Personal Income Tax Benefits Announced
In July 2017, the Thai government issued Royal Decree Number 641 giving personal income tax benefits to an employee (“the Employee”) of a company or legal partnership that conducts business in a targeted industry, and has its place of business (defined as a place that is used in the normal course of business or used for manufacturing goods on a regular basis) in Chachoengsao, Chonburi, or Rayong Provinces.
Keywords: Mazars, Thailand, Tax, Personal Income Tax, Tax Incentives, Benefits, PIT, Royal Decree Number 641
09 August 2017
We set below a summary of this Royal Decree.
1. A company or legal partnership must be exempt from corporate income tax under the law on enhancing the competitiveness of the country for targeted industries, or the law on the Board of Investment (BOI), and must conduct business in the targeted industry.
2. We set below a list of targeted industries:
(1) the modern automotive industry;
(2) the intelligent electronics industry;
(3) the tourism for wealthy people and health tourism industries;
(4) the agriculture and bio-technology industry;
(5) the food processing industry;
(6) the robotics industry;
(7) the aviation and logistics industries;
(8) the bio-fuel and bio-chemical industries;
(9) the digital industry; and
(10) the comprehensive medical industry.
3. Withholding tax on the Employee’s income shall be imposed at a fixed rate of 17% if the income was subject to tax greater than 17% under the standard progressive rates. The Employee does not have to include that income as taxable income when filing the year-end tax return if he does not request a tax refund for any excess tax withheld from that income. If the income was subject to tax of less than 17% under the standard progressive rates, the Employee can choose not to include that income as taxable income in the tax return if he allows the employer to deduct withholding tax of 17%, and does not request a tax refund for any excess tax withheld from that income. In either case, the Employee must report the income that is subject to this special tax treatment.
4. The following conditions must be met for the Employee to receive tax benefits under this Royal Decree:
(1) He must be a member of management, an expert, or a researcher having those qualifications set out in a notification of the Director-General of Revenue (to be announced later).
(2) He must be employed by a company or legal partnership that conducts business in a targeted industry, and that has its place of business in Chachoengsao, Chonburi, or Rayong Provinces, and he must work at that place of business, and the employer must notify the Revenue Department of his employment by filing the necessary documents (the first date that the Employee receives tax benefits under this Royal Decree shall be the date that the Revenue Department receives those documents).
(3) The Employee’s income must be paid entirely in Thailand.
(4) The Employee must not stay in Thailand for 180 days or more in the year before the first year in which he utilizes the tax benefits under this Royal Decree.
(5) The Employee must stay in Thailand for 180 days or more in the years that he utilizes the tax benefits under this Royal Decree, except for the first year and the last year.
(6) Other rules and conditions set out in a notification of the Director-General of Revenue (to be announced later) shall apply.
5. If any of the conditions set out above are not met in any given year, the Employee will not be entitled to the benefits under this Royal Decree for that year.