Becoming a tax resident in Thailand means paying income tax in the country. But, it’s not just the tax residents who must pay taxes on their income in Thailand. Even non-residents might be required to pay tax in Thailand, for example, through corporate taxes or withholding taxes. The Thai tax system can be complicated to understand, especially for foreigners. Therefore, this article aims to simplify the regulations on tax residency in Thailand and explain how to become a tax resident in Thailand.
Understanding Thailand’s tax system
Before you dive into establishing your tax residency in Thailand, it’s essential to understand the basics of Thailand’s tax system, which the Thai Revenue Code controls. The country operates on a territorial basis, meaning both residents and non-residents only pay tax on income sourced in Thailand. However, tax residents may find certain exemptions, which can be beneficial, especially for those with global incomes.
Foreigners should be aware of the importance of the tax residency certificate in Thailand, as it plays a crucial role in tax procedures and potential treaty benefits. Moreover, understanding Thailand’s elite visa tax residency and Capital Gains Tax in Thailand will provide a clearer financial picture for expats.
TIN in Thailand
A Tax Identification Number (TIN) in Thailand is a 13-digit tax ID number, used to register individuals or corporations for various tax-related functions in Thailand. To become a tax resident in Thailand, one must live in Thailand for at least 180 days a year and apply for a TIN in Thailand. Whether foreigners are dealing with income tax in Thailand or corporate income tax in Thailand, having a TIN is a constant requirement.
When are you considered a tax resident in Thailand?
A tax resident in Thailand is defined as anyone residing in the country for 180 days or more in a calendar year. Thai tax residents must pay taxes on income earned in Thailand and income earned in foreign countries during the same tax year.
The Thai tax residency status also applies to foreigners regardless of their visa type, meaning even digital nomads, retirees, or those on non-immigrant visas can become tax residents in Thailand.
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Requirements to become a tax resident in Thailand
Becoming a tax resident in Thailand involves several procedural steps and meeting specific criteria. Below is a comprehensive list of requirements that individuals must fulfill to establish their tax residency status in Thailand:
- Being physically present in Thailand for 180 days or more within a calendar year.
- Having a valid visa that allows a long-term stay in Thailand (this could be a Non-Immigrant Visa, a Retirement Visa, a Thailand Elite Visa, etc.)
- Having a valid passport.
- Obtaining a TIN from the Thai Revenue Department.
- Showing proof of income.
After meeting all the above requirements for tax residency in Thailand, you can apply for a tax residency certificate from the Thai Revenue Department. This certificate is proof of your tax status in Thailand and is particularly important for availing of benefits under double taxation agreements.
Become a tax resident in Thailand in 6 steps
Below is a step-by-step guide to ease the process for foreigners to become a tax resident in Thailand:
Step 1: Secure a long-term visa in Thailand
Start by obtaining a long-term visa suitable for your situation, such as a Non-Immigrant Visa, Retirement Visa, or the Thailand Elite Visa. This step is crucial as it legally establishes your intention to stay in Thailand for an extended period and is a prerequisite for tax residency.
Step 2: Obtain a Tax Identification Number (TIN)
Visit the local office of the Thai Revenue Department to apply for a Tax Identification Number (TIN). You must bring the necessary documents, including your passport and visa. The TIN is essential as it is used in all tax-related activities and formalities in Thailand.
Step 3: Maintain a record of stay
Ensure you’re in Thailand for at least 180 days in a calendar year, as this physical presence is a crucial criterion for tax residency in Thailand. Keep detailed records, such as stampings in your passport or any travel documents, as proof of your stay in the country.
Step 4: File your tax returns
If you’re earning income in Thailand, you must file a personal income tax return annually. This process involves declaring your worldwide income and can be done independently or with the assistance of a local accountant or tax advisor.
Step 5: Apply for a Tax Residency Certificate
Once you meet the Thai tax residency criteria, you can apply for a tax residency certificate from the Thai Revenue Department. This document is proof of your tax resident status and is necessary for many financial and legal transactions, especially if you’re looking to benefit from double taxation agreements.
Step 6: Follow the tax regulations in Thailand
You can establish yourself as a tax resident in Thailand by following these steps. Each step is crucial and requires attention to detail and, in some cases, the assistance of professionals to ensure all procedures are correctly followed.
