Simple Tax Guide for Americans in Thailand

Resident vs. non-resident of Thailand

The distinction between a resident and a non-resident in Thailand is a fundamental aspect of understanding one's tax obligations. This classification plays a key role in determining how you are taxed and what income is subject to Thai taxation.

Generally, residents are taxed on their worldwide income. This means that as a resident, your income from both Thai and international sources may be subject to Thai tax laws.

Non-residents are only taxed on income earned within Thailand. Income earned outside of Thailand is generally not subject to Thai taxation for non-residents.

Who can be considered a resident of Thailand?

The criteria for being considered a tax resident in Thailand are specific and primarily based on the length of your stay in the country. According to Thai tax laws:

• An individual is considered a resident for tax purposes if he resides in Thailand for a total of 180 days or more in a tax (calendar) year.
• The count of 180 days does not have to be continuous; it is cumulative over the tax year.

Personal income tax rates

PIT in Thailand is levied on an individual's income, with rates varying based on the amount of taxable income.

The system is progressive, meaning that higher income levels are subject to higher tax rates. As of the most recent tax year, the PIT rates are as follows:

* Thai baht

Types of income in Thailand

Employment income

Employment income is a primary source of income for most individuals and is subject to personal income tax in Thailand.
Employment income can come as:

• Regular payments received for services rendered as an employee.
• Any additional compensation received, whether performance-related or otherwise.
• Non-cash benefits such as housing, cars, or education are provided by the employer.
• Retirement benefits received, either from previous employment or private retirement plans.

Income from gifts

In Thailand, income received in the form of gifts may be subject to taxation, depending on the value and nature of the gift:

• Cash gifts exceeding certain thresholds may be taxable.
• Gifts of real estate or other tangible personal property may also be subject to tax if they exceed certain limits.
• Gifts from certain relatives or under certain circumstances may be exempt.

Cryptocurrency and token income

• Gains from the sale or exchange of cryptocurrencies and digital tokens are subject to taxation.
• Income from mining activities is considered taxable.
• Profits from trading cryptocurrencies and tokens are subject to taxation.

Interest income

Interest income is a common form of income for many individuals, including expatriates in Thailand. This type of income typically includes:

• Income from savings or time deposit accounts held in Thai banks.
• Income from lending money or investing in bonds and other debt instruments.

Interest income in Thailand is subject to withholding tax. The rate can vary but is usually around 15%. Taxpayers have the option of including this income in their total taxable income or paying the withholding tax as a final tax.

Dividend income

Dividend income, which is money paid to shareholders of stocks or mutual funds, is another important type of income for investors in Thailand:

• Dividends received from Thai companies are subject to withholding tax, usually at a rate of 10%.
• For residents, dividends from foreign sources may be taxable in Thailand, especially if remitted in the same year they are received.

Taxpayers may be entitled to tax credits for tax withheld on dividend income, which may be used to offset their total tax liability.

Capital Gains

Capital gains are the profits made from the sale of assets such as stocks, bonds, real estate, or other investments:

• In Thailand, capital gains from the sale of stocks and securities are generally taxed as ordinary income. However, gains from the sale of shares on the Stock Exchange of Thailand are often exempt.
• Gains from the sale of real estate in Thailand may be subject to capital gains tax depending on various factors, including the length of ownership and the type of property.

Exempt income

Certain types of income are exempt from taxation in Thailand, which can significantly affect an expatriate's tax situation:

• The first 150,000 THB of income is generally exempt for all taxpayers.
• Other exemptions may include certain types of government bonds, income from certain types of insurance policies, and certain pension income.
• Certain employment benefits, such as per diem, travel expenses, and others, may not be taxable.

Social security in Thailand

Social Security in Thailand is an important aspect of the country's welfare system, providing a safety net for workers in various circumstances, including illness, disability, and retirement.

Employees in Thailand, including foreign workers, are required to contribute to the Social Security Fund. The contribution rate is usually 5% of the monthly salary, subject to a maximum salary base.

The social security system in Thailand provides a range of benefits, including medical care, disability benefits, child support, unemployment benefits, and pensions.

Employees must contribute to the fund for a certain number of years to be eligible for full benefits, including pensions.

The tax treaty between the US and Thailand

The tax treaty between the United States and Thailand plays a key role in determining how American expatriates are taxed on their income in Thailand. This treaty is designed to prevent double taxation and tax evasion by ensuring that expatriates are not unfairly taxed by both countries on the same income.

The main benefits of the tax treaty for American expatriates include:

• The treaty provides mechanisms to ensure that income earned by American expatriates in Thailand is taxed in a manner that avoids double taxation.
• The treaty often results in reduced withholding tax rates on dividends, interest, and royalties, benefiting Americans receiving such income from Thai sources.
• The treaty clarifies which country has the right to tax certain types of income, providing greater certainty and reducing the risk of tax disputes.
• American expatriates may be eligible for tax credits for taxes paid in Thailand that can be used to offset US tax liability.

Thailand tax forms for US expats

There are three main tax forms you need to be aware of as an American expat in Thailand.

1. PND form 90: this one is needed to file for income taxes in Thailand which come from sources other than employment (e.g self-employment)
2. PND form 91: required to report taxes on revenue streams whose origin is employment
3. PND form 94: a mid-year tax return (should be filed by September 30) for passive income streams (e.g. renting out property, dividends, etc.)