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Tax Obligations and Compliance for Foreign Residents in Thailand

Under Thailand’s taxation framework, foreign individuals residing in the country are subject to specific tax obligations, particularly when they are also liable for taxation in other jurisdictions. This article provides a comprehensive overview of the Thai tax system for individuals residing in Thailand for 180 days or more, including the requirements for filing tax returns, allowable deductions, the application of Double Taxation Agreements, and penalties for non-compliance.

Tax Residency and Taxable Income in Thailand:

According to Thai tax law, an individual who resides in Thailand for a cumulative period of 180 days or more within a calendar year (1 January to 31 December) is classified as a “tax resident of Thailand.” Tax residents are subject to Personal Income Tax (PIT) on the following categories of income:

  1. Income Derived from Sources Within Thailand:
Such income is taxable regardless of whether it is paid within Thailand or abroad.
  1. Foreign-Sourced Income:
Such income is subject to Thai PIT if it is earned on or after 1 January 2024 and remitted to Thailand in any year. However, foreign-sourced income earned prior to 1 January 2024 is exempt from Thai PIT, even if remitted to Thailand on or after 1 January 2024.

Tax Return Filing Requirements:

Thai tax residents who earn income from sources within Thailand or who remit foreign-sourced income to Thailand (as described above) are required to file a tax return with the Thai Revenue Department within 31 March of the following year for the preceding calendar year’s income.

Deductions and Allowances:

Not all income is subject to taxation, as certain types of income are exempt, including severance pay up to a specified amount, retirement benefits, and bank interest that has already been withheld at source. Additionally, taxpayers may claim deductions for various expenses based on the type of income received.

Double Taxation Agreements (DTAs) and Tax Credits:

To mitigate the risk of double taxation, Thailand has entered into DTAs with various countries. These agreements aim to prevent income from being taxed in both Thailand and the country where it was earned. Foreign residents subject to Thai PIT may be eligible for either a tax exemption or a foreign tax credit, depending on the provisions of the applicable DTAs and the type of income involved.

Penalties for Non-Compliance:

Failure to comply with the above requirements results in fines and surcharges.

Conclusion:

Foreign residents in Thailand who meet the 180-day residency threshold must carefully navigate their tax obligations to ensure compliance with Thai tax law. This includes understanding the scope of taxable income, both from Thai and foreign sources, fulfilling tax return filing requirements, leveraging allowable deductions and DTAs benefits, and adhering to deadlines to avoid penalties. By maintaining accurate records and submitting properly certified documentation, taxpayers can effectively manage their tax liabilities and ensure compliance with the Thai Revenue Department’s regulations. 

Source: International Comparison December 2025: Antea

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Thailand : Penalties of non-tax compliance

Introduction

Taxes in Thailand are imposed in various forms, and the authorities governing each form of payment are separated from each other. The main authorities governing the tax collection in Thailand will be as follows:

  • Revenue Department – Responsible for collecting personal income tax, corporate income tax, value-added tax (VAT), withholding tax, specific business tax, and stamp duty.
  • Excise Department – Responsible for collecting excise taxes.
  • Customs Department – Responsible for collecting customs duties on imported and exported goods.
  • Local Administrative Authorities – Responsible for collecting local taxes, including land and building tax and signboard tax.

If a taxpayer fails to comply with the obligations to pay the taxes referred to above, neglects or refuses to act in accordance with the law, evades taxes, or provides

false information, the relevant authorities are entitled to impose fines, additional charges, and in some cases, criminal penalties against such taxpayer.

