Thai sourced income and residence rules
Thailand will impose personal income tax on income that is derived from Thai sources, regardless of the nationality of recipient of the income, or the jurisdiction in which the payment is made or received. Thailand will also impose personal income tax on a Thai tax resident on his worldwide income.
Keywords: Mazars, Thailand, Tax, PIT, Source, Thai Sourced Income, Tax Resident
8 December 2015
The Thai sourced income and residence rules apply as follows:
1. If the income an individual receives is considered Thai sourced income, regardless of where it is paid, and regardless of his tax residence status, it will be taxed in Thailand (on a cash basis) in the calendar year that he receives it.
The income will be considered Thai sourced income if it is derived from:
i. work performed in Thailand;
ii. business in Thailand;
iii. business of an employer in Thailand; or
iv. property situated in Thailand.
2. If such income is considered foreign sourced income (income derived from work performed outside of Thailand, business conducted outside of Thailand, or property situated outside of Thailand) it will be taxed in Thailand only if: i. an individual is a Thai tax resident; and ii. such individual brings such income into Thailand in the same calendar year that he receives it.
An individual will be considered a Thai tax resident in a particular calendar year if he lives in Thailand for 180 days or more in such calendar year.
From the above rules, for instance, if a Thai tax resident receives foreign sourced income overseas on 31 December 2015, and deposits it in his foreign bank account, and then transfers it to his Thai bank account the next day (1 January 2016, the calendar year after that in which he received the income), the income would not be taxed in Thailand.
If a Thai tax resident worked partly outside of Thailand, it is advisable that he calculate the income received proportionally, based on the number of days that he spent working overseas versus the number of days that he spent working in Thailand. The portion based on the number of days that he spent working in Thailand would be Thai sourced income, and subject to Thai personal income tax. The portion based on the number of days that he spent working overseas would arguably be foreign sourced income, and not taxable in Thailand if he did not bring that portion of income into Thailand in the calendar year in which he received it.