Overview of Taxes in Thailand

 

Thailand has a modern yet relatively simple tax system that is a breath of fresh air for anyone who has ever done their own taxes in a Western country, especially Americans (the average American spends 13 hours per year on their taxes!)1. On my Thai tax forms, there are only about six lines that need to be filled out and it takes less than 5 minutes! It would be even faster if I didn’t have tax-deductible investments. 

Thailand has the following progressive tax rates:

Personal-Tax3

As an example, if you made 1.5 million baht (49,000 USD) in a year, only the amount over one million baht is taxed at 25%. Your overall tax rate would be around 13%, although you could reduce that to 6% if you maximized your tax-deductible investments.

In addition to being simple, fast, and relatively easy to understand, the main advantages for FIRE in Thailand followers are tax deductible investments such as LTF’s and RMF’s and the fact that Thailand doesn’t tax capital gains on the stock market. These are huge advantages if you invest here during your working years and then stay here for retirement! 

Other countries have tax-deductible investments as well, but when you retire the capital gains you earned will then be taxed (you will be in a lower tax bracket when you’re retired, but no tax is always better than low tax). This means your tax-deductible investments will not only save you money on your taxes, they will grow tax-free during your working years, and when you sell, your gains will also be tax-free. 

Not only will your investments save you money on taxes, any gains you make will not be taxed even when you retire 30 years later!  Show me a better investment system anywhere in the world that’s available to the average person!

Also, there’s no tax on income outside Thailand if it’s kept out of the country for a year. A good example of how FIRE in Thailand followers can use this to their advantage is with dividend income from abroad. If you receive dividends from investments outside of Thailand and keep that money out of Thailand for a year, that income is not taxed. If you tried doing this while a tax resident of another country like Canada, the Canadian government would tax you on those foreign dividends, but by living in Thailand you can collect that money tax-free (note: the American government always taxes worldwide income, sorry Americans). 

To completely maximize this advantage you can have investments on a foreign stock exchange which doesn’t have any dividend withholding tax, like the London Stock Exchange. Then your dividends will be 100% tax-free!

Lastly, dividends from investments in Thailand are taxed at a flat rate of 10%. Thailand has double-taxation agreements with many countries so you can avoid being taxed twice on the same income.

Click here to find out more about free money and tax-deductible investments in Thailand.

1Saving close to 13 hours per year on taxes works out to almost an extra month of free time over a 30-year stay in Thailand, assuming you would be awake for 16 hours per day. I would never want to spend a month of my life just doing taxes!

 

Please read the disclaimer. This is not meant to be an exhaustive summary of taxes in Thailand. There may also be rules from your home country you need to consider. For example, if you return to the UK you will be taxed on any capital gains in the previous five years.  Obtain professional advice before making any investment or financial decisions.

 

References

A Summary of Thailand’s Tax Laws

Thailand Double Taxation Agreements

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Leave a Reply

avatar
  Subscribe to comments  
Notify of me of follow-up comments by email.