Tax News Flash Issue 11
Tax News Flash Issue 11
Amended Personal Tax Income Tax Deductible Expenses and Allowances
The Revenue Code Amendment Act No. 441 BE 2560 and Royal Decree No. 6292 BE 2560 were published in the Royal Thai Government Gazette on 27 January 2017 with effect for tax year 2017 onward whereby increasing some personal tax deductible expenses and allowances while reducing others, changing the tax filing thresholds, and increasing the income threshold in the highest tax bracket of the progressive personal income tax scale.
WHY THIS MATTERS
The amendment to Thailand’s personal income tax described in this newsletter should prove advantageous to taxpayers. With the considerable increases in tax deductible expenses and allowances, and the expansion of the 30-percent tax bracket up to THB 5.0 million (from THB 4.0 million), and with the highest tax rate beginning to apply on incomes over THB 5.0 million (formerly (over THB 4.0 million), employers will need to make the necessary payroll adjustments and update hypothetical tax calculations for tax equalized assignees.
2016 and 2017 Income Tax Brackets
The table on the following page highlights changes to tax rates and brackets for 2017 as compared with the situation in 2016
| 2016 Net taxable income (THB) |
2017 Net taxable income (THB) |
Tax rate (%) |
| 0 - 300,000* |
0 - 300,000* |
5 |
| 300,001 - 500,000 |
300,001 - 500,000 |
10 |
| 500,001 - 750,000 |
500,001 - 750,000 |
15 |
| 750,001 - 1,000,000 |
750,001 - 1,000,000 |
20 |
| 1,000,001 - 2,000,000 |
1,000,001 - 2,000,000 |
25 |
| 2,000,001 - 4,000,000 |
2,000,001 - 5,000,000 |
30 |
| 4,000,001 and Over |
5,000,001 and Over |
35 |
*The table on the following page highlights changes to tax rates and brackets for 2017 as compared with the situation in 2016
2016 and 2017 Tax Deductible Expenses and Allowances
The Thai law allows resident of Thailand (including foreign nationals residents of Thailand) to claim tax deductible expenses and tax allowances against assessable income.
The table below and continued on the following page highlights changes to taxpayers’ tax deductible expenses and allowances for 2017 as compared with the tax year 2016:
| Tax Deductible Expenses |
Tax year 2016 |
Tax year 2017 |
| Deduction against employment income (Section 40(1)) |
40% of income, capped at THB 60,000 |
50% of income, capped at THB 100,000 |
| Deduction against income from hiring of services (Section 40(2)) |
40% of income, capped at THB 60,000 |
50% of income, capped at THB 100,000 |
| Deduction against goodwill, copyright and other rights income (Section 40(3)) |
40% of income from copyrights, capped at THB 60,000 |
Royal Decree not yet to be issued. |
| Deduction against construction income (Section 40(7)) |
Actual expense or 70% of income |
Actual expense or 60% of income |
| Deduction against business, commerce, agriculture, industry, transport or any other activities not specified in categories (1) through (7) (Section 40(8)) |
Actual expense or 70%-85% of income |
Actual expense or 60% of income |
| Tax Allowances |
Tax year 2016 |
Tax year 2017 |
| Taxpayer |
THB 30,000 |
THB 60,000 |
| Spouse (if joint filing or spouse has no income) |
THB 30,000 |
THB 60,000 |
| Joint filing for taxpayer and taxpayer’s spouse who earns income |
THB 60,000 |
THB 120,000
|
| Taxpayer’s child for children under the age of 25 years |
• THB 15,000 per child • Income not over THB 15,000 per year • Limited to 3 children |
• THB 30,000 per child • Income not over THB 30,000 per year • No limit on the number of children claim, except for 3 with adopted children |
| Education for children |
• THB 2,000 per child for education in Thailand |
Repealed
|
| Deceased estate |
THB 30,000 |
THB 60,000 |
| Unincorporated ordinary partnership or group of persons |
THB 30,000 for each partner not exceeding THB 60,000 |
THB 60,000 for each partner not exceeding THB 120,000 |
| Domestic travel and hotel costs paid during 1 January 2016 to 31 December 2016 |
Actual amount paid not exceeding THB 15,000 |
Expired |
| Songkran dinning and travel costs paid during 9 to 17 April 2016 |
Actual amount paid not exceeding THB 15,000 |
Expired |
| OPT purchase on OTOP products during 1 to 31 August 2016 |
Actual amount paid not exceeding THB 15,000 |
Expired |
| Domestic travel and hotel cost paid during 1 to 31 December 2016 |
Actual amount paid not exceeding THB 15,000 |
Expired |
| Year-end spending during 14 to 31 December 2016 |
Actual amount paid not exceeding THB 15,000 |
Expired |
2016 and 2017 Filing Obligation Thresholds
|
|
2016 Regime |
2017 Regime |
| 1) A taxpayer who earns exclusively employment income under section 40 (1) of the Thai Revenue Code has an obligation to file an annual tax return if the following thresholds are met: |
||
| • Single taxpayer
|
More than THB 50,000 |
More than THB 120,000 |
| • Married taxpayer |
Combined income more than THB 100,000 |
Combined income more than THB 220,000 |
| 2) A taxpayer who earns employment income under section 40 (1) and/or who earns other non-employment income under the Thai Revenue Code has an obligation to file an annual tax return if the following thresholds are met:
|
||
| • Single taxpayer
|
More than THB 30,000 |
More than THB 60,000 |
| • Married taxpayer |
Combined income more than THB 60,000 |
Combined income more than THB 120,000 |
KPMG NOTE
The changes to the personal income tax regime are welcomed since they may serve to reduce the overall tax burden on individuals and increase personal disposable income, taking into account the current cost of living and economic situation in Thailand. Taxpayers with monthly employment income of THB 25,800 or less will not be subject to tax in Thailand due to the increased tax deductible expense and allowances. High income earners with annual employment income in excess of THB 4 million will have an annual saving of THB 50,000 simply factoring in the widening of the tax brackets. The tax saving would be more than THB 50,000 if the standard tax deductible expenses and allowances are taken into account.
FOOTNOTE:
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