New Thai personal income tax structure

During the cabinet meeting on 19 April 2016, the cabinet agreed to the Ministry of Finance’s proposal to revise the Thai personal income tax structure.

Keywords: Mazars, Thailand, Tax, Personal Income Tax, Tax Rate, PIT, Ministry of Finance, Revenue Code

13 May 2016

1. Deductible expenses for income under Sections 40 (1) [employment income and other fringe benefits derived from an employment contract] and 40 (2) [service income derived from services that are not professional services and are not services provided as part of a business that requires substantial capital investment] of the Thai Revenue Code would increase from 40% of income (capped at 60,000 baht) to 50% of income (capped at 100,000 baht).

2. The scope of deductible expenses for income under Section 40 (3) [goodwill, copyright, other rights, annuity, or income in the nature of yearly payments derived from a will, any other juristic act, or judgement of the court] of the Thai Revenue Code would expand to include goodwill, copyrights, and other rights (this was previously restricted only to copyrights), increase from 40% of income (capped at 60,000 baht) to 50% of income (capped at 100,000 baht).

3. Tax allowances shall be revised as follows:

  • The personal allowance will increase from 30,000 baht to 60,000 baht, and where the taxpayer and spouse both earn taxable income, the maximum deduction for both of them would be 120,000 baht.
  • The spouse allowance will increase from 30,000 baht to 60,000 baht.
  • The child allowance will increase from 15,000 baht per child (capped at 3 children) to 30,000 baht per child (uncapped).
  • The allowance for an estate would increase from 30,000 baht to 60,000 baht.
  • The allowance for a non-juristic partnership or a non-juristic body of persons would increase from 30,000 baht for each individual (capped at 60,000 baht) to 60,000 for each individual (capped at 120,000 baht).

4. The progressive tax rates shall be revised as follows:

Current tax rates New tax rates

Taxable income

(in Thai baht)

Rate

Taxable income

(in Thai baht)

Rate
First 150,000 0% First 150,000 0%
150,001 – 300,000 5% 150,001 – 300,000 5%
300,001 – 500,000 10% 300,001 – 500,000 10%
500,001 – 750,000 15% 500,001 – 750,000 15%
750,000 – 1,000,000 20% 750,000 – 1,000,000 20%
1,000,001 – 2,000,000 25% 1,000,001 – 2,000,000 25%
2,000,001 – 4,000,000 30% 2,000,001 – 5,000,000 30%
Over 4,000,000 35% Over 5,000,000 35%

5. The minimum income threshold for being required to file a tax return shall be revised as follows:

i. For a taxpayer who has only employment income:

  • if single, and income exceeds 100,000 baht (previously, 50,000 baht); and
  • if having a spouse, and the sum of the taxpayer’s and spouse’s income exceeds 200,000 baht (previously, 100,000 baht).

ii. For a taxpayer who has employment income and other income, or who has only other income that is not employment income:

  • if single, and income exceeds 60,000 baht (previously, 30,000 baht); and
  • if having a spouse, and the sum of the taxpayer’s and spouse’s income exceeds 120,000 baht (previously, 60,000 baht).

iii. An undistributed estate must file a tax return if its income exceeds 60,000 baht (previously, 30,000 baht).

iv. A non-juristic partnership or a non-juristic body of persons must file a tax return if its income exceeds 60,000 baht (previously, 30,000 baht).

6. This proposal would apply to the tax year 2017 onwards.

Thus, based on the proposal above, if you are an employee and your monthly salary is 25,833 baht or less, assuming that you do not receive other taxable income during the year (such as a bonus or other fringe benefits), you will not have to pay personal income tax.

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