Personal Income Tax (PIT)Failure to file or late submission of a tax returnFine not exceeding 2,000 THBSection 35 of the Revenue Code
Failure to file a tax return to evade taxFine not exceeding 200,000 THB or imprisonment for a term not exceeding 1 year or bothSection 37 Bis of the Revenue Code
Giving false statement or evidence to evade taxImprisonment for a term of 3 months to 7 years, and a fine of 2,000 to 200,000 THBSection 37 of the Revenue Code
Late payment of assessed taxSurcharge of 1.5 percent per month and a fine of 2,000 THB imposed on the period of the month that the tax has not yet been paidSection 27  of the Revenue Code
Corporate Income Tax (CIT)Failure to file or late submission of a tax returnFine not exceeding 2,000 THBSection 35 of the Revenue Code
Failure to file a tax return to evade taxFine not exceeding 200,000 THB or an imprisonment for a term not exceeding 1 year or bothSection 37 Bis of the Revenue Code
False statement or gives false statement or evidence to evade taxImprisonment for a term of 3 months to 7 years, and a fine of 2,000 to 200,000 THBSection 37 of the Revenue Code
Late payment of assessed tax Surcharge of 1.5 percent per monthSection 27  of the Revenue Code
Value Added Tax (VAT)Operating a business without VAT registrationFine twice the tax due in the tax month for the duration of failure to comply with such provision, or 1,000 THB, whichever is greater.
Imprisonment up to 1 month, or a fine up to 5,000 THB, or both		Section 89 (1) of the Revenue Code
Section 90/2 of the Revenue Code
Late or missing VAT return/paymentFine twice the amount of tax due or remittable in the tax monthSection 89 (2) of the Revenue Code
Filing a VAT return or remitting VAT incorrectly, causing the VAT due or remitted to be under- or over-statedAdditional penalty equal to the amount of underpaid or overpaid VATSection 89 (3) of the Revenue Code
Filing an incorrect VAT return resulting in understated output VAT or overstated input VATFine for the amount of the deficient output tax or excess input taxSection 89 (4) of the Revenue Code
Using false tax invoice in tax calculation partly or whollyFine twice the amount of tax on such an invoiceSection 89 (7) of the Revenue Code
Late or incomplete VAT payment/remittance Surcharge of 1.5 percent per month on the unpaid VATSection 89/1 of the Revenue Code
Failure to issue or deliver a tax invoiceImprisonment up to 1 month, or a fine up to 5,000 THB, or bothSection 90/2 of the Revenue Code
Failure to prepare VAT-related reportsImprisonment up to 6 months, or a fine up to 10,000 THB, or bothSection 90/3 of the Revenue Code
Specific Business taxOperating a business subject to specific business tax without registrationImprisonment not exceeding 1 month or a fine not exceeding 5,000 THB or bothSection 91/18 of the Revenue Code
Failure to prepare a record of taxable and exempt gross receiptsImprisonment not exceeding 6 months or a fine not exceeding 10,000 THB or bothSection 91/19  of the Revenue Code
Stamp DutyNeglecting or refusing to pay duty or cancel stampFine not exceeding 500 THBSection 124  of the Revenue Code
Customs DutyFailure to comply with the Customs Act, including the failure to submit goods
declaration, pay the full amount of duties, or provide a security deposit		Fine not exceeding 50,000 THBSection 208  of Customs Act 2017
Withholding taxFailure to pay or remit withholding tax within the prescribed periodSurcharge of 1.5 percent per month and fine of 2,000 THB imposing on the period of the month that the tax has not yet been paidSection 27 of the Revenue Code
Failure to issue withholding tax certificatesFine not exceeding 2,000 THBSection 35 of the Revenue Code
Failure to withhold or remit the full Withholding TaxPayer is jointly liable with the payee for the unpaid Withholding TaxSection 54 of the Revenue Code

Source: International Comparison November 2025: Antea

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New Tax Framework for Foreign-Sourced Income: Thailand’s Draft Decree Explained

The taxation of foreign-sourced income has emerged as a pivotal issue within Thailand’s tax system, particularly as increasing numbers of Thai individuals engage in overseas employment, investment, and asset holdings. The government seeks to achieve a delicate balance between closing tax loopholes and incentivizing the repatriation of overseas funds to stimulate domestic economic growth.

