US Tax Advice for US Expatriate Living and Working in Thailand

Tax Guide for US Expats Living and Working in Thailand

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Who Is Liable For Income Taxes in Thailand

All resident and nonresident individuals earning income from sources in Thailand are subject to personal income tax (PIT). A Thai resident is also subject to PIT on self-employment and business income from sources overseas if the income is remitted to Thailand.

Individuals are considered resident if they reside in Thailand for a period or periods aggregating 180 days or more during a calendar year. Income earned overseas by Thai residents is also subject to PIT if it is remitted to Thailand in the year it is earned.

Income subject to tax.  Taxable income consists of assessable income, less deductible expenses and allowances.  The taxation of various types of income is described below. For a table outlining the taxability of income items.

Employment income.  All benefits derived from employment are assessable, unless expressly exempt by law. Examples of assessable benefits are wages, salaries, per diem allowances, bonuses, bounties, gratuities, directors’ fees, pensions, house rental allowances, the monetary value of rent-free accommodation provided by an employer, and income tax paid and borne by an employer on behalf of an employee.

Tax-exempt benefits include medical expenses as well as travel expenses incurred wholly and exclusively by an employee in carrying out his or her duties. In addition, group medical insurance premiums paid by the employer to an insurance company operating in Thailand on behalf of its employees are tax-exempt benefits if the duration of the group insurance policy does not exceed one year. Effective from 25 April 2006, income received from a provident fund by an employee at the termination of his or her employment as a result of retirement, disability or death is exempt from income tax, subject to certain conditions.

Self-employment and business income.  Taxable self-employment and business income consists of assessable income less deductible expenses and allowances. Generally, all types of income are assessable unless expressly exempt by law.

Investment income.  Interest, dividends and other investment income are subject to PIT at the rates.

A tax credit is granted for dividend income received by an individual domiciled in Thailand from locally incorporated companies.   

Capital gains.   Gains derived from sales of shares are generally subject to PIT. However, gains derived from sales of securities listed on the Stock Exchange of Thailand are exempt from tax.

Gains derived from sales of real property are subject to PIT. A standard allowance is deductible, depending on the number of years of ownership. This tax also applies to gains derived from sales of real property used in a trade or business.

Taxation of employer-provided stock options.  Employees are subject to tax on the benefit derived from shares provided either for free or at a favorable price by the employer. The taxable benefit is the difference between the price paid by the employee, if any, and the fair market value of the shares.

Deductions

Deductible expenses.  A standard allowance of 40% of assessable income, up to THB 60,000, is allowed as a deductible expense against income from employment.

Personal deductions and allowances.  To arrive at net assessable income, the following allowances are permitted as deductions.

Rates.  Personal income tax is levied on an individual’s net assessable income.

B. Other taxes

Net worth tax. PIT normally is levied on assessable income earned during a calendar year. However, the tax authorities may reassess income tax based on net worth if the amount of a taxpayer’s income is believed to be understated. In practice, this power is rarely exercised.

Inheritance and gift taxes.  No inheritance taxes are levied in Thailand. Gifts other than those made on ceremonial occasions or in other limited situations are taxed as ordinary income.

C. Social security

Employers and employees must each contribute 5% of each employee’s basic salary to the Social Security Fund, up to a monthly contribution of THB 750, to finance benefits for pregnancy, accidents, illnesses, child welfare, old age, death and physical disability occurring outside working hours. The government contributes 2.75%.

Tax treaties

Thailand has entered into double tax treaties with the countries listed below. The method of eliminating double tax varies by treaty.

Armenia

Indonesia

Romania

Australia

Israel

Seychelles

Austria

Italy

Singapore

Bahrain

Japan

Slovenia

Bangladesh

Korea (South)

South Africa

Belgium

Kuwait

Spain

Bulgaria

Laos

Sri Lanka

Canada

Luxembourg

Sweden

China

Malaysia

Switzerland

Cyprus

Mauritius

Turkey

Czech

Republic

Nepal

Ukraine

Denmark

Netherlands

United Arab Emirates

Finland

New Zealand

France

Norway

United Kingdom

Germany

Oman

United States

Hong Kong

Pakistan

Uzbekistan

Hungary

Philippines

Vietnam

India

Poland

To learn more about the history, culture, economy and other information about Thailand

We have been preparing US income tax returns for US Citizens and permanent residents living in Thailand for over 15 years. As a US Citizen or permanent resident (green card holder) you are required to file a US return each year regardless of the fact that you file and pay taxes in your residence country. The expatriate earned income exemption ($100,800 for 2015) can only be claimed if you file a timely tax return. It is not automatic if you fail to file.

We have scores of clients located in Thailand and know how to integrate your US taxes into the local income taxes you pay.  Any income tax you pay there can be claimed as a dollar for dollar credit against the tax on your US return on the same income.

As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end.  (You cannot file using the tax fiscal year for US tax purposes). You must pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.

There are other forms which must be filed if you have foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership.   If you do not file these forms or file them late, the IRS can impose penalties of $10,000 or more per form.  These penalties are due regardless of whether you owe income taxes or not.

There are certain times you may wish to make elections with respect to your Corporation or Investment Company which will give you US tax benefits.  There are other situations where forming a US corporation to receive your business income may be more advantageous than using a corporation in your resident country. We can help you with these decisions.

If you are self-employed, you will have to pay US self-employment taxes (social security).   If you are a bona-fide employee you do not have to worry about paying US social security on your wages earned in Thailand.

We have helped hundreds of expats around the world catch up because they have failed to file US returns for many years. Unfortunately, unlike India, Canada, UK, etc. you must also file so long as you are a US citizen or resident.  You can if you follow proper IRS and State Department procedures surrender your US Citizenship and therefore cut off your obligation to pay US taxes in the future. You must surrender that Citizenship for non-tax avoidance reasons and then can usually not return to the US for more than 30 days per year for the subsequent ten years.

Let us help you with your US tax returns, US tax planning and other US tax and legal concerns.  Download our expat tax questionnaire or request a request a consultation by phone, skype or email