In May 2022, the Royal Decree No. 743 B.E. 2565 (2022) issued under the Revenue Code declared that foreigners working in Thailand as highly skilled professionals on long-stay, non-immigrant visas will be taxed at a rate unique to their immigration status. Tax on a foreigner’s assessable income shall be withheld at the source at a collectability rate of 17%. Foreign professionals will be exempt from including this income in the computation of their personal income tax; however, they must not apply for a refund or tax credit, either in whole or in part, on the withheld tax to maintain eligibility. This decreased rate and exemption was implemented to promote Thailand’s market competitiveness and investment.
Some foreigners’ income may be subject to a payment rate less than 17%. In this case, the taxpayer may compute their income tax in either of following two ways:
1. The first option would allow the professional to continue benefitting from the lower payment rate, but the assessable income would be included in the final income tax computation.
2. The second option would raise the payment rate to 17%, but the assessable income would be excluded from the final income tax computation.
Exemptions may also apply to foreigners with assessable income under Section 40 (4) and (8) of the Thai Revenue Code.
✓ Section 40 (4) includes additional sources of income tax derived from investments, capital holdings, and other sources.
✓ Section 40 (8) concerns income derived from several sources, and circumstances in which a third-party pays taxes on behalf of a taxpayer.
If assessable income in either category has been withheld at the source, then the taxpayer is entitled to choose to pay income tax under Section 48 (3) and (4) of the Revenue Code. Section 48 (3) would permit the foreigner to pay taxes at a rate of 15% on income earned in a few distinct categories under Section 40 (4). Section 48 (4) includes alternative means of calculating the tax on income earned under section 40 (8). Again, to be eligible, foreigners must not apply for a refund or tax credit, either in whole or in part, on the withheld tax. Even if the taxpayer chooses to take advantage of these exemptions, they must still file returns relating to the exempt assessable income.
Foreigners living in Thailand as wealthy global citizens, wealthy pensioners, or work-from-Thailand professionals may be eligible for tax-exempt status in the Kingdom. Personal, assessable income brought into Thailand from abroad, derived from work, businesses, or international property, is eligible for this exemption.