Human Interest

Tax Facts - Thailand

Personal Income Tax or PIT is a direct tax which is levied on the taxable income of a ‘person’. A ‘person’ can mean; an individual, a non-juristic body of persons, an undivided estate, a deceased person or an ordinary partnership.

In general terms, a person liable to Personal Income Tax must compute their tax liability, file tax returns and pay tax (if any is owed) on a calendar year basis. There are two types of taxpayer, these being ‘resident’ and ‘non-resident’. You would be classed as a ‘resident’ in Thailand if you were to reside there for 180 or more days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand on a cash basis, regardless of where the money is paid, as well as on the portion of income from foreign sources that is brought into Thailand in the same year that the foreign income is derived. A non-resident, however, is only liable for Personal Income Tax on income from sources in Thailand.

Income chargeable to Personal Income Tax is classed as ‘assessable income’. This term covers income both in cash and in kind. This means that any benefits provided by an employer or other persons, such as rent free housing or the amount of tax paid by the employer on behalf of the employee, are also treated as assessable income on the employee for the purposes of Personal Income Tax.

Assessable income is split into eight categories. Certain allowances and deductions can be offset against assessable income in order to calculate taxable income. Taxpayers will make any deductions from assessable income before the allowances are granted.

The following table details deductions permitted for the calculation of Personal Income Tax in Thailand:

 

Type of income

Deductions
  1. Income from employment.

40% but not exceeding Baht 60,000

  1. Income from hire work.

40% but not exceeding Baht 60,000
  1. Income received from copyright.

40% but not exceeding Baht 60,000
  1. Income in the nature of interest, dividend or capital gain.

-
  1. Income from letting out of property on hire:

-

5.1.  Building and Wharves.

30%

5.2.  Agricultural land.

20%

5.3.  All other types of land.

15%

5.4.  Vehicles.

30%

5.5.  Any other type of property.

10%
  1. Income from professional services.

30% except for the medical profession where 60% is allowed.
  1. Income derived by contract work or whereby the contractor provides essential materials besides tools.

Actual expense or 70%
  1. Income derived from business, commerce, agriculture, industry, transport, or any other activities not specified earlier.

Actual expense or 40% to 85% depending on the types of income

 

 

The following table details allowances permitted for the calculation of Personal Income Tax:

 

 

Type of allowances

Amount

Personal allowance for a single tax-payer.

Baht 30,000 for the taxpayer.

Personal allowance for non-juristic partnership or body of persons.

Baht 30,000 for each partner but not exceeding Baht 60,000 in total.

Spouse allowance (legally married).

Baht 30,000.

Child allowance (child under 25 years of age and studying at educational institution, or a minor, or an adjusted incompetent or quasi-incompetent person).

Baht 15,000 each (limited to 3 children).

Education (additional allowance for child studying in educational institution in Thailand).

Baht 2,000 each child (limited to 3 children).

Life insurance premium paid by taxpayer or spouse.

Amount actually paid but not exceeding Baht 100,000 each.

Approved provident fund contributions and retired mutual fund.

Maximum allowance (exemption) of  Baht 500,000 but not exceeding 15% of income.

Long term equity fund.

Maximum allowance (exemption) of Baht 500,000 but not exceeding 15% of income.

Home mortgage interest.

Amount actually paid but not exceeding Baht 100,000.

Social security contributions.

Amount actually paid.

Parent allowance (parents of either taxpayer and/or legal spouse over 60 years of age with income less than 30,000 Baht)

Baht 30,000 each parent

Undivided estate.

Baht 30,000

Disability allowance (cost of caring for disabled persons).

Baht 60,000

Charitable contributions.

Amount actually donated but not exceeding 10% of income after standard deductions and allowances.

 

 

The tax rates fir resident and non-resident individuals (2008 and subsequent yeaqrs) are as follows:

 

Taxable income (Baht)

Tax rate %

Tax amount

Accumulated tax

0 – 150,000

Exempt

-           

-           

150001 – 500,000

10

35,000

35,000

500,001 – 1,000,000

20

100,000

135,000

1,000,001 – 4,000,000

30

900,000

1,035,000

4,000,001 and over

37

-           

-           

 

Persons over age 65 get an exemption on the first Baht 190,000 of taxable income instead of the normal Baht 150,000 threshold.

Removal of Compulsory Annuitisation for UK pensions

Submitted by qrops on Thu, 15/Jul/2010

In the Emergency Budget, the government announced that the requirement to purchase an annuity by age 75 was to be removed from April 2011. Transitional rules have been implemented to allow those individuals who reached age 75 on or after 22nd June 2010 to effectively remain in Unsecured Pension (USP) up to age 77 years old.

Today we see the consultation paper covering the new tax rules that will need to be introduced aimed at inviting feedback from the industry. The consultation period will end on the 10th September 2010. Legislation can then be drafted for the 2011 Budget. The new rules would then form part of the Finance Bill 2011.

