Is Thailand a tax haven?
Many expats have fallen in love with Thailand, and it has become a popular place for expats and retirees. Living in Thailand can come with many perks, such as tropical weather and lower taxes if you plan properly.
There are more options for reducing your tax rate than just moving to Vanuatu or Dubai. Thailand has a unique tax system that can possibly help you to lower your taxes to a point that it virtually becomes a tax haven. You can reduce your tax rate without moving to one of the popular tax-free countries or offshore tax havens in the world.
Thailand also has multiple visa options that will allow you to gain temporary or permanent residence in the country. You can learn more about these different options as you continue to read.
In this article, we’ll discuss:
- Thailand Quick Facts
- Is Thailand An Offshore Tax Haven?
- Who Has to Pay Tax in Thailand?
- Double Taxation Treaties
- How Can You Lower Your Tax?
- Cost of Living in Thailand
- Thailand Elite Visa
- Thailand Investor Visa
- Retiring in Thailand
Thailand Quick Facts
Where is Thailand located?
Thailand is located in Southeast Asia, neighboring Myanmar to the west, Laos, and Cambodia to the east, and Malaysia to the south.
Capital City: Bangkok
Currency: Thai Baht (THB)
Exchange Rate: 1 USD = 31.27 THB
Is Thailand An Offshore Tax Haven?
While Thailand isn’t exactly a tax haven, it can be a useful part of your tax plan.
Thailand is not deemed a tax-free country but it does have a unique tax structure. It’s like a mix between a non-domicile tax country and a territorial tax country. How it works for you is dependent on the time you spend living in Thailand.
If you live in Thailand and qualify as a tax resident, you’ll be required to pay Thailand’s personal income tax on your worldwide income.
If you are residing in Thailand for only half of the year (less than 180 days) then you will only be required to pay tax on the income that you’ve earned in Thailand. However, if the income that is earned abroad is moved into Thailand in the year that it was earned, it will be taxed the same as the personal income earned within Thailand.
If you have enough savings that you have earned from previous years that will cover all you need to survive during your time in Thailand, you can transfer that money and live in Thailand tax-free.
If you spend time in Thailand (up to 179 days) and earn all of your money overseas but don’t transfer it into Thailand, you won’t have to pay any tax to Thailand while you live there. If you plan this way, Thailand can become a tax haven.
Who Has to Pay Thailand Tax?
So, who has to pay taxes in Thailand?
You’ll have to pay income tax on all of your assessable income. All income earned in Thailand is going to be taxed by Thailand, no matter how long you stay in Thailand — yes, even if you’re there for less than 180 days. This includes money that you earn working online.
If you are considered a Thai tax resident, you’ll have to pay income tax on any income you earn worldwide. Anyone who stays in Thailand for over 180 days is going to be considered a tax resident.
If you are retired, you’ll also have to pay income tax on your pension and retirement pay.
Your assessable income also includes housing and meal allowances, school fees, cost of home leave, capital gains, and royalties.
In Thailand, the tax year starts on the 1st of January and ends on December 31st. Tax returns are due March 31st. If you do not submit a tax return, the amount you’ll have to pay in taxes will be doubled.
How much you have to pay in taxes is going to be based on how much income you earn. Here is an income band chart.
|Income (in bahts)||Tax Rate|
|0 – 150,000||Exempt|
|150,000 – 300,000||5%|
|300,000 – 500,000||10%|
|500,000 – 750,000||15%|
|750,000 – 1,000,000||20%|
|1,000,000 – 2,000,000||25%|
|2,000,000 – 5,000,000||30%|
Thailand is clearly not a zero-tax country. It might not even be considered a low-tax haven if you are living there year-round.
Still, even at the highest tax bracket, the tax rate is still lower than you would be paying in many high-tax western countries that will tax you nearly half of your income.
Double Taxation Treaties
If you are paying taxes in Thailand, will you still have to pay tax in your home country?
Thailand has treaties with most of the countries throughout the world. These treaties are designed so that you or your company are not going to be taxed twice on the same income.
Not only can you avoid double taxation, but this can possibly lower your tax obligation.
If you are considered a domicile or tax resident in a high-tax country, you can establish tax residence in Thailand and then use it to cancel out the tax you would have had to pay in your high-tax country.
In the US, all US persons are required to pay income tax no matter where they live in the world. However, they have an agreement with Thailand (among other countries) that will allow you to take a Foreign Tax Credit on what you pay in income tax in Thailand and subtract it from your US tax obligation.
Just remember, you may still need to file your tax report to your home country. The US requires that all US persons report all their income and file to the IRS, even if they don’t have to pay any tax.
How Can You Lower Your Tax?
There are deductions and allowances in Thailand that you can use to lower your taxes.
A deduction for Category 1 income, which includes salaries, wages, and a pension, can be 50% of the assessable income, but not be more than 100,000 baht. It’s the same for Category 2 income which includes service fees, agent fees, director fees, and meeting fees, and Category 3 income which is goodwill, copyright, and income that comes from annuities, juristic acts, judgments, or wills.
