period, which is usually from October to December
  • you have and file shopping tax invoices

Tax Deduction Planning

After knowing all the available tax deduction options, the next step is to plan your taxes.

In general, there are two things you have to do:

  • calculate how much you need to pay tax
  • look at the tax deductions that are most suitable for you

When calculating your taxes, always include the 60,000 baht personal expense as a tax deduction. It’s available for everyone.

If you work in a Thai company, include another 9,000 baht tax deduction for social security.

Then you know how much taxes you have to pay.

Normally, the tax deduction options are valuable for any taxable amount that’s above 500,000 baht at the tax rate of 15%.

Two recommended tax deductions for this taxable range are LTFs and health insurance.

If you have high taxable income, you should look at the donation option and find a place where you can donate and get twice the tax deduction. It’s going to save you a lot of money.

This is why corporations love to donate to educational institutes or hospitals.

And always remember the other tax deductions that you’re eligible for. Many people have a baby. But they don’t make the claim.

Paying Income Tax

If you work in a Thai company, normally, the company’s accountant deducts income tax from your salary every month and pays it to the Revenue Department on your behalf.

This means that you get you salary minus the taxes and social security.

Your pay slip should state clearly how much taxes and social security the company pays on your behalf.

If you plan on using tax deductions, such as buying LTFs or health insurance, you should inform your company’s accountant so that they can pay you the right amount of tax for you.

Otherwise, you have to wait for the Revenue Department to refund the outstanding amount to you, which can take many months.

If the company doesn’t pay taxes for you, you have to do it during tax season, which is between January and March of every year through the Revenue Department’s website or at any Revenue Department in your area.

Then, you can pay taxes by wire transfer through any bank in Thailand.

How to File Taxes

Tax season in Thailand is between January and March. You can file taxes on the Revenue Department’s website.

If you work with a company in Thailand, they file taxes for you. All you have to do is give them all your tax deduction proof.

If you want to file your own taxes, you must be able to read Thai or find someone who can read Thai, since everything is in Thai.

Here’s what you need to do:

  • head to the Revenue Department website and register a new account if it’s your first time filing income taxes—you only need your passport number and your address in Thailand
  • after a successful registration, log in to the tax filing system
  • the system is very straightforward—you need to enter your annual income and tax deduction, then it calculates all the taxes for you
  • if you pay more tax than what you should pay, you can ask them for a refund and they send a check to your address in a few months
  • if you have to pay more taxes, they give you an invoice and you need to pay the Revenue Department through a wire transfer

What you need when filing taxes:

  • 50 Tawi: this is the document issued by your employer summarizing your annual income, paid taxes, and paid social security in the taxable year
  • tax deduction proof like LTF receipts, health insurance receipts, and so on

You don’t have to send these document to the Revenue Department when filing taxes but they might ask for them.

You can send them by uploading the receipts to their system in PDF form or send a copy to the Revenue Department in your area.

If you plan on using deductibles, you should keep original receipts for at least five years.