Summary of Thai Tax Legislation Changes: Income Tax Payments
Overview
This summary provides an overview of recent amendments to Thai tax legislation, specifically focusing on alterations related to the payment of income tax as outlined in Section 41, paragraph two of the Revenue Code.
Applicability
The updated legislation primarily impacts individuals residing in Thailand and deriving assessable income from work, business activities or assets located abroad.
Residents of Thailand
Section 41 of the Thai Revenue Code, a "resident of Thailand" is defined based on the individual's duration of stay in the country. According to the legislation, a person is considered a resident of Thailand for tax purposes if they stay in Thailand for a total of 180 days or more in any tax year. This stipulation forms the basis for determining tax residency and subsequently affects the taxation of assessable income earned both within and outside Thailand. Residents, as per this definition, are subject to tax on all assessable income derived from sources within Thailand, as well as on assessable income derived from foreign sources if brought into Thailand during the tax year in which the income is received.
Income Tax Payment Requirement
The amendments necessitate individuals meeting residency criteria, as per Section 41 of the Revenue Code, to include assessable income earned from foreign work duties, activities or foreign property (as per Section 41, paragraph two) in their tax calculation. This income is subject to taxation under Section 48 of the Revenue Code in the tax year when it is brought into Thailand.
Effective Date
The revised rules will be effective from January 1, 2024, for assessable income imported into Thailand. This implies that the changes will apply to income brought into Thailand starting from this specified date.
Objectives
The amendments aim to enhance tax transparency, align with international tax standards, and adhere to global best practices. By requiring residents to report and pay tax on foreign-sourced income, Thailand intends to boost its international tax standing, ensure fairness in taxation from both domestic and foreign sources, and maintain transparency and equity in tax processes.
Double taxation Treaty
In the context of the Thai tax legislation changes, the mention of double taxation is indirectly relevant. The amendment under discussion, which mandates the inclusion of foreign-sourced income for taxation in Thailand, aims to address potential issues related to double taxation. Specifically, by requiring residents to report and pay tax on income earned abroad when brought into Thailand.
It should be noted that countries that the Thai government has a double tax treaty with will be exempt, to prevent double taxation on the same income. This aligns with international tax standards and ensures that individuals are not taxed twice on the same income—once in the country where the income was earned and again in their country of residence.