Historical Framework

Under the previous Revenue Department Order No. GorKhor 0802/696, dated 1 May 1987, foreign-sourced income remained exempt from Thai personal income tax provided it was brought into Thailand in a tax year different from the year in which it was earned. This provision enabled many individuals to legally defer the remittance of foreign income, thereby avoiding immediate taxation obligations.

Current Regulatory Changes

Effective 1 January 2024, the aforementioned provision was repealed by Revenue Department Order No. Por.161/2566. Under this regulation, individuals classified as Thai tax residents, those residing in Thailand for more than 180 days within a calendar year, are now obligated to pay personal income tax on foreign-sourced income if such income is remitted to Thailand, regardless of the calendar year it is earned. The applicable personal income tax rates for this remitted foreign income range progressively from 5% to 35%, determined by the total taxable amount.

Unintended Consequences and Policy Response

While Revenue Department Order No. Por.161/2566 was enacted to enhance tax transparency and align Thailand’s tax framework with international standards, including those established by the OECD, it has generated an unintended consequence. Many Thai individuals earning foreign-sourced income have opted not to remit such funds to Thailand due to concerns regarding potentially substantial tax burdens.

In response to these matters, the Revenue Department is currently drafting a new Royal Decree (hereinafter referred to as “the Draft“) designed to address these conditions.

person holding dollar bills while using a calculator

Key Proposed Provisions

The Draft includes the following principal proposals:

  • Tax Exemption Extension: Personal income tax exemption will apply to foreign-sourced income remitted to Thailand within one to two years from the year it was earned. If remitted after that, the income tax will be applied.
  • Elimination of Same-Year Requirement: The current requirement mandating income remittance within the same calendar year it was earned will be removed.

This revised approach aims to provide taxpayers with enhanced flexibility in managing financial transactions, such as year-end dividend payments, while serving as a positive incentive for overseas Thais to repatriate funds for domestic investment across capital markets, business enterprises, and real estate sectors.

Current Status and Implementation Considerations

While the Draft represents a promising policy development, it has not yet been formally enacted and enforced. Uncertainty remains regarding whether the new provisions will apply retroactively to income remitted to Thailand during 2024.

Until formal enactment occurs, timing remains a critical consideration. Remitting income outside the anticipated grace period may result in taxation under current regulations.

Conclusion

The recent policy initiative by the Thai government reflects a broader strategic objective to incentivize, rather than penalize, the repatriation of foreign-sourced income. This approach serves dual purposes—reducing the tax burden on individuals earning income abroad while acting as a catalyst for attracting capital back into the domestic economy. Should the Draft be formally enacted and enforced, it will communicate a clear and positive message to overseas Thai nationals that repatriating funds will no longer entail prohibitive tax costs.

The success of this policy framework will ultimately depend on its implementation details and the government’s ability to balance revenue generation with economic stimulus objectives.

Author: Panisa Suwanmatajarn, Managing Partner.

Source: International Comparison August 2025: Antea

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Thailand : Tax Exemption of Dividend

ConceptExplanation
Dividend and Capital gain ExemptionTax Exemption of Dividend
1. Half Tax Exemption
A limited company incorporated under Thai laws receiving dividends from another company incorporated under Thai laws must include the income in its tax calculation. However, only 50% of such income is subject to tax.

2. Full Tax Exemption
A public limited company incorporated under Thai laws whether it is listed or non-listed company holding at least 25% of the voting rights in the dividend-distributing company incorporated under Thai laws is fully exempted from tax on dividends, provided that the dividend-distributing company does not hold any shares in the dividend recipient company whether directly or indirectly. In both cases, the holding company must hold shares in the dividend-distributing company for at least 3 months before and after the dividend payment.

