New income tax regulations targeting overseas earnings drafted by Revenue Department
The Thai Revenue Department is currently formulating legislation aimed at imposing taxes on the overseas income of individuals residing in Thailand. This initiative aligns with the internationally recognized principle of taxing worldwide income based on residency, as clarified by the department’s leadership.
According to the proposed legislation, anyone residing in Thailand for 180 days or more will be subject to personal income tax on foreign earnings, irrespective of whether that income is repatriated to Thailand.
The law necessitates revisions to Section 41 of the Revenue Code, which currently allows individuals to bypass taxation on foreign income unless it is brought into Thailand within the year it was earned.
This significant change follows recent adjustments in tax regulations effective January 1, 2024, which now require individuals meeting the residency criteria to report foreign income as assessable, regardless of when it is transferred into the country.
The amendments specifically target personal income tax, excluding corporate income tax and income from mutual funds investing abroad, except for private funds. This decision has sparked discussions around the tax treatment of pension income from expatriates, particularly in cases where such income is subjected to taxation in the individual’s home country.
The department anticipates that effective tax collection on foreign earnings relies heavily on international collaboration and exchange of information, with Thailand participating in global tax information groups.
Introduction of Minimum Corporate Tax
Additionally, the Revenue Department is pursuing a minimum corporate tax rate in line with international agreements aimed at ensuring major multinational corporations are taxed a minimum of 15% across their operations. This regulation targets corporations with global revenues exceeding €750 million ($870 million) annually.
In the fiscal year 2024, the Revenue Department reported a collection of 1.963 trillion baht, surpassing its target by 0.4%. This uptick is attributed to effective government measures to enhance consumption, including the implementation of an easy e-Receipt program.
The department aims to achieve its fiscal target of 2.28 trillion baht by September 30 and has set a collection goal of 2.372 trillion baht for the upcoming fiscal year starting October 1.
