By Dezan Shira & Associates
Editor: Alexander Chipman Koty
Thailand’s updated personal income tax (PIT) structure officially came into effect on January 1, 2017, with the aim to ease tax burdens and boost disposable income. The revision, Revenue Code Amendment Act (No 44) BE 2560, was gazetted on January 27, officially instituting the changes. The new rates apply for all income collected as of January 1 for filing in 2018. The revised income tax scheme was initially approved by the Thai Royal Cabinet on April 19, 2016.
The new structure revises the income tax bands subject to 30 percent and 35 percent tax, and increases deductibles, and doubles allowances. The lower income tax bands and their respective rates remain unchanged. The revision also raises the minimum thresholds for mandatory tax filing.
Updated income tax bands
The PIT update changes the bands subject to 30 percent tax rate from THB 2,000,001-4,000,000 to THB 2,000,001-5,000,000, and the 35 percent tax rate from over THB 4,000,000 to over THB 5,000,000. The changes result in a five percent reduction for those earning between THB 4,000,001 and THB 5,000,000. Thailand’s complete PIT brackets are as follows:
Deductible expenses and tax allowances
The deductible amount for general expenses has been raised from 40 percent of taxable income with a maximum of THB 60,000 to 50 percent of taxable income with a THB 100,000 limit. Tax allowances have been doubled across the board. Personal allowances have been increased from THB 30,000 to THB 60,000, or a combined THB 120,000 for taxpayers with an earning spouse. Spousal allowances have also been raised from THB 30,000 to THB 60,000. Child allowances have increased from THB 15,000 per child with an eligible limit of three children to THB 30,000 per child with no limit, except for adopted children, where there is a three child cap. However, the additional THB 2,000 educational support allowance for children has been eliminated with the update.
Tax reporting threshold
The revised PIT law raises the threshold for tax filing from THB 50,000 to THB 100,000 for a single taxpayer earning only employment-derived income, or THB 100,000 to THB 2000,000 if filing jointly with a spouse. For those with other sources of income, the threshold has been raised from THB 30,000 to THB 60,000, or THB 60,000 to THB 120,000 in a joint submission. Even if there is no tax that ultimately needs to be paid, those meeting the threshold have to file with tax authorities, while low-earners below the threshold do not have to file.
The updated PIT rates ease the tax burden for a relatively small portion of the population, giving them more disposable income and leading, it is hoped, to increased domestic spending. The new deductions and allowances affect a much broader swathe of the Thai population, many of whom had argued that deductions were too low and out of sync with actual living expenses. However, the changes are fairly modest overall, and with ongoing competition and tax harmonization between ASEAN states, further reductions in PIT rates could be on the table going forward.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email firstname.lastname@example.org or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
Dezan Shira & Associates Brochure
Dezan Shira & Associates is a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors. Operational throughout China, ASEAN and India, our mission is to guide foreign companies through Asia’s complex regulatory environment and assist them with all aspects of establishing, maintaining and growing their business operations in the region. This brochure provides an overview of the services and expertise Dezan Shira & Associates can provide.
An Introduction to Doing Business in ASEAN 2016
An Introduction to Doing Business in ASEAN 2016 introduces the fundamentals of investing in the 10-nation ASEAN bloc, concentrating on economics, trade, corporate establishment and taxation. We also include the latest development news in our “Important Updates” section for each country, with the intent to provide an executive assessment of the varying component parts of ASEAN, assessing each member state and providing the most up-to-date economic and demographic data on each.
Human Resources in ASEAN
In this issue of ASEAN Briefing, we discuss the prevailing structure of ASEAN’s labor markets and outline key considerations regarding wages and compliance at all levels of the value chain. We highlight comparative sentiment on labor markets within the region, showcase differences in cost and compliance between markets, and provide insight on the state of statutory social insurance obligations throughout the bloc.