Key points:

  • Alternatively secured pension (ASP) will cease when these new rules come into force.
  • Unused funds on death post age 75 years will be taxed at 55%. Alternatively, dependents pensions can be paid and will be subject to income tax as usual. Death benefits before age 75 will remain unchanged.
  • Inheritance tax (IHT) will not apply to unused pension funds on death post age 75 years. This will be monitored to prevent abuse e.g. IHT avoidance
  • The age 75 limit will be removed for the purposes of Value Protected Lump Sums, Trivial Commutation Lump Sums and Pension Commencement Lump Sums (or Tax Free Cash).
  • Unsecured Pension (USP) will be available in two forms – a capped USP subject to maximum income limits per annum or a flexible USP with no cap. Flexible USP will only be available to individuals who can prove that they will not exhaust their pension savings prematurely and have to rely on the state. There is a proposed Minimum Income Requirement (MIR) test for flexible USP.
  • The age 75 conditions in relation to the Lifetime Allowance test or the latest age at which tax relieved pension contributions can be made will remain unchanged.

 

To see the full consultation document click on the link below:
http://www.hm-treasury.gov.uk/d/consult_age_75_annuity.pdf

Pension Transfer Abroad,QROPS and QNUPS

Submitted by qrops on Mon, 21/Jun/2010

Sterling stepped back from a one month high against the US dollar on Fridayafter what had been a positive week for the UK currency. The positive effectsof improved UK data and improved risk appetite eased late on Friday withtraders becoming more cautious ahead of this weeks emergency budget andthe first round of fiscal cuts.Earlier on Friday the pound had continued to rally after risk appetite hadcontinued to improve following 5 straight days of gains for European stocks.Sterling had also been supported after data released showed Britain's budgetdeficit came in lower than expected in May. By mid afternoon sterling hadrelinquished its gains to trade flat on the day with analysts very cautious overthe sustainability of this months 2 percent rally ahead of the budget this week.Following Thursdays’ improved retail sales and also the news that Britain’sbudget deficit is slightly improved, we are starting to see signs that the worstfor the UK economy may be over. However, there may still be tough timesahead with George Osborne putting the finishing touches to his first budget,released on Tuesday, which is fully expected to feature heavy spending cutsand tax increases.In other news last week there may be signs that Britain’s credit conditionsmay be easing slightly with news that lending to UK firms contracted at aslower pace in April and major banks approved more mortgages in May,according to figures from the Bank of England.Against the euro the pound was little changed following a fairly range boundweek. The significant resistance of 1.20 yet again proved too much of abarrier for sterling with the euro, despite their ongoing problems, holding firmin the late 1.19’s.The week ahead brings a quiet day today with markets looking ahead totomorrow’s budget, with caution being the key theme with analysts andinvestors. Also tomorrow are the bank of England minutes from their lastmeeting. This is followed later in the week by US interest rate decision

How HMRC can now check Residency

Submitted by qrops on Fri, 05/Feb/2010

Ever wondered why you have to submit your identity details when booking flights?

Counter Terrorism is the normal answer and certainly that forms part of its uses. But for most people - especially people living abroad as expats - it is a way for Her Majesty's Revenue and Customs (HMRC) to keep track of visits to the UK.

And their reason, of course, is Tax.

The e-Borders programme has been widely introduced and will be extended extensively to cover international travel information being retained by UK border control authorities. That information will be shared with the Police and HMRC, and retained for 10 years.

From an immigration perspective this will allow the government greater access to the identity and movements of individuals entering the the UK. From HMRC’s perspective it is a means to track residence, and therefore liability to taxation.

A further aim is to help identify those who avoid paying tax by claiming to be resident outside the United Kingdom.See our guide to Residence and Domicile for more details.

A recent Court of Appeal case has shown that the fact that you spend less than 90 days in the UK does not deter HMRC from challenging residency and winning!

HMRC will look at length and frequency of visits and aspects such as retaining residential property.

You will have to disclose frequency and length of visits on your UK tax return.

The e-Borders programme states:

We will collect the biographical information contained in the section of a passport that can be read by machine. We will also collect details of the service on which a passenger is travelling, for example the flight number. This information is sometimes known as advance passenger information.

A number of other countries already collect this type of information, including the United States, Canada, Spain and Australia.

We will also collect other passenger information, for example details of reservations and payment.

This information will be collected from the carrier not from the passenger. The carrier will be legally required to collect this information and provide it to the e border programme as part of the check-in process. Passengers who do not provide the information are unlikely to be allowed to travel.

The information will be kept for no more than 10 years. It will be protected in keeping with the Data Protection Act and appropriate security controls will ensure it is not used or accessed incorrectly. It will be given only to organisations that are legally authorised to receive it and that need it to carry out their official duties

A “Third Way” for UK Pensions and QROPS

"Third Way" - An Introduction:

This is an explanatory document about the evolution of Pensions in the UK now encompassing the benefits of globalisation, guarantees and Qualifying Recognised Overseas Pension Schemes (QROPS).

The Third Way looks at solutions to the volatility in investment markets and what appear to be long term low interest rates. These factors are beyond the control of individual investors but that have a huge impact on the willingness of individuals to make provision for retirement. 

The recent credit crisis has hugely damaged Pensions and Pensioners. Long held assumptions relating to pensions seem to have been swept away. The stock market’s volatility has resulted in pensions significantly dropping in value. The FTSE 100 index is still more than 20% lower than its peak in December 1999. The Bank of England have printed money to buy gilts, employers are cutting contributions - often substantially - to employee pension schemes and annuity rates have plummeted. The timing of this could not have been worse.

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