Personal income tax on Thai vs foreign sourced income.

This guide demonstrates the difference between Thai-sourced income and foreign-sourced income.

Taxpayers in Thailand are categorised into residents and non-residents. Only residents are taxed on both Thai- and foreign-sourced income, while non-residents are taxed on Thai-sourced income.

Let’s learn more about personal income tax, Thai-sourced income and foreign-sourced income.

What is personal income tax?

Personal income tax is a legal obligation of all persons (non-juristic bodies) in Thailand.

It is a tax levied on the portion of an individual’s income and is generally quite straightforward if the earnings are sourced in the country.

Thai-sourced income

Regardless of nationality, Thailand will impose personal income tax on income that is generated from Thai sources.

Thailand’s personal income tax laws are clear about tax obligations originating from receiving Thai sourced income. Any income 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.

What income is Thai-sourced income?

Income is considered as 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

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Foreign-sourced income

Income from activities mentioned above is also considered foreign-sourced income, but the activities take place outside of Thailand.

Foreign sourced income will only be taxed in Thailand if the following conditions are met:

• The individual is a Thai resident
• The individual brings income into Thailand in the same calendar year it is received

An individual is considered as a Thai tax resident if a person has lived 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 applies when foreign income is brought into Thailand in the same year as it is earned.

For example, when a Thai tax resident earns foreign income in 2019, which could be from employment in another country or from other foreign sources such as capital gains, rental income and interest income, and does not transfer the income to Thailand until 2020, the individual will not be liable to pay personal income tax on that portion of income. Income tax would have been paid if the income was transferred to Thailand in 2019.

Conclusion

The main difference between Thai-sourced income and foreign-sourced income is that only resident taxpayers are liable to pay personal income tax on both sources of income. If you are a personal income taxpayer in Thailand, we recommend engaging with Acclime’s tax services.