Thailand has a fast expanding economy, which is mostly supported by its export-oriented sectors including tourism, the car industry, and electronics. As a result, the nation has a sophisticated tax system that is essential to the government's attempts to uphold economic stability and deliver public services.
An outline of Thailand's taxation system for both people and companies will be given in this article.
Taxation System for Individuals
Personal income tax (PIT), which is levied on a person's worldwide income in Thailand, is due. The tax rate is progressive, which means that it rises in proportion to income. The tax rate is between 5% and 35%. The following are the tax rates for 2021:
- Income of up to THB 150,000: 0%
- Income between THB 150,001 and THB 300,000: 5%
- Income between THB 300,001 and THB 500,000: 10%
- Income between THB 500,001 and THB 750,000: 15%
- Income between THB 750,001 and THB 1,000,000: 20%
- Income between THB 1,000,001 and THB 2,000,000: 25%
- Income between THB 2,000,001 and THB 5,000,000: 30%
- Income over THB 5,000,000: 35%
Individuals may be liable to other taxes in addition to PIT, such as value-added tax (VAT) and specific business tax (SBT). The usual rate of VAT, a tax on the consumption of goods and services, is 7%. However, some goods and services might be subject to a reduced rate or be exempt from VAT. SBT is a tax on specific types of companies, including eateries, lodging facilities, and entertainment establishments. Depending on the type of business, the SBT tax rate might range from 0.1% to 3%.
Taxation System for Corporations
Thai firms must pay corporate income tax (CIT) on their global revenue. CIT is taxed at a fixed rate of 20%. However, some forms of income, like dividends from Thai companies, might be subject to a 10% reduced rate.
Corporations may be liable to other taxes in addition to CIT, including VAT, SBT, and special goods tax (SGT). SGT is a tax on specific products, including alcohol, tobacco, and petroleum. Depending on the nature of commodities, different SGT tax rates apply.
Tax Planning Strategies
Both individuals and corporations in Thailand may engage in tax planning strategies to minimize their tax liabilities. Some common tax planning strategies include:
- Income deferral: delaying the receipt of income until a later tax year
- Income shifting: transferring income to family members or related entities with lower tax rates
- Deduction maximization: maximizing deductions to reduce taxable income
- Tax treaty planning: taking advantage of tax treaties between Thailand and other countries to reduce tax liabilities
Tax evasion is illegal, but it's crucial to remember that tax preparation is allowed. Intentionally omitting to disclose income or claiming erroneous credits or deductions is considered tax evasion. In Thailand, evading taxes is a crime that carries penalties, jail time, or both.
Conclusion
Thailand has a sophisticated taxation system for both private citizens and businesses. PIT is levied at a progressive rate on the global income of people, whereas CIT is levied at a flat rate on the global revenue of businesses. Individuals and businesses can both use tax planning techniques.