Tax Exemption of Capital Gain
Tax exemption of capital gain applies only in certain cases of share transfers where specific holding periods and criteria of the shares in the company incorporate and operated in Thailand are met.  
Participation in Non- Resident EntitiesA limited or public limited company incorporated under Thai laws shall be exempt from tax on dividends distributed by any company or partnership incorporated under foreign laws if the following conditions are met:
1. Such Thai company must hold at least 25% of the total voting shares in the dividend-distributing entity, and the shares must be held for at least six months from the date of acquisition to the date the dividend is distributed; and
2. The dividend must be paid from net profits after the tax deduction in the country where the dividend-distributing entity is incorporated, at a rate of not less than 15% of the net profits after tax deduction, regardless of whether that country provides any tax reduction or exemption for the dividend distributing entity.  
Group of Companies StructureA limited or public limited company incorporated under Thai laws shall be exempt from tax on dividends distributed by any company or partnership incorporated under foreign laws if the following conditions are met:
1. Such Thai company must hold at least 25% of the total voting shares in the dividend-distributing entity, and the shares must be held for at least six months from the date of acquisition to the date the dividend is distributed; and
2. The dividend must be paid from net profits after the tax deduction in the country where the dividend-distributing entity is incorporated, at a rate of not less than 15% of the net profits after tax deduction, regardless of whether that country provides any tax reduction or exemption for the dividend distributing entity.  
Group of Companies StructureAny group of companies managed through a holding structure enables centralized and unified control, as well as strategic decision-making. The profits generated by subsidiaries/affiliates of the group of companies will also be required to be retained and reinvested within the group.  
Participation requirementsTo qualify for full dividend tax exemption under Thai laws, the parent company must hold at least 25% of the total voting shares in the subsidiary, with no cross-shareholding structure.
In addition, the parent company must have held such shares for not less than three months before and after the dividend distribution date.  
Benefits of Holding sharesHolding shares in other companies with centralized control will reduce costs, manage risk, protect assets, and provide tax benefits.  
Subholding StructureThai law does not specifically define a subholding company. If it acts like a holding company regardless of level of shareholding structure, the conditions regarding the holding company will be applied.  
Protection of Minority ShareholdersUnder the Thai laws, protection of minority shareholders can be in several form, including participation in meetings, voting rights, and the ability to inspect company records as mutually specified in the articles of association of the company.  
Deduction to avoid Double TaxationDouble Tax Agreements (DTAs)
Bilateral tax treaties are signed by and between Thailand and many other contracting countries (e.g., the United States, Singapore, Japan, China, the United Kingdom, Germany, Australia, etc.) to prevent natural persons and juristic persons with cross-border income from facing double taxation in both Thailand and such particular foreign countries. The measures can be in a form of tax credit or tax exemption.  
Consideration of the Holding Company as a Taxable Person for VAT purposesBusiness engaging in certain activities are required to register for VAT. However, a holding business is not considered as a business activity subject to VAT. Thus, it is not required to register and is not subject to collect and conduct VAT filing.  
Taxation effects on Non-Resident HoldingsA company incorporated under foreign laws that does not conduct business in Thailand, but receives assessable income, such as dividends or other benefits from a company operated and based in Thailand, will be liable to pay tax under Thai laws.
Additionally, capital gains from the sale of shares in a company incorporated and operated in Thailand by a non-resident are subject to withholding tax in Thailand as Thai-sourced income.
Requirements for Capital Gains ExemptionCapital gains from the sale of shares of the company incorporate and operated in Thailand may be exempt from the income tax if the following conditions are met:
• The shares have been held for at least 24 months prior to the sale;
• The sale results in a capital gain (i.e., generating profits from the original investment);
• The company incorporated and operated in Thailand earns at least 80% of its revenue from government-promoted activities for two consecutive accounting years prior to the sale.
In addition, capital gains from the transfer of shares in a venture capital holding company may also be exempt from tax, provided that a venture capital holding company has invested in a company incorporated and operated in Thailand that earns at least 80% of its revenue from government-promoted activities for two consecutive accounting years prior to the sale.  
Group Structure and Tax ConsolidationThailand’s tax system treats each company as a separate taxable entity, requiring companies to file taxes individually. There is no provision under the Thai Revenue Code for group tax filing or consolidated tax returns. Profits and losses cannot be offset across the group.  
Liability of the Parent CompanyA parent company is generally not liable for the debts or obligations of its subsidiary/affiliates, as it is a separate entity from its subsidiaries/affiliates. However, as a shareholder, it is liable to pay for any unpaid amount of shares it holds in such subsidiaries/affiliates. The liability will be as in the amount of unpaid amount of shares.

