Taxation of Foreign Sourced Income in Thailand Begins in 2024

The Thai Department of Revenue issued Departmental Instruction No. Paw 161/2566 which provides significant changes to the collection of personal income tax on foreign-sourced income.  The new tax treatment has been in effect since January 1, 2024.

The new tax treatment states that Thai taxpayers who derive assessable income from employment or business overseas, or from property located abroad, must pay tax on that income after bringing such assessable income to Thailand.

Previously, Thai residents paid tax on foreign-source income only if the income was brought to Thailand in the same calendar year. Instruction No. P 161/2566 effectively eliminates this loophole. Now, any income earned overseas from employment, business, or property, regardless of when it enters Thailand, must be declared, and taxed in the year the income is earned.

This new rule applies to all taxpayers in Thailand.

If a person resides in Thailand for 180 days or more during the tax calendar year, that person is taxed for income from that year. As of January 1, 2024 onwards, this income is subject to tax. Individuals must account for income tax in the 2024 tax calendar year and must submit income tax forms no later than March 2025.

This provision requires a person to pay income tax to the Thai Revenue Department under the following conditions:

Individuals, who are categorized as:

• Thai citizens;
• A Thai resident who filed taxes in the previous tax year; or
• Foreigners who reside in Thailand for one or more periods with at least 180 days in one tax calendar year.

Receive income inside or outside Thailand via:

• Income from employment (wages, salaries, remuneration, etc.) assessable under Section 40 of the Revenue Code;
• Income from business operations is assessable under Section 40.
• Passive or property income (interest, dividends, rental income, goodwill, etc.) based on Article 41 paragraph 2 of the Revenue Code.

Thai citizens and foreigners who are permanent residents will be subject to income tax, if they earn annual income at the following rates:

• 0 to 150,000 baht (US$4,177) is exempt from income tax;
• More than 150,000 baht (US$4,177) and up to 300,000 baht (US$8,354) are subject to a 5 percent tax rate;
• More than 300,000 baht (US$8,354) and up to 500,000 baht (US$13,923) are subject to a 10 percent tax rate;
• More than 500,000 baht (US$13,923) and up to 750,000 (US$20,884) are subject to a 15 percent tax rate;
• More than 750,000 (US$20,884) and up to 1 million baht (US$27,846) are subject to a 20 percent tax rate;
• More than 1 million baht (US$27,846) and up to 2 million baht (US$55,683) are subject to a 25 percent tax rate;
• Over 2 million baht (US$55,683) and up to 5,000,000 baht (US$139,201) are subject to a 30 percent tax rate; and
• More than or more is subject to a 35 percent tax rate.

Instruction No. P 161/2566 brings significant changes to the income tax offering in Thailand, and thus for foreign investors. The latest changes are aimed at fostering a fairer tax system, particularly among taxpayers who have income from foreign and domestic sources.

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