Personal income tax on Thai vs. foreign income.

Personal income tax is a legal obligation of all persons (non-juristic bodies) in Thailand. It is a tax levied on the portion of their income and is generally quite straightforward if the earnings are sourced in the country. It may, however, become less so if the income comes from foreign sources or the tax residence status is unclear.

Thai-sourced income

Thai personal income tax laws are clear about tax obligations originating from receiving Thai sourced income. In essence, any income that is created as a result of an activity taking place in Thailand is deemed taxable in Thailand in the same calendar year it is received (regardless of where it is paid and the recipient’s tax residence status).

The income is considered Thai sourced income if it is derived from:

  • Work performed in Thailand
  • Business in Thailand
  • Business of an employer in Thailand
  • Property located in Thailand

Foreign-sourced income

Similarly, the income is considered foreign when it is derived from the same activities listed above, only taking place outside of Thailand. It will be taxed in Thailand provided the following conditions are met:

  • An individual is a Thai tax resident
  • The income is brought to Thailand in the same calendar year it is received

The first condition is clear – a Thai tax resident is a person residing in Thailand for at least 180 days or more in a year. Such residents are liable to pay tax on income from sources in Thailand as well as foreign sources brought into Thailand (non-tax residents are subject to tax only on Thai sourced income).

The second condition, however, may need some clarification. For example, when a Thai tax resident earns foreign income in 2015 and does not transfer the funds to Thailand until 2016, they are not liable to pay personal income tax on that portion of the income. They would have to pay tax only if the amount was transferred to Thailand in the same year it was received – 2015.

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