Thai tax law is frequently amended and although the following information is up-to-date as at January 2014, investors are advised to seek current professional advice. We would be pleased to provide contact information to tax advisors based on recommendations from previous clients.
Capital gains tax in Thailand
Thailand does not have specific capital gains tax legislation. Instead, capital gains income is dealt with under the general provisions of the income tax law, which classifies capital gains income as a type of assessable income subject to both personal income tax and corporate income tax.The amount of assessable income for capital gains on real estate (or other assets or investments) sales is simply the difference between the sales price and the original purchase price.
There are no allowances for inflation although there are allowances for share investments on the Stock Exchange of Thailand (SET).
The sales proceeds for capital gains tax (income tax) purposes is the amount actually derived, irrespective of the market price.
For non-resident tax payers, capital gains income that is sourced in Thailand is subject to tax at the rate of 15% under the provisions of the personal income law in Thailand.
Foreign non-resident individuals selling property in Thailand should note, however, they may be exempt from this 15% tax under a double taxation treaty.
Other capital gains tax exemptions
The Thai government grants exemptions to resident and non-resident owners who sell a property and use the proceeds to purchase another which is to be used as their primary residence.
However, there are a number of provisions that must be met in order to properly qualify for the exemption.
Firstly, the seller must have lived-in the sold property as a primary residence and have registered the living address for a period of at least one year from the date of acquisition.
Second, sellers must purchase a new property within one year, either prior to or after the sale, and the new property must be for residential purposes.
The amount of exemption is calculated according to the official estimated value of the property at the time of sale, which may be lower or higher than the actual sale price, but must not exceed the value of the new property.
Income tax in Thailand
At the time of writing, the Thai government has resolved to issue a law approving income tax rate cuts which is expected to come in to effect in 2014.
For residents of Thailand, the rates of personal income tax are as follows:
|
Taxable Income Amount |
2012-13 Final Year Rates |
Proposed Rates for 2013 Onwards |
|
1 – 150,000 |
Exempt |
Exempt |
|
150,000 – 300,000 |
10% | 5% |
|
300,000 – 500,000 |
10% |
10% |
|
500,000 – 750,000 |
20% | 15% |
|
750,000 – 1,000,000 |
20% |
20% |
|
1,000,000 – 2,000,000 |
30% |
25% |
|
2,000,000 – 5,000,000 |
30% |
30% |
|
5,000,000 up |
37% |
35% |
For non-residents, tax is paid according to the following flat rate:
|
Taxable Income Amount (See note 2) |
2012-13 Financial Year |
2013 Onwards |
|
Whole Amount |
15% |
15% |
Note 1 – For residents of Thailand, the amount of taxable income is the net amount of income received after deductions and allowances.
Note 2 – For non-residents of Thailand, the amount of taxable income is the gross amount of income received.
Tax on rental income
Income earned from renting-out property is assessable under Thai income tax law and the taxable amount is determined after deducting expenses incurred from gross income.
Depending on the type of property leased a standard deduction of from 10% to 30% is permitted for rental income. If the actual expenses incurred are higher than the standard deduction they can be claimed but must be supported by documentation.
Housing and land tax in Thailand
Building or housing and land tax is collected yearly by the local government where the property is located. For individual property owners if they lease out their property. The tax is assessed at the rate of 12.5% of the yearly rental according to the lease agreement or the annual assessed value by the local authorities, whichever is higher.
Owner-occupied residences are exempt from building and land tax and it is the owners responsibility to inform the local authorities if the property is leased out or otherwise is put to commercial use and pay this 'rental tax' before the end of February each year.
Generally, in Thailand, this tax burden is passed on to the tenant/ lessee in the lease agreement.