The Thai Ministry of Finance has issued Service Instruction No. Paw 161/2566, which provides significant changes to the collection of income tax on income from abroad. The new tax treatment is effective from January 1, 2024.

The new tax treatment states that Thai taxpayers who receive taxable income from employment or business abroad, or from property located abroad, must pay tax on that income after bringing that taxable income to Thailand.

Previously, Thai residents only had to pay tax on foreign-sourced income if the income was brought to Thailand in the same calendar year. Instruction No. P 161/2566 effectively removes this loophole. Now, all income earned abroad from employment, business or property, regardless of when it enters Thailand, must be declared and taxed in the year the income is earned.

This new rule applies to all taxpayers in Thailand.

If an individual stays in Thailand for 180 days or more during the tax calendar year, they will be taxed on the income from that year. From January 1, 2024, this income will be taxable. Individuals must account for income tax in the 2024 tax calendar year and submit income tax forms no later than March 2025.

Under this rule, an individual must pay income tax to the Thai tax office under the following conditions:

Individuals categorized as:

• Thai citizens;

• Residents of Thailand who have paid taxes in the previous tax year; or
• Foreigners who stay in Thailand for one or more periods of at least 180 days in a tax calendar year.

They receive income inside or outside Thailand through:

• Income from employment (wages, salaries, remuneration, etc.) that is taxable under Section 40 of the Tax Law;

• Income from business operations taxable under Section 40.
• Passive income or property income (interest, dividends, rental income, goodwill, etc.) as defined in Article 41, Paragraph 2 of the Tax Code.

Thai citizens and permanent resident foreigners are subject to income tax if they earn annual income at the following rates:

• 0 to 150,000 baht (US$4,177) is exempt from income tax;
• More than 150,000 baht (US$4,177) and up to 300,000 baht (US$8,354) is subject to a 5 percent tax rate;
• More than 300,000 baht (US$8,354) and up to 500,000 baht (US$13,923) is subject to a 10 percent tax rate;
• Over 500,000 baht (US$13,923) and up to 750,000 baht (US$20,884) is subject to a tax rate of 15 percent;
• Over 750,000 (US$20,884) and up to 1 million baht (US$27,846) is subject to a tax rate of 20 percent;
• Over 1 million baht (US$27,846) and up to 2 million baht (US$55,683) is subject to a tax rate of 25 percent;
• Over 2 million baht (US$55,683) and up to 5,000,000 baht (US$139,201) is subject to a tax rate of 30 percent; and
• Over or more is subject to a tax rate of 35 percent.

Instruction No. P 161/2566 brings significant changes to the income tax offering in Thailand and hence to foreign investors. The recent changes aim to promote a fairer tax system, especially for taxpayers who have income from both foreign and domestic sources.

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