Thailand income tax exemptions: the importance of proper payroll

The vast majority of organisations in Thailand do not calculate income tax properly for their employees. This is an incredible oversight and one that is potentially costing organisations hundreds of thousands of Baht every year.

Employees in Thailand pay an income tax based on their earnings. This income tax is, however, subject to deductions in accordance with various factors, including whether they are married, have children, are the only working partner in a marriage, whether the children are in education, whether they pay interest on a property, and others related to investments and donations.

Take a look at the following example:

• Mr. Smith and Mr. Johnson both earn Baht 100,000/month.
• Mr Smith is married, his wife is a stay at home Mum, he has two children (both in education) and pays Baht 10,000/month interest on his condo.
• Mr. Johnson is single, has no children, and rents his condo.

Over the course of 12 months, Mr. Johnson will have to pay Baht 17,760 more income tax than Mr Smith. For larger organisations with dozens or hundreds of staff, and who pay income tax on behalf of their employees, this is a substantial difference. For individuals who receive a salary after tax, this equates to a flight home every year.

These figures should all be listed and recorded in your organisations payroll system. An accurate payroll system is crucial in calculating these significant cost savings, and also provides staff with confidential documented evidence regarding their salary that can be used to obtain loans and other financial services.

If you feel that your organisation, or your employer, is not taking full advantage of potential income tax exemptions here in Thailand, or that your payroll system could be improved, ask the question - or contact one of the organisations below.

Written by Stuart Blott, General Manager, Sutlet Group Co., Ltd.
Contribution by Danaya Chinda, HR & Customer Service, PB Legal Services Co., Ltd.