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Taxes in Thailand

The Tax Code is a basic internal-revenue law of Thailand. The underlying taxes include direct taxes (general and corporation tax on profits, OilProfits Tax) and indirect taxes (goods and services tax, customs duties, some business tax, excise levy and levy on coats of arms, property tax).

Let us talk to you about the most important taxes that take place in foreigner’s life inThailand.

As a first step, we speak about value-added tax (or VAT).

Value-added tax is paid by all business entities – goods and service fabricators, intermediaries on each good or service production phase. Until today effective tax rate is 7%.

Any private or juridical person who regularly supplies goods or provides services and has an annual turnover exceeding 1.8 million Baht is subject to VAT in Thailand. Service is deemed to be provided in Thailand if the service is performed in Thailand regardless where it is utilized or if it is performed elsewhere and utilized in Thailand.

The import merchants also have to pay VAT not matter if they are registered in Thailand or not. VAT will be collected at the time of importation of goods.

Some types of activity in Thailand are exempt from VAT.

Here they are:

  • Small business owners (annual turnover is less 1.8 million Baht;
  • Companies that are involved in selling and importing unprocessed agricultural products and such goods as fertilizers, animal feeds, pesticides and so forth;
  • Companies that are involved in selling and importing newspapers, magazines and books;
  • Some other services such as transport operations, health, education and so forth.

VAT return (Form VAT 30) together with tax payment, if any, must be submitted to the District Revenue Office within 15 days of the following month. The Company has to pay double penalty charge in case of amount of business outnumbers 1,8 million Baht and Company is not VAT-registered taxpayer.

The Personal Income Tax (PIT)

The Personal Income Tax (PIT)– this is a direct tax on income of individual taxpayers who earn an income both inside and outside Thailand. The person should submit a tax return and pay tax. Taxation year for private persons is the calendar year that ends on the 31th of December. There are two classifications of taxpayers: Resident and Nonresident. A resident taxpayer is someone who has resided in Thailand for a period that totals more than 180 days. The resident is subject to personal income tax on all income derived from sources within Thailand. Profit received from foreign sources is subject to Thai tax if it has arrived to Thailand in the same year it was obtained. For Non-resident, only incomes earned in Thailand are subject to taxation.

Tax calculated at progressive rates ranging from 10% to 37%.

Different types of income subject to withholding personal income tax, divided into 8 categories:

  1. Wages Income
  2. Income from direct employment provided by the employment Office or services.
  3. Income from intangible assets, literary property, franchising, patent, other rights, rent and income in the form of annual payments received under the will, another document or decision of the court.
  4. Interest (including interest on Bank deposits in Thailand), the investor bonuses, income from the merger or division of the company, income from the transfer of shares.
  5. Income from renting out real properties, from breach of contract for instalment purchase.
  6. Income from jurisprudence, engineering, architectonics, accounting.
  7. Income from work to task then the contractor provides essential materials besides tools.
  8. Income from business, commerce, agriculture, industry, transport and other profit not mentioned in paragraphs 1-7.

Tax on income from renting an apartment in Thailand.

Many people purchase the property in the land of smiles for renting it in store. However, only a few amount of people think about responsibility for paying a profit tax to treasury of the Kingdom. However, Income from renting out real properties is at number 5 in list of eight categories.

Tax code of Thailand stipulates that the income that was derived from the lease of personal property for any period on the territory of the country subject to the relevant tax. Progressive tax rate will depend on the amount of income from renting out real properties per annum. Income amount under 150 thousand baht is not taxed. If Income more than 150 thousand Baht but less than 500 000 Bath then become effective the tax rate of 10 %. Then an annual income is about to 1 million Bath the tax rate becomes twice more.  In case when the annual income from the rental of real estate is 1-4 million baht, the tax rate is 30 percent. When income more than 4 million baht, the tax rate is maximum and amounts 37 %.

However, when estimating tax liability you should remember that the sum will decrease by 30 %, and another 30 000 Bath will be subtract from the remaining sum.

For example, if the annual income from the rental of your apartment amounted to 200 thousand baht, after simple calculations we obtain that the taxable amount is only 110 thousand baht, which, as mentioned above, is not taxed.

The estate tax.

There are two kinds of property tax in Thailand - land tax and local development tax.

Tax on land and buildings are subject to the owners of houses, buildings and land, leased or are in commercial use. The tax rate is 12.5% of the annual value of the actual or estimated property. The local development tax is subject to any owner of the land.

The tax Rate varies depending on the ratable value of the property established by local authorities. If you are an apartment owner and use it for your own purpose, you are not taxed on apartment ownership as it takes place in Russia.

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