Financing business processes, investment activities, and purchasing real estate in Thailand require specialized legal, financial, and tax support. The development of a financial scheme, drafting contracts, ensuring fund transfers, company registration, opening a bank account, and government registration of assets are processes based on knowledge of legislation and transactional experience.
When purchasing properties such as Freehold villas or condominium apartments, which are acquired as full ownership, a transaction must be made from a foreign bank with a purpose of payment indicating the complete address of the property, form of ownership, and the buyer’s name and surname. Such details are mentioned in the Credit Advice bank document, which is submitted to the Land Office for the government registration of property rights. Investors use cryptocurrencies and offshore company funds as a means of payment.
What types of real estate can be acquired in this case? What contracts can be used for loans and investments? How to pay taxes and at what rates? How to repatriate profits to other jurisdictions? Financial and tax planning is an integral part of any business, enabling executives to make timely decisions.
Thailand’s tax legislation is governed by the Revenue Code, which has been in effect since April 1, 1939. Non-payment of taxes or intentional tax evasion is considered a criminal offense and is punishable by a fine of up to 200,000 baht and imprisonment for up to 7 years, according to Article 37 of the Revenue Code.
Which types of taxes apply to non-residents and are they taxpayers? First, it is necessary to understand tax residency and avoid double taxation (Double Tax Treaty). According to Thai tax legislation, a non-resident individual who spends more than 180 days in the Kingdom in a calendar year is considered a tax resident. Non-residents with long-term (annual) visas who officially work or receive income from renting or selling real estate fall into this category.
For example, if a foreigner working in Thailand receives dividends in their home country and transfers them to their account in Thailand during the reporting year, such income is subject to income tax by law. Thailand has agreements with 49 countries to avoid double taxation. Common reasons for double taxation are citizenship and source of income in other countries. In such cases, both countries claim tax on the taxpayer’s income. If there is no agreement between the countries to avoid double taxation, the taxpayer will pay tax in both countries.
Personal Income Tax – is levied on various incomes, including services, various forms of salaries, bonuses, allowances, pension payments, free property rentals, and other income and payments, including brokerage, discounts, subsidies, meeting fees, rewards, loans, gifts, exports, etc. The progressive tax rates are applied to personal and corporate income tax. Tax is payable on income exceeding 150,000 baht at a rate of 5%, from 300,000 to 500,000 baht at a rate of 10%, from 500,000 to 750,000 baht at a rate of 15%, from 750,000 to 1 million at a rate of 20%, from 1 million to 2 million at a rate of 25%, from 2 million to 5 million baht at a rate of 30%, and above 5 million baht at a rate of 35%, according to the reporting period (calendar year).
Thai companies pay Corporate Income Tax at a rate of 20%. According to Article 65 of the Revenue Code, taxable income is all receipts minus expenses during the reporting period, which are listed in Article 8 of the Royal Decree of December 15, 1959, issued in accordance with the Revenue Code, which regulates the determination of expenses deducted from taxable income.
Value Added Tax (VAT) has been levied in the Kingdom since 1992 at a rate of 10%, officially reduced to 7% currently. Companies with turnover exceeding 1.8 million baht are required to register with the inspection as taxpayers. Importers are also subject to VAT, and taxable goods include all types of property, material and non-material, regardless of whether they are available for sale or for personal use. Essentially, all goods imported into Thailand are subject to VAT.
Foreigners are affected by taxes related to the registration, ownership, leasing of real estate, stamp duties and road taxes, advertising taxes, taxes of local administrations (when renting commercial premises), and dividend taxes when sharing profits in a Thai company. Welcome to Thailand!