Basis of Thai personal income tax

Keywords: Mazars, Thailand, Tax, Personal Income Tax, Tax Resident, Thai-sourced income

26 January 2017

Thailand imposes personal income tax on income that is derived from Thai sources, regardless of the nationality of the recipient of the income, or the jurisdiction in which the payment is made or received. Thailand also imposes personal income tax on the worldwide income of a Thai tax resident.

The rules on Thai-sourced income and tax residence are as follows:

1. If the income that an individual receives is considered Thai-sourced income, regardless of where it is paid, and regardless of his tax residence status, it will be taxed in Thailand (on a cash basis) in the calendar year that he receives it.

The income will be considered Thai-sourced income if it is derived from:

(1) work performed in Thailand;

(2) business in Thailand;

(3) business of an employer in Thailand; or

(4) property situated in Thailand.

2. If such income is considered foreign-sourced income (income derived from work performed outside of Thailand, business conducted outside of Thailand, or property situated outside of Thailand) it will be taxed in Thailand only if: (1) an individual is a Thai tax resident; and (2) the individual brings such income into Thailand in the same calendar year that he receives it.

An individual will be considered a Thai tax resident in a particular calendar year if he lives in Thailand for 180 days or more in that calendar year. 

For example, based on these rules, if a Thai tax resident receives foreign-sourced income overseas on 31 December 2016, and deposits it in his foreign bank account, and then transfers it to his Thai bank account the next day (1 January 2017, the calendar year after that in which he received the income), the income would not be taxed in Thailand.

If a Thai tax resident worked partly outside of Thailand, it would be advisable for him to calculate the income received proportionally, based on the number of days that he spent working overseas versus the number of days that he spent working in Thailand. The portion based on the number of days that he spent working in Thailand would be Thai-sourced income, and subject to Thai personal income tax. The portion based on the number of days that he spent working overseas would arguably be foreign sourced income, and not taxable in Thailand if he did not bring that portion of income into Thailand in the calendar year in which he received it.