Source: International Comparison July 2025: Antea

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Thailand New Draft Digital Platform Economy Act

The outbreak of the COVID-19 pandemic has significantly altered consumer behavior, leading to a surge in reliance on digital platforms for activities like shopping and food delivery. This shift has played a pivotal role in the rapid growth of the digital economy, both in Thailand and globally. Citizens have become increasingly dependent on these platforms, which offer convenience and ease in daily life. As digital platforms now cover almost every facet of modern existence, the government has recognized the need to regulate these services to ensure economic and social stability, enhance credibility, and mitigate any potential risks to the public at large.

In response to this, Thailand initially enacted the Royal Decree on the Operation of Digital Platform Service Business Subject to Prior Notification B.E. 2565 (2022) (“Royal Decree”), which regulates and imposes obligations on digital platform service operators. These operators, such as Shopee or Lazada, manage platforms that connect business users and consumers through data networks to facilitate electronic transactions. However, recognizing the evolving landscape, the Ministry of Digital Economy and Society (“MDES“) has proposed the Draft Digital Platform Economy Act B.E. …. (the “Draft Bill”), which aims to expand regulation to include a broader range of platform services not covered under the Royal Decree, also known as, digital media services.

The Draft Bill seeks to regulate various digital platform services more comprehensively, promoting fair trade, encouraging self-regulation, and supporting operators in adopting good governance principles. Below are the key aspects of the Draft Bill.

Categorization of Digital Media Services

The Draft Bill defines Digital Media Services as any service provided over a computer network, internet system, or telecommunications network that acts as a medium between the sender and the data receiver. It categorizes these services into three types, each with distinct legal responsibilities for the operators:

  1. Mere Conduit Service: This refers to the provision of electronic data transmission services or access to an electronic communications network. Mere conduit providers are not liable for illegal activities during data transmission, as long as they can prove they neither initiated the data nor altered it in any way.
  2. Caching Service: Caching services involve temporary data storage for faster transmission. Providers are not held responsible for illegal activities, provided they meet the terms for data access and follow standard industry practices.
  3. Hosting Service: Hosting services provide data storage on behalf of users. These providers are only held accountable if they are aware of illegal content stored and fail to take action by either removing or blocking access to it.

General Obligations for Digital Media Services Platform Operators

Under the Draft Bill, platform operators are required to comply with obligations prescribed in Chapter 3 of the Draft Bill, which includes notifying the users of their rights and obligations, as well as the risks associated with using digital media services; providing a complaint resolution channel that responds within 24 hours and reports on the investigation outcome within 60 days; disclosing advertising information, publishing clear terms and conditions, as mandated by the law, and appointing a point of contact to liaise with the Electronic Transactions Development Agency (“ETDA“).

Very Large Online Platform (VLOP)

The Draft Bill introduces the concept of Very Large Online Platforms (“VLOP“). To qualify as a VLOP, a platform must meet one of the following criteria:

  1. A net income (before expenses) of over 1,000 million Baht per year from the provision of services in Thailand.
  2. More than 6 million active users per month.
  3. Poses a high risk to the economic or social security of Thailand, as determined by the ETDA.

VLOPs are subject to additional obligations, such as reporting data to the ETDA, tracking business users’ activities, suspending services for users engaged in serious illegal activities, and submitting annual transparency reports.