The deduction for Category 6 income — professional services income — is 60% for medical professionals and 30% for all other liberal professions. The deduction for Category 7 — construction services income — and Category 8, which includes business, commercial, agricultural, transport, and industrial, is 60% of assessable income.
Some options for tax allowance include home mortgage interest payments, purchases of a retirement mutual fund or long-term equity fund, contributions made to charity, social insurance contributions, life insurance premiums, and qualified provident fund payments.
A personal deduction of 60,000 baht can be taken out for the taxpayer as well as his or her spouse if their spouse doesn’t file their own tax return.
30,000 baht can be deducted for each child. 30,000 baht can be deducted for the taxpayer’s or their spouse’s parents if their parents are older than 60 and have an income below 30,000 baht.
60,000 baht can be deducted if the taxpayer is the caregiver for a disabled or incapacitated family member.
Cost of Living in Thailand
If you are going to try and spend time in Thailand without working there or transferring in money that you are earning overseas, it’s important to know how much you will need.
Thailand’s affordability is going to be based on the perception you have in comparison to your home country, as it’s more expensive than some and cheaper than others. Thailand is a fairly inexpensive country to live in compared to Western countries.
A two-bedroom apartment in central Bangkok is going to cost 40,000 to 45,000 bahts per month ($1,275 USD). Outside of central Bangkok, the price for a two-bedroom drops to about 17,000 to 20,000 bahts monthly.
A loaf of bread in Bangkok will cost around 60 bahts and a standard pack of Oreos costs 30 bahts. Lunch for two people can cost around 400 bahts and it will cost about 120 bahts for a large cappuccino at Starbucks.
The cost of living in Bangkok may be similar to what you might pay in a town in the US, but it’s a lot cheaper than other big cities, like Paris, Sydney, or London.
Thailand Elite Visa
If you would like to spend time in Thailand, you’re going to need a visa. In the past, people have lived in Thailand by doing visa runs, a process in which a person takes a quick trip across a border to reset the time on a visa. However, this is illegal and Thailand has cracked down on it even more than before.
If you want to spend a long period of time in Thailand, you’ll need a legitimate visa, like the Thailand Elite Visa.
The Thailand Elite Visa is one of the most cost-effective ways to obtain residence in Thailand.
The Thailand Elite Visa lasts for five years and works as a residence permit. Or you can invest even more (over 1 million bahts) to get an Elite Visa that lasts for 20 years.
The Thailand Elite Visa is a sunk cost of 600,000 baht, not an investment. This means you won’t be earning this money back. You’re paying to have the visa.
The Thailand Elite Visa also comes with some other lifestyle perks. It comes with rides to and from the airport and they’ll help you with renewing it. You can even get a complimentary yearly medical check-up.
This visa does not have a minimum requirement on how much time you have to spend in the country in order to keep it, meaning you can spend as little time there as you want. Still, it gives you access to Thailand as often as you would like.
Thailand Investor Visa
Thailand also has a residency by investment program that allows you to make an investment in Thai property worth 10 million bahts (300,000 USD) or into a Thai bank to receive residency in Thailand.
You can renew your Thai Investor Visa every year, and you are required to spend only one day actually in-country each year.
Elite Flexible One is a new program coming out that allows you to make an investment into real estate from one of four large developers. This will come with the same benefits as the Thailand Elite Visa but will allow you to make an investment rather than just paying a sunk cost. Foreigners cannot own land in Thailand, so you’ll most likely be investing in a condo.
While this is a decent deal, there are other options that may be cheaper or give you a better return on your investment. If you aren’t already wanting to live in Thailand, you may want to look elsewhere. There are other offshore tax havens, low-tax, or tax-free countries you might want to consider.
Only get a Thailand Visa if you are planning on spending some of your time living there. However, if Thailand matches your lifestyle and is somewhere you’ve always dreamed of going, this is a great option.
Retiring in Thailand
Thailand offers a long-stay retirement visa for foreigners over 50 years old.
You can start by first obtaining a non-immigrant O visa and then extending it to a one-year retirement visa. After that, you’ll need a re-entry permit. This will allow you to come and go without invalidating your extension of stay. You’ll be required to report to immigration every 90 days.
To qualify for the retirement visa, you’ll need a Thai Bank Account with at least 800,000 baht ($25,608 USD) and a monthly income or pension of at least 65,000 baht ($2,080 USD). You are not allowed to be employed if you use this visa.
Remember, you will be taxed in Thailand on your pension or any other retirement money you earn. Some people have gotten away with simply not reporting the pension or retirement income, but this is illegal and can come back to bite you later on.
Thailand’s tax system is a bit complicated, but if Thailand is a place in which you would really like to spend time, it’s a place you can work into your tax plan.
The cost of living in Thailand is decently priced and if you are making all of your money abroad and keeping it out of the country, then you can live in Thailand tax free.
There are various options for how to legally get into Thailand. Once there, you can enjoy all Thailand has to offer.