Understanding the property rental income tax in Thailand is crucial before initiating a property rental business in the Southeast Asian country, which is a popular destination for tourists. You can guarantee compliance with Thailand’s income tax policies and optimize your profits by researching the Thai tax system. This article presents a comprehensive overview of the property rental income tax in Thailand, along with Thailand’s income tax rules for foreigners.
Must foreigners pay property rental income tax in Thailand?
Foreigners are obligated to pay property rental income tax in Thailand, regardless of whether they are considered a tax resident of Thailand or where the payment is received. Failure to comply with the requirement to pay property tax in Thailand may result in legal or financial consequences.
Under Thai tax law, an individual who spends 180 days or more in Thailand is classified as a “tax resident,” according to Section 41 of the Revenue Code. Income earned from rental property in Thailand is taxable under Section 40(5) of the Thai Revenue Code. So, whether you’re a foreign tax resident in Thailand or not, you still must pay taxes on rental income generated in Thailand.
Which taxes do you pay on property rental income in Thailand?
It is worth noting that the property rental income tax in Thailand is different for foreigners than for Thai nationals. If you are earning income from property rental in Thailand, there are three taxes you need to be aware of. Rental income is always subject to a 5% withholding tax, which will be credited toward your final tax liability when you file your income tax return.
1. Personal Income Tax for residents
The Personal Income Tax (PIT) is the most important property rental income tax in Thailand, as all tax residents pay the income tax over rental income generated through rental property. As income rises, Thailand’s income tax rates increase, with a maximum rate of 35%. Here are Thailand’s tax rates for taxable income:
| Taxable income | Tax rate |
|---|---|
| 0 to ฿ 150,000 ($4,469) | 0% |
| ฿ 150,000 ($4,469) to ฿ 500,000 ($14,895) | 10% |
| ฿ 500,001 ($14,895) to ฿ 1 million ($29,790) | 20% |
| ฿ 1 million ($29,790) to ฿ 4 million ($119,160) | 30% |
| ฿ 4 million ($119,160) and more | 37% |
2. Personal Income Tax for non-residents
Non-resident individuals earning rental income in Thailand are subject to a 15% flat tax rate on their gross rental income. This means that 15% of the total rental payment is payable as income tax.
| Taxable income | Tax rate |
|---|---|
| Any amount | 15% |
3. Corporate Income Tax
Foreigners who earn property rental income through a Thai company must pay Corporate Income Tax (CIT) on the generated revenue. The taxes that Thai limited companies pay are based on their annual net profit generated through real assets, such as land, buildings, or structures. The Corporate Income Tax rates have a maximum of 20% and are applied progressively.
| Net profit | Tax rate |
|---|---|
| 0 to ฿ 300,000 ($8,937) | 0% |
| ฿ 300,001 ($8,937) to ฿ 3 million ($89,370) | 15% |
| ฿ 3 million ($89,370) and more | 20% |
Deductions on property rental income tax in Thailand
When individuals rent out their property in Thailand, they may have to pay taxes on the rental income they generate. The amount of tax payable is calculated based on the gross rental income, with the government offering a deduction that typically ranges between 10% and 30%, depending on the type of real estate.
If the expenses incurred concerning the rental property exceed the deduction offered, then the total costs can be claimed as a deduction. However, it is important to provide receipts or other relevant documents to support these claims.
Here’s an overview of the deductions on property rental income tax in Thailand:
| Type of real estate | Deduction |
|---|---|
| Buildings and wharves | 30% |
| Agricultural land | 20% |
| All types of land | 15% |
| Vehicles | 30% |
| Other types of properties | 10% |
When owners rent out houses, buildings, and floating houses, they can deduct 30% of the gross rent as expenses. However, if the actual costs incurred are higher than the standard deduction mentioned above, they can deduct the actual expenses supported by relevant documents.
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Frequently Asked Questions (FAQs)
Do I need to report my rental income to the Thai tax authorities?
Everybody must report their property rental income to the Thai tax authorities, whether you’re a foreigner or a Thai national. Reporting and filing your personal or corporate income tax should be done annually.
What documentation should I keep for property rental income tax in Thailand?
Maintaining accurate records, such as lease agreements, rental income statements, receipts for property-related expenses, and tenant correspondence, is crucial for calculating taxable income and proving deductions during a tax audit for property rental income tax in Thailand.
Is there a specific form for filing property rental income tax in Thailand?
Individual taxpayers commonly use the PND 91 form. However, the process may differ depending on your tax status. To ensure you follow the correct procedure, it’s advisable to seek guidance from the Thai Revenue Department or a tax professional.
