All you need to know about the changes in the tax law for foreigners living in Thailand (Paw. 161/2566)

What are the changes to the tax law for foreigners in Thailand?

 

You might have heard of a new tax law for foreigners in Thailand which took effect on January 1, 2024. We have summarised and clarified what this exactly means for foreigners living in Thailand: 

  • Residency and Taxation: If you live in Thailand for 180 days or more per year, you’re considered a Thai tax resident. You’ll need to pay tax on any foreign-sourced income that you bring into Thailand, regardless of when you earned it. Previously, only income brought into Thailand in the same year it was earned was taxable.
  • Closing Loopholes: This change aims to close a tax loophole that some wealthy Thais used to avoid taxes by remitting foreign income in a different year. Unfortunately, it also affects expats who meet the 180-day residency requirement.
  • Tax Rates: Any income over 120,000 THB (around $3,400) per year is taxable. The tax rates range from 5% to 35%, depending on the amount. The first 150,000 THB you earn is tax-exempt.
  • Managing Remittances: To avoid being taxed, you can keep your foreign income or savings in accounts outside of Thailand and not remit it. According to Revenue Department Order No. 162/2023, income earned before 2024 is not taxable if it’s brought into Thailand after January 1, 2024.
  • Declaration and Payment: You’ll need to declare and pay tax on foreign income in the year it was earned, not when you bring it into Thailand. Tax returns are due by March of the following year.

 

In summary, this new law means long-term expats in Thailand will be taxed on their foreign income, but you can still manage how and when you bring money into the country to minimise the impact. If you are unsure about how this will effect your personal situation, and what it means for buying a house and living in Thailand, we would be happy to help you navigate the tax system with our lawyer at White Beach Villas. 

 

 

Is it still advisable to live in Thailand for your retirement or if your income comes from another country?

 

Even though this change might lead to higher taxes for some individuals, Thailand remains a very low-tax country compared to Western nations, where tax rates and overall tax burdens are typically much higher. These are some of the benefits of the Thai tax system:

  • Lower Tax Rates: Western countries, especially in Europe and North America, often have higher personal income tax rates. For example, in some Western countries, the top marginal tax rates can exceed 40-50%, whereas in Thailand, the highest rate is 35%.
  • Overall Tax Burden: In addition to income tax, Western countries often have higher taxes on goods and services (VAT/GST), property, and social security contributions. Thailand’s overall tax burden (the total amount of taxes collected as a percentage of GDP) is generally lower.
  • Cost of Living and Other Expenses: Lower taxes in Thailand are complemented by a generally lower cost of living compared to Western countries, making it more affordable to live comfortably even after accounting for any tax increases.
  • Tax Benefits and Deductions: Thailand offers various tax benefits, deductions, and allowances that can further reduce the effective tax rate for residents.

 

By considering these factors, it’s clear that despite the new tax law potentially increasing taxes for some, Thailand still offers a comparatively favourable tax environment. These factors make Thailand an ideal destination to live, invest in property, and enjoy life in a tropical paradise. Schedule an appointment to chat with our team to make your dream home in Thailand a reality.

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