Which taxes do Thai tax residents pay?
Various taxes apply to your income and financial activities within the country when you are a tax resident in Thailand. It’s crucial to understand each tax type and the corresponding rates to ensure compliance and avoid legal issues.
Personal Income Tax
This tax applies to your global income if you’re a tax resident in Thailand. The progressive rates range from 0% to 35%, depending on your income bracket.
| Taxable income | Tax rate |
|---|---|
| Less than ฿ 150,000 ($4,200) | 0% |
| ฿ 150,000 ($4,200) to Less than ฿ 500,000 ($14,000) | 10% |
| ฿ 500,001 ($14,000) to ฿ 1 million ($28,000) | 20% |
| ฿ 1 million ($28,000) to ฿ 4 million ($112,000) | 30% |
| ฿ 0 billion ($112,000) | 37% |
Capital Gains Tax
There is no separate Capital Gains Tax in Thailand for individuals. However, any profit from the sale of assets, such as real estate, is considered part of your taxable income, subject to Personal Income Tax rates.
Withholding tax
Certain types of income, such as interest, dividends, and royalties, are subject to withholding tax. The payer deducts tax at source, and rates vary depending on the income type, generally ranging from 10% to 15%. Thailand’s withholding tax rates vary depending on whether someone is a tax resident or non-tax resident in Thailand. If someone is not a tax resident, the withholding tax rates can vary depending on the country of residence.
How to leave Thailand as a taxpayer?
Leaving Thailand as a taxpayer is not just about packing your bags and booking a flight. It’s essential to ensure all tax obligations are settled, and your tax records are current. You already have a Thai certificate of residence but must obtain a Tax Clearance Certificate, also known as Por Ngor Dor 92, to avoid issues with the government. You can get this certificate by notifying the Revenue Department of Thailand about your intention to leave the country as a tax resident, whereafter you can obtain the Tax Clearance Certificate.
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Frequently Asked Questions (FAQs)
What are the benefits of tax resident Thailand?
Becoming a tax resident in Thailand offers several advantages, including potential tax exemptions on foreign income, access to tax treaties to avoid double taxation, and more straightforward financial management within Thailand.
What are the requirements for a tax residency certificate in Thailand?
The requirements to obtain a tax residency certificate in Thailand include staying in Thailand for 180 days or more within a calendar year, holding a valid long-term visa, and having a Tax Identification Number (TIN).
Do foreigners have to pay taxes in Thailand?
Foreigners are required to pay taxes in Thailand if they earn income while residing in the country. This rule, set by the Thai Revenue Code, applies to various income types, including employment income, rental income, or any gains from business activities conducted in Thailand.
What happens if you don’t pay tax in Thailand?
Not paying taxes in Thailand can have severe consequences, including fines, accused interest on unpaid taxes, and legal sanctions as stipulated in the Thai Revenue Code. The penalties for not paying tax typically range between ฿ 1,000 ($28) and ฿ 2,000 ($56). Interest starts accumulating right after a tax error occurs. Alongside these fixed penalties, a monthly interest rate of 1.5% is applied.
Can a foreigner become a tax resident in Thailand?
Foreigners can become tax resident in Thailand when they reside in Thailand for at least 180 days in a calendar year. Whether through employment, retirement, or business, foreigners who meet the residency requirement can apply for tax residency.
How do I get a tax residency certificate in Thailand?
You can get a tax residency certificate in Thailand in several steps: ensuring you meet the 180-day residency requirement, obtaining a TIN, and providing proof of income and residency. Once these conditions are met, you can apply through the Thai Revenue Department, either independently or with the assistance of a local expert, to get your tax residency certificate Thailand authorities issue.
2 Responses
I will be in Thailand and earning income for possibly only a few days more than 180. Am I able to apply for a TIN, file a tax return and obtain a TAX CLEARANCE CERTIFICATE all online when out of Thailand.
Hello Ron! In Thailand, earning income for over 180 days generally subjects you to tax residency. While you can apply for a TIN online, filing a tax return and obtaining a tax clearance certificate usually require being in Thailand or using a tax service that can handle these matters on your behalf.