Thailand Income Tax

Thailand income tax system matters to expatriates, employers and investors because a few simple thresholds (180-day residency, withholding obligations, and company residence) determine whether income is taxable locally — and because recent policy changes (notably the global minimum corporate tax and amended rules on foreign-sourced income) have changed planning priorities. This guide explains who is taxable, how personal and corporate income is taxed, withholding and VAT interactions, cross-border rules (residency and foreign income), transfer-pricing and the new Pillar Two top-up, practical compliance mechanics and sensible planning steps.

Who is taxable: residency and company residence

Individuals. Thailand treats an individual as a tax resident if present in the kingdom 180 days or more in a calendar year; residents are generally taxable on Thailand-sourced income and on foreign-sourced income remitted into Thailand (with specific timing rules for when remitted foreign income becomes taxable). Nonresidents are taxed only on Thailand-source income. Residency is a fact-based test, so count days carefully — short trips out of country still count toward the 180-day total.

Companies. A company incorporated in Thailand is a resident entity and taxed on worldwide income. A foreign company that carries on business in Thailand is taxable on Thailand-sourced profits. The threshold for what constitutes “carrying on business” is factual and can include a permanent establishment under treaty rules.

Personal income tax (PIT): rates, allowances and filing

Thailand’s PIT is progressive. Net taxable income bands run from exempt at the bottom to 35% at the top: 0–150,000 THB is tax-exempt, then stepping rates up to 35% on the highest bands (the Revenue Department’s rate table remains the practical guide for calculations). Standard deductions and allowances — personal, spouse, child allowances, and social-security contributions — reduce taxable income; many deductions require documentation. Annual PIT returns are filed after the tax year (calendar year) with self-assessment and a final payment or refund reconciliation.

Practical notes for expats: employer withholding reduces year-end balances for salaried taxpayers, but expatriates with mixed foreign income should model remittance timing carefully because tax on foreign income depends on when funds are brought into Thailand (see below).

Corporate tax: headline rates, SME tiers and incentives

The standard corporate income tax (CIT) rate is 20% for most resident companies, but lower tiers and incentives apply to small companies or promoted activities (for example, SME tiers and BOI incentives reduce effective tax). For accurate applied rates in your situation — especially for small companies or newly promoted enterprises — consult a tax adviser because thresholds and reliefs change.

Importantly, Thailand implemented the OECD-backed global minimum (Pillar Two) top-up tax, effective 1 January 2025: multinational groups above the consolidation threshold will face a 15% minimum effective tax, with Thailand applying a top-up where other jurisdictions’ taxes leave the group below that floor. This affects multinational tax planning, incentive use and transfer-pricing alignment. Model Pillar Two effects early if your group’s global revenue approaches or exceeds the EUR 750 million threshold.

Withholding taxes, VAT and common collection points

Thailand collects a lot of revenue at source. Employers withhold PIT on salaries; payers must withhold tax on certain domestic payments and on many cross-border payments to nonresidents (services, royalties, interest). Dividend withholding is typically 10%, and many cross-border service and royalty payments attract 15% (tax treaty rates often reduce these). Recently, Thailand temporarily adjusted some withholding rates and introduced incentives to remit tax electronically — check current Revenue Department guidance for temporary reductions or electronic-filing benefits that may apply.

VAT is a separate indirect tax at 7% (the statutory rate; operational adjustments and exemptions apply). Businesses with turnover above the VAT threshold must register and charge VAT on taxable supplies, making VAT compliance a critical part of corporate cash-flow planning.

Foreign-sourced income and remittance timing — what changed recently

Thailand historically taxed foreign income of residents only when remitted; legislative changes in recent years tightened the treatment so that foreign income brought into Thailand in the year it was earned became taxable for residents in some cases. That created major planning consequences for returning nationals and digital professionals. Policymakers have signaled refinements to ease burdens (and there have been proposals to relax timing in certain instances), but the bottom line is you should not assume remittances are tax-free — document when income was earned and when it was brought into Thailand and obtain up-to-date tax advice.

Transfer pricing, documentation and audits

Thailand enforces transfer-pricing rules; related-party transactions must reflect arm’s-length terms and be supported by contemporaneous documentation. Large multinationals should maintain benchmarking studies (master/local files where applicable) because audits can lead to adjustments, penalties and interest. Given Pillar Two and increased OECD focus, expect greater cross-border scrutiny and more rigorous documentation demands.

Compliance mechanics: filings, provisional payments and penalties

Companies file annual CIT returns (with provisional installments during the year based on estimated profits); individuals file annual PIT returns. The Revenue Department imposes interest, surcharges and penalties for late filing, underpayment and failure to withhold. Keep disciplined bookkeeping, adhere to provisional-payment requirements and file withholding returns on time to avoid cumulative penalties that can rapidly exceed initial tax shortfalls.

Practical planning recommendations

1. Track days and residency — 180 days is the critical threshold. Use digital logs and keep flight records.

2. Model remittance timing — if you earn foreign income, document when it was earned and when you remit it; tax treatment can depend on both dates.

3. Align payroll and withholding — employers should withhold correctly and provide withholding certificates to employees for annual filing.

4. Prepare transfer-pricing documentation early — don’t wait for an audit notice.

5. Revisit incentive claims — BOI and other incentives are attractive but carry substance and reporting conditions; Pillar Two may change their net benefit for large groups.

6. Use advance rulings where appropriate — the Revenue Department and competent authorities can sometimes issue binding rulings to reduce uncertainty for complex cross-border cases.

Disputes, audits and remedies

If assessed, taxpayers can object administratively and then appeal to the tax courts; engage local counsel early because procedural steps and timelines matter. For treaty issues, use competent-authority channels under double-taxation agreements.