On 15 September 2023, the Thai Revenue Department issued Departmental Instruction No. Por 161/2566 (“DI No. 161/2566”) as a guideline to assist tax officers in determining the personal income tax implications of foreign-sourced income brought into Thailand by Thai tax residents.1
WHY THIS MATTERS
Previously, Section 41 Paragraph 2 of the Thai Revenue Code was interpreted differently: the assessable income derived by a Thai tax resident from employment, a business carried on overseas, or from a property situated overseas, would have been subject to Thai personal income tax only if the said taxable income was brought into Thailand in the same tax year. However, the new interpretation means that foreign-sourced income brought into Thailand from 1 January 2024 onwards will be subject to Thai personal income tax, considering the tax-resident status in the year that such foreign-sourced income was earned.
Under these new rules, Thai tax residents who earn income from abroad will be subject to personal income tax on such income upon bringing it into Thailand in any calendar year from 1 January 2024 onwards, meaning that they — and their tax service providers — will have more record-keeping and administration around data gathering and income reporting, and may see their tax burdens increase. Global mobility programmes that have assignees on tax equalisation may need to reconsider, and perhaps adjust, their policies.
It is essential to get in front of the changes described in this newsletter and to communicate quickly and clearly with key stakeholders, so that they can properly plan, budget, and make necessary adjustments.
More Details
DI No. 161/2566 provides a new interpretation of Section 41 Paragraph 2 of the Thai Revenue Code: the assessable income under Section 40 of the Revenue Code derived by a resident of Thailand in the previous tax year — from employment, a business carried on overseas, or property situated overseas — which is brought into Thailand should be subject to personal income tax in the tax year that the said assessable income is brought into Thailand. This rule should apply to assessable income which is brought into Thailand from 1 January 2024 onwards.
A resident of Thailand is defined as an individual who stays in Thailand for a period or periods aggregating 180 days or more in any tax year.
Any rules, regulations, instructions, rulings, or practices which contradict DI. No. 161/2566 shall be repealed.
If the assessable income is subject to tax in the source country, the tax paid in the source country can be credited against the personal income tax liabilities in Thailand per rules prescribed in the applicable double taxation treaties.
KPMG INSIGHTS
Affected taxpayers should be aware of the Thai personal income tax implications and take this new interpretation and their tax residency into consideration when planning to repatriate foreign-sourced income into Thailand.
Individual taxpayers and employers may have questions about how to comply with the new rules and may have difficulty understanding how they will be impacted, in practical terms. They should consider consulting with their qualified tax services professional or a member of the Global Mobility Services tax team with KPMG in Thailand (see the Contacts section).
FOOTNOTES
1 See (in Thai): ประกาศ (rd.go.th) .
The information contained in this newsletter was submitted by the KPMG International member firm in Thailand.
CONTACTS
Connect with us
- Find office locations kpmg.findOfficeLocations
- kpmg.emailUs
- Social media @ KPMG kpmg.socialMedia
Stay up to date with what matters to you
Gain access to personalized content based on your interests by signing up today
GMS Flash Alert is a Global Mobility Services publication of the KPMG LLP Washington National Tax practice. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
© 2024 KPMG Phoomchai Tax Ltd., a Thailand limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.