Thailand plans tax break on foreign income
The move is expected to boost economic liquidity and incentivise overseas investors to bring funds home
The Thai Revenue Department is fast-tracking new legislation to exempt Thai citizens from income tax on earnings sourced from abroad within the current year.
Revenue Department Director-General Pinsai Suraswadi stated that the proposed law would exempt Thai citizens from income tax if they bring foreign-sourced income into Thailand within two years of earning it. The details are under discussion at the Finance Ministry. The law, once enacted this year, could be applied retroactively.
According to Pinsai, Thai citizens collectively hold approximately 2 trillion baht in foreign income. Bringing this money into Thailand could stimulate the economy. The tax incentive aims to encourage the repatriation of foreign income. Many invest abroad for potentially higher returns compared to domestic investments. However, tax considerations often deter them from repatriating those profits.
In Thailand, personal income tax is applied on a progressive scale, ranging from 5% to 35% based on income levels. On June 17, the Cabinet approved the Finance Ministry’s proposal to exempt personal income tax on capital gains from the sale of digital assets or cryptocurrency. This exemption is set to be effective from January 1 this year until December 31, 2029.
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Pinsai said that the proposed cryptocurrency tax measure is intended to attract foreign investments into the country through the crypto trading market. The draft ministerial regulation is pending publication in the Royal Gazette before enforcement.
Regarding the taxation of foreign-sourced income, the Revenue Department follows the Resident Rule principle. Those residing in Thailand for 180 days or more within a tax year (January to December) are considered tax residents and are taxed on all income, whether earned domestically or abroad, according to Bangkok Post.
Before last year, those with foreign income could plan to reduce tax liabilities. The law then required that foreign income brought into Thailand in the same year it was earned would be taxed. However, if the income were brought in after the year it was earned, no tax would apply. For instance, foreign income earned in 2020 but brought into Thailand in 2021 would not be taxed.
Under the current law, effective since 2024, citizens are required to pay personal income tax on foreign-sourced income regardless of the year it is brought into the country, whether in the year it was earned or any subsequent year.
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