Whilst not being sophisticated law, the income tax laws in Thailand are quite encompassing, and prescribe that the following earnings are subject to tax in Thailand:
- All earnings derived from performance of duties in Thailand, including duties performed in Thailand for an employer outside Thailand and earnings for duties performed in Thailand that are paid outside Thailand
- All earnings paid in Thailand regardless of where the duties are performed
All other earnings that are derived from offshore sources that are remitted into Thailand in the same year in which they are derived.
The tax laws permit standard deductions and standard allowances to be claimed against your salary earnings in Thailand. The tax laws also contain strictly enforced withholding tax provisions that require all employers to withhold the employee’s personal income tax liability at the time of payment, and remit such withholding tax to the Revenue Department on a monthly basis.
Foreign expatriate employees cannot opt out of the withholding tax provisions and volunteer to pay their own taxes. The employer must deduct withholding tax on all:
- Earnings physically paid in Thailand
- Earnings paid overseas, which has been or will be charged as an expense in Thailand.
If an expatriate employee has a work permit but all of his salary or wages costs are paid by and borne by an entity outside Thailand, a withholding tax requirement in Thailand still exits due to the Immigration and Labor laws.
Double tax treaty considerations
When an expatriate employee is in Thailand for 183 or fewer days, it may be possible for the employee to be exempt from Thailand tax on his earnings pursuant to a double tax treaty.
But a double tax treaty does not override any of the Thai Immigration and Labor (work permit) laws.