Fairer tax system plan for foreigners, overseas workers

The Finance Ministry is poised to adjust the personal income tax system for Thais working abroad and foreigners who work here to create fairness and attract foreign direct investment.

The adjustment will create a clear-cut direction for taxing income of Thai and non-Thai employees, which will help solicit investment in Thailand, deputy permanent secretary for finance Prapas Kong-ied said without elaborating on details.

According to the Revenue Code, employees working for companies incorporated in Thailand are subject to personal income tax regardless of where they work.

Those staying in Thailand for an aggregated period of more than 180 days in a tax year are defined as Thai residents, making them liable to tax for income from sources in Thailand and on a portion of income from foreign sources brought into Thailand.

For example, employees of a Thai company working in the Philippines must be taxed by the revenue authority there and taxed again by Thailand's Revenue Department when they bring back money to their home country, Mr Prapas said.

The way Thailand charges personal income tax is based on where employers have been set up rather than the source of income as in other countries.

Thailand's taxation of personal income is not fair and needs to be adjusted, he said, adding that permanent secretary for finance Somchai Sujjapongse wants to include the issue in the amendment of the Revenue Code.

Under the current personal income tax structure, annual taxable income of 150,000 baht or lower is exempt from tax, 150,001 to 300,000 baht is charged at 5%, 300,001 to 500,000 baht is charged at 10%, 500,001 to 750,000 baht is charged at 15%, 750,001 to 1 million baht is charged at 20%, 1-2 million baht is charged at 25%, 2-4 million baht is charged at 30%, and more than 4 million baht is charged at 35%.

The 30% bracket will be widened to 2-5 million baht, with the top rate of 35% starting from 5 million baht, in the 2017 tax year.