By Wimvipa Jirakajorn, Tax Manager

 

Thailand is currently preparing a draft amendment for the taxation of worldwide income under the residence rule. According to this principle, an individual’s income is taxable in their country of residence, regardless of where it is earned, as long as the person resides there for a defined period.


This proposed amendment to Section 41 of Thailand’s Revenue Code would mandate that individuals who live in Thailand for 180 days or more would be required to pay tax on their overseas income, even if that income is not transferred into Thailand.


The amendment would focus specifically on personal income tax, excluding corporate income tax and income from foreign mutual funds, apart from private funds. If this amendment is enacted, it will further reinforce recent changes to Thailand’s approach to taxing foreign income. Under current regulations, individuals who spend more than 180 days a year in Thailand are subject to tax on both local income and any foreign income brought into Thailand.


Previously, according to section 41 of the Revenue Code, it is stated that 


“Section 41 A taxpayer who in the previous tax year derived assessable income under Section 40 from an employment, or from business carried on in Thailand, or from business of an employer residing in Thailand, or from a property situated in Thailand shall pay tax in accordance with the provisions of this Part, whether such income is paid within or outside Thailand.


A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part.


Any person staying in Thailand for a period or periods aggregating 180 days or more in any tax year shall be deemed a resident of Thailand.”


This means that foreign income was only taxable if it was brought into Thailand within the same tax year it was earned.  It is planned to enact these draft amendments in 2025.


This movement could foster international cooperation and information-sharing for tax collection on foreign income, since Thailand is already part of the OECD’s tax information exchange network.


For more information with respect to proposed taxation of worldwide income in Thailand, readers can contact the author of this articles Khun Wimvipa Jirakajorn on [email protected] who is a Tax Manager in RSM Tax Service Thailand.


Ref: https://www.bangkokpost.com/business/general/2860812/law-to-tax-income-from-overseas-in-the-works