Between now and April is the time workers dread — personal tax filing season! And this is a good time to remind you of some of the things you need to do and be aware of if you earned income in Thailand during 2014.
When you file your returns, the correct taxable income has to be reported. This includes any income related to your Thai employment regardless of where it was paid or if you're a resident of Thailand.
Are you a Thai tax resident?
Under Thai tax law, a resident is a person who stays in Thailand 180 days or more in a calendar year. And remember, the day you arrived in or departed from Thailand, no matter what time of day, will each be counted as one day. You should keep passport copies to verify this. If you are a resident in a tax year, it's considered a full year for tax purposes.
Filing your return
Hard copies of personal income tax returns must be filed with the Revenue Department by March 31, while e-filing can be done up to April 8. Personal income tax returns can be filed through the Revenue Department's website, www.rd.go.th.
Taxpayers wishing to file a hard-copy personal income tax return on form PND90/91 can file at any Revenue Department Area Office along with any additional tax due by cash or a personal cheque, which must be paid to the Revenue Department within seven days from the date it's issued. The deadline to file hard-copy returns and pay your tax is March 31. A surcharge of 1.5% per month or a fraction of a month will be charged for late filers on top of the outstanding tax. Instalment payment plans of up to three months with no additional interest are available for those who apply.
For residents and non-residents, the tax rates are the same, from zero to 35%. So what is the difference between residents and non-residents?
Foreign income
If you are a Thai resident and bring foreign income into Thailand in the same year it's earned, that income will be taxed in Thailand. It could be from your employment in another country before you started work in Thailand or from other foreign sources such as capital gains, rental income and interest income. Carefully consider this before you bring foreign income into Thailand. For non-residents, you can bring in such foreign income without triggering any Thai tax.
Deductions for dependents
If you're a Thai resident, you can take a family allowance deduction for your dependent spouse and up to three dependent children. A dependent is a person who does not earn income in a tax year. Spouses and children living abroad can also qualify as dependents.
For this allowance, you'll need to provide the Revenue Department with a copy of your entire passport that you used for travelling in the tax year from front to back including the blank pages along with copies of your marriage and/or children's birth certificates. For children aged 20-25, you can claim them as dependents if you can prove they are students such as with a copy of a tuition receipt.
If you are not a Thai resident, you can still take these deductions if your dependents are Thai residents. You'll need to provide the Revenue Department with copies of their entire passports from front to back including the blank pages.
Tax savings
Let's explore some ways expat employees can legally reduce their taxes, starting with the various deductions allowed for 2014 and 2015.
1.Long-term equity fund (LTF) investment of up to 500,000 baht per year.
2.Holiday travel expenses (Dec 16, 2014 to Dec 31, 2015) of up to 15,000 baht per year.
3.Donations to religious, educational and charitable institutions not exceeding 10% of net income per year.
Normally you can take a deduction for the actual amount of the donation for item 3. However, if the education donation meets certain qualified objectives, the Revenue Department allows two times the deduction for the donated amount. Receipts in your name for items 2 and 3 and LTF tax certificates for item 1 will need to be filed.
Please note that tax reduction entitlements on your Thai tax return cover only Thai plans. Foreign pensions, social security plans, life insurance plans, home mortgages and charitable donations are not deductible on your Thai tax return.
For those with a Thai dependent spouse, the following are deductible:
1.Spouse's life insurance premiums of up to 10,000 baht per year.
2.Spouse's dependent parents allowance of up to 30,000 baht each.
3.You and your spouse's parents' health insurance premiums of up to 15,000 baht per year if under a Thai plan.
Tax refunds
The size of your tax refund depends on your tax bracket. If your tax bracket falls in the 35% bracket, your tax savings could be significant, up to 175,000 baht if you purchase LTFs.
Don't forget to include a mailing address in Thailand where you can be contacted on your tax return. Once you receive your refund cheque in a blue Revenue Department envelope, don't forget to cash it within six months from the date it's issued.
This article was prepared by Hatairat Topiboonpong, senior manager, and Natchanond Charoenmechaikul, manager, at PwC International Assignment Services (Thailand).
