Advance Blog

September 20, 2023
Grant Thornton

Thai Government to Begin Taxing Foreign-Sourced Income as of 2024 

On September 15, 2023, the Thai Revenue Department (TRD) released Departmental Instruction No. Paw 161/2566 (2023) concerning income tax payments according to Section 41, Paragraph 2 of the Thai Revenue Code (TRC). This newly introduced guidance is expected to have a significant impact on the tax regulations governing the repatriation of foreign-sourced income to Thailand by Thai tax residents, with implications scheduled to be enforced starting from January 1, 2024, and beyond.

Current Practice 

Before the issuance of this recent departmental directive, a Thai tax resident was subject to income tax on foreign-sourced income only if such income was transferred to Thailand within the same calendar year in which it was earned. In other words, foreign-sourced income remained non-taxable if it was brought into Thailand in the following calendar year.

Note: A Thai tax resident is defined as an individual who resides in Thailand for a cumulative duration of 180 days or more within a single tax year. 

Practice Effective 1 January 2024 

According to the recent departmental directive, Thai tax residents with foreign-sourced income will be subject to taxation in Thailand regardless of the timing of remittance of such income into the country. It’s important to note that this rule exclusively applies to Thai tax residents.

Our view

This new guideline poses significant challenges for Thai tax residents who have income from both Thai and foreign sources. While the departmental instruction doesn’t have the force of law, it serves as the tax authority’s enforcement directive.

There are several unresolved issues that the tax authority still needs to address regarding the implementation of this new rule. These include determining the applicable tax rates (whether a flat tax will be imposed, if different tax rates will be specifically applied to foreign-sourced income, or if the standard progressive tax rate will be used), how to differentiate between principal (funds from legacy investments, inheritance, original investment capital) and earnings (interest, dividends, remuneration) from commingled funds, and establishing the relevant foreign currency exchange rates for tax assessment, among others.

We are actively monitoring further developments in this matter and we aim to provide additional updates and clarifications on this topic in the near future.

Grant Thornton is a leading business advisory firm in Thailand, offering Audit and Assurance, Talent Acquisition Management and Executive Recruitment, Advisory, Business Consulting, Tax and Legal Consulting, Japanese Business Practice Consulting, Business Process Outsourcing, and Business Risk Services.   

Grant Thornton
Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Thailand is a member firm of Grant Thornton International Ltd (GTIL).

Thailand’s Personal Data Protection Act B.E. 2562 (2019) (“PDPA”)

As the Personal Data Protection Act (PDPA) also applies to personal data collected prior to the PDPA’s entry into force, please be informed that AustCham Thailand will automatically keep your contact details including email address, name and last name, and company details, on our mailing list.

Your data was received by AustCham Thailand as a result from you either registering or attending an event, contacting our office or subscribing to regular updates via the website. However, if you would like to stop receiving emails AustCham Thailand and revoke your consent for AustCham to keep and use your data to contact you for chamber events and updates, please scroll down to the end of this email and click “Unsubscribe from this list”. Your personal data will be shortly deleted once the opt-out notice request is received.

Please note that your data is kept in AustCham’s CRM system, please see here for AustCham’s Terms of Use and Privacy Policy. AustCham uses a management software system from Wild Apricot, and emails are distributed through MailChimp.