For purposes of taxation, anybody who had lived in Thailand for more than 180 days is considered a resident of the country. Thailand residents are required to pay taxes on all income earned within and outside Thailand. Non-residents or those who have stayed in Thailand for less than 180 days per year will only be required to pay taxes on the income earned only within Thailand. Even those without a work permit but earn income in Thailand are not exempt from paying taxes.
To begin with, any expat working in Thailand must have his own tax ID number. This can be issued by the tax office after presenting passport or ID card. You will also need to justify the reason for needing a tax ID number.
Personal Income Tax
All earnings that are considered to be assessable are categorized as Personal Income Tax. This includes non-cash payments such as accommodation or the use of a car. Personal Income Tax is classified as follows:
Deductible Expenses and Allowances
Taxpayer may deduct the Deductible expenses and allowances from his assessable income before applying the tax rate. This will lower the taxpayer’s tax base. In essence:
Taxable Income = Assessable income less deductions (expenses) less allowances
A person completing a tax return will start with the assessable income amount less deductions such as expenses, then deduct any personal allowance. The remaining amount will be the amount that will be subject to tax.
The following personal allowances are allowed in Thailand:
Tax Exemptions and Tax Rates
Employers deduct a certain amount corresponding to withholding tax at source. This accumulated amount will be offset against the tax bill when filing a tax return, thus reducing the possibility of paying high tax amount.
The Thai tax year begins from 1st January to 31st December and tax return should be filed with the tax office by 31st March of the following year. Prompt payment of tax is encouraged in order to avoid incurring penalties for late filing and payment.
Tax levied on every individual is common all over the world. So, before moving to another country, knowing how taxation works would help you decide whether the move would be more beneficial or not. Make sure that you will consult a reputable accounting firm that has experience in the field of taxes paid by expats to accommodate all questions and clarifications that would help you create an educated decision. Here is a sample of an accounting firm that can help you with taxes.
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