Income Tax for Foreigners with and without Long-Term Resident Visa

According to the Royal Decree (No. 743) regarding the reduction of tax rate and exemption of tax, and the Director-General of the Revenue Department’s Notification regarding Income Tax (No. 427) prescribing the criteria, procedures, and conditions on income tax reduction and exemption for foreigners categorized as long-term residents, qualified foreigners who have been granted Long-Term Resident Visa (the “LTR Visa”) will be eligible for tax privileges as follows:

1. 1. Foreigners granted the LTR Visa in the category of a “Highly-Skilled Professional” will be entitled to a reduction of the personal income tax rate, from 35% to 17%, for employment income derived from working for a company or registered partnership which engages in the target industries under the laws of National Competitiveness Enhancement, Investment Promotion, and Eastern Economic Corridor. Moreover, this type of assessable income will not be treated as taxable income for the purposes of calculating personal income tax when filing the Personal Income Tax Return, provided that the tax on such income has already been withheld at a rate of 17% and the LTR Visa holder does not request a tax refund or credit from the Revenue Department.
   2. Foreigners granted the LTR Visa in the categories of “Wealth Global Citizen”, “Wealthy Pensioner”, and “Work from Thailand Professional” will be exempted from paying personal income tax on their assessable income derived in the previous tax year from their work or business conducted abroad or from their properties situated abroad which have been brought into Thailand.

On the other hand, for foreigners working in Thailand who have not been granted the LTR Visa, regardless of the fact that they are employees of Thai companies or foreign-based companies, employment income will be regarded as an assessable income derived from employment or business carried out in Thailand. As such, any income paid by Thai companies and/or foreign-based companies to those foreigners for their employment or business conducted in Thailand, including income paid outside Thailand by foreign-based companies, will be treated as taxable income and calculated when paying personal income tax in each tax year, regardless of whether or not such foreigners reside in Thailand for an aggregate period of 180 days.

In cases where such employment income is paid to foreign employees by their employers in Thailand, the employer who is the payer of income shall also be responsible for deducting withholding tax from such income. In this regard, the tax withheld will be creditable against the personal income tax payable by those foreign employees when filing the Personal Income Tax Return, or those foreign employees will be entitled to request a refund of tax paid or withheld in excess from the Revenue Department in the event that the total tax withheld by the payer of income exceeds the total tax payable by those foreign employees.

If you are a foreigner working in Thailand and would like to learn more about how the aforementioned Decree and Notification impacts your tax payment, please contact the authors of this article, Sumet Mingmongkolmitr (Senior Partner) and Yanisa Rujirawat (Associate).

Author:  Sumet Mingmongkolmitr and Yanisa Rujirawat