Core Platform Services & Gatekeepers

Chapter 5 of the Draft Bill defines core platform services and identifies platform operators that act as “gatekeepers” to other service providers. Core platform services currently include 10 types of digital media services such as online search engines, video-sharing services, cloud computing, and online advertising services, among others. A platform operator may be classified as a gatekeeper if it meets three criteria:

  1. Significant impact on the economy, with annual income (before expenses) exceeding 7 billion Baht.
  2. Serves as a critical gateway for business users to reach end users, with more than 15 million consumer users and 10,000 business users annually.
  3. Has the power to limit competition from other platform service providers, maintaining a dominant position.

Gatekeepers are subject to additional responsibilities, such as ensuring fair treatment of business users, facilitating free communication between consumers and businesses, preventing unfair practices that hinder competition, and more.

ETDA and Digital Platform Economy Committee’s Power to Enforce Data Platform’s Compliance

In order to enforce the Draft Bill effectively, the Draft Bill grants ETDA various powers to enforce compliance, including but not limited to the power to request data from platform operators to assess compliance, power to access and inspect platforms’ computer systems and physical premises if there is reasonable suspicion of illegal activities, the power to impose fines, service suspensions, or even criminal charges for severe violations.

Regulatory Transition

To ensure a smooth transition in the enforcement of this Draft Bill from the existing Royal Decree, the Draft Bill includes a grandfather clause allowing the platform operators who have already submitted notification under the Royal Decree to be deemed to have been notified under this Draft Bill as well. Nonetheless, they are required to update their information to align with the new requirement within 120 days of its enactment. Whilst the Royal Decree shall cease to be effective on the enforcement date of this Draft Bill, the sub-ordinate regulations issued under the Royal Decree shall remain in effect for as long as they do not conflict with the Draft Bill, or the new-subordinate regulation to be issued under the Draft Bill. 

Conclusion

The Draft Bill represents a proactive step toward regulating the rapidly expanding digital economy in Thailand. By establishing clear guidelines for digital platform operators, categorizing services, and introducing additional obligations for large and influential platforms, the Draft Bill aims to foster fair competition, ensure consumer protection, and maintain economic stability. As digital platforms continue to play an integral role in modern society, this legislation will be crucial in balancing innovation with accountability, ensuring that the digital economy can thrive in a secure and sustainable manner. As such, the passage of the Draft Bill will likely have far-reaching implications, not only for platform operators but also for the broader economy and society.

Source: International Business April 2025 : Antea

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Thailand : Transfer Pricing

1. Overview of Transfer  Pricing Regulations in ThailandTransfer pricing in Thailand is governed by
1. Thai Revenue Code
2. Ministerial Regulation  No. 369 (B.E. 2563) (2020) Issued under the Thai Revenue Code Regarding the Adjustment of Income and Expenses of Related Companies or Partnership
3. Ministerial Regulation No. 370 (B.E. 2563) (2020) Issued under the Thai Revenue Code Regarding the Revenue Threshold of Companies or Juristic Partnerships According to Section 71 ter paragraph 3
2. Whether aligned with BEPS?Yes, Thailand participates the Inclusive Framework on BEPS.
3. Scope and Applicability of Transfer Pricing RegulationsCompany or Jursitic Partnership (for juristic partnership, it includes limited partnership and registered ordinary partnership)
1. who proceeds a transaction with its related companies or juristic partnerships under Transfer Pricing Regulations (please see below the definition as specified in Item 5.); and
2. Such company or juristic partnership has revenue of more than 200 million THB; and
3. Subjects to disclose information regarding its related companies or juristic partnerships and their transactions by submitting a Disclosure Form to the Thai Revenue Department
4. Transactions Covered:Commercial or financial terms, agreements, or contracts involving sales, services, marketing, advertising, loans, financial assistance, or other commercial or finance transactions, both verbally and in writing.
5. Legal Definition of Related companies or juristic partnerships Under Transfer Pricing RegulationsTwo entities or more are considered as related companies or juristic partnerships if any of the following conditions are met:
1. An entity, either directly or indirectly, holds shares or partnership (contribution) with not less than 50% of the total shares or partnership (contribution) of another entity; or
2. A shareholder or partner of an entity holds shares or partnership (contribution) at 50% or more of its total shares or partnership (contribution) and such shareholder or partner holds shares or partnership (contribution) at 50% or more of the total shares or partnership (contribution) in another entity; or
3. An entity that has a capital, management, or control relationship with another entity and either of them cannot operate independently.
6. Recognized Transfer Pricing MethodsThailand applies six methods:
1. Comparable Uncontrolled Price Method
2. Resale Price Method
3. Cost Plus Method
4. Transactional Net Margin Method
5. Transactional Profit Split Method
6. Other Methods subject to notification to the Director General of the Thai Revenue Department
7. Data Used for comparison
to improve the company or juristic partnership’s incomes and expenses.		The tax assessor will use these data to assess the company or juristic partnership’s incomes and expenses;
Internal Data
1. Prioritize using internal data from transactions that occurred between the related companies or juristic partnerships with other third-party companies or juristic partnerships
External Data
2. If internal data is unavailable, external data from transactions of other third-party companies or juristic partnerships shall be used, regardless of whether the transactions are conducted in Thailand or outside and by incorporated entities under Thai or foreign laws
8. Transfer Pricing Audit Process and PenaltiesTransfer Pricing Audit Process
Documentation Review – Disclosure Form (Master Files) and Local Files which were requested by the tax assessor to be used for analysis.
1. Contractual Term of the Transaction
2. Functional Analysis : FAR
3. Characteristic of Property & Service
4. Economic Circumstances
5. Business Strategy
Remarks:
– Local Files refer to the documents or evidence used to analyze the contractual terms of the transactions
– All documentations must be submitted in Thai language
The Tax Assessor Examination – The tax assessor verifies Arm’s Length Price (ALP).
Adjustments – If pricing is incorrect, taxable income is adjusted.
Penalties for Non-Compliance
ViolationPenalty
Failure to file a Disclosure Form, providing a false declaration, or providing insufficient informationA fine not more than 200,000 THB
9. Reporting Deadlines and Compliance Timelines1. Disclosure Form: Within 150 days from the last day of the fiscal year by electronic filling or by hand-in submission
2. Local Files: The Revenue Department can request local files within 5 years from the Disclosure Form filing date, and the Local Files must be submitted within 180 days of receiving the first notification or 60 days of receiving subsequent notifications by the Thai Revenue Department

Source: International Comparison March 2025 : Antea

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Labor: Legal Consideration for Employment Termination

Disclaimer:
This article provides a general legal framework for employment termination in Thailand. It is important to note that specific industries, professions, or situations may be subject to additional or different regulations. If a matter in question is governed by specific legislations, those particular laws and regulations must be considered in addition to the general principles outlined here.


Introduction:
Employment termination is a critical aspect of workforce management that requires careful consideration of legal and ethical factors. In Thailand, the Labor Protection Act B.E. 2541 (1998) provides the primary framework for lawful employment termination, balancing the rights of employers and employees. This article explores the key aspects of employment termination under Thai labor law, focusing on contract types, compensation requirements, and legal protections for both parties. Types of Employment Contracts and Termination Procedures:

The Labor Protection Act B.E. 2541 (1998) recognizes two primary types of employment agreements:

1. Fixed-Term Contracts

    • Termination occurs automatically upon contract expiration.
    • Early termination by the employer requires written notice.
    • Premature termination without cause may result in a breach of contract penalties.

    2. Non-Fixed Term Contracts

      • Termination requires written notice prior to or on the wage payment date and will be effective on the following payment date.
      • Notice period should not exceed three months unless specified otherwise in the contract.

      For both contract types, failure to provide proper notice obliges the employer to pay compensation in lieu of notice and salary until the effective termination date. Additional contractual obligations, such as repatriation expenses, must also be honored.


      Compensation for Termination Without Cause:
      When an employer terminates an employee without the employee committing any offense specified by law or contract, the Labor Protection Act B.E. 2541 (1998) mandates severance pay. The amount is calculated mainly on the employee’s length of service.


      In cases of contract breach before expiration without the employee’s fault, employers must pay damages. Failure to provide advance notice also requires compensation in lieu of notice.

      Source: International Business Newsletter December 2024 (antea-int.com)

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      Carbon credit market regulations

      Carbon Credit Market Regulations
      Currently, Thailand applies voluntary program called Thailand Voluntary Emission Reduction Program (“T-VER“) for controlling and managing of carbon credit market. No compulsory laws or regulations to control or manage of carbon credit market.

      However, there are currently 3 draft laws related  to the carbon credit market under the process of public hearing which are:
      1. Draft Act on Promoting Greenhouse Gas Reduction and Carbon Credits B.E. ….
      2. Draft Act on Climate Change B.E. …. (proposed by Department of Climate Change and Environment, Ministry of Natural Resources and Environment
      3. Draft Act on Climate Change B.E. …. (proposed by Ms. Saniwan Buaban, the House Representative)
      (all herein after referred to as “Drafts“).
      DefinitonsActivity dataNot mentioned in the guideline of T-VER.
      Baseline yearNot mentioned in the guideline of  T-VER.
      Compliance MechanismGoverning Authorities
      Thailand Green House Gas Management Organization (Public Organization) (“TGO“).
      Obligated Entities
      As Thailand currently applies for voluntary program, thus, there is no spcified obligated entities. However, the definition of obligated entitiies are mentioned in the Drafts.
      Application for Registration in T-VER
      T-VER has designated the types and categories of the businesses registering to join the program (e.g. renewal energy business, transportation business, waste management business). Such businesses may submit application and required documents to TGO. The duration for consideration of the application is 60 days.
      Once the business is registered, the business shall have the duty to prepare for monitoring report regarding amount of Green House Gas (“GHG“) emission for further requesting for carbon credit certificate.
      GHG Emission Intensity Trajectory and TargetsThe Types of GHG
      Under the guideline of T-VER, the GHG covers
      ◾ carecarbon dioxide (CO2)
      ◾ methane (CH4)
      ◾ nitrous oxide (N2O)
      ◾ hydrofluorocarbons (HFCs)
      ◾ perfluorocarbons (PFCs)
      ◾ sulfur hexafluoride (SF6)
      ◾ nitrogen trifluoride (NF3)
      The Calculation of GHG Emissions Intensity
      The calculation of GHG emission intensity  will be calculated by the business opeartor. Given that the sum amount of GHG emission result known as “Ery”, it must contain no decimal.
      Monitoring and Reporting ProcessSubmission of Monitoring Report of GHG Emission
      The business is required to prepare the monitoring report of GHG emission for further requesting for  carbon credit certificate. The monitoring report of GHG emission must be submitted together with
      1) Verification report made by a third party known as Validation and Verification Body (“VVB“)
      2) Calculation of the amount of GHG emission in excel form
      3) Lists of tools used for recording of GHG emission of the business.
      Verification and Assessment of PerformanceFor T-VER, the verification process applies the standard of ISO 14064-3:2019 for assessing the reduction of the GHG emission from the business. The verification and assessing must be conducted by VVB.
      Issuance and Surrender of Carbon Credit CertificateIssuance of Carbon Credit Certificate
      Business may request for carbon credit certification by submitting application and related documents to TGO. This certification must be requested within 2 years from the date which status of being business under T-VER is terminated. If the business operator fails to do within this period, they will no longer be able to request for further carbon credit certification for their business.
      Once TGO approves the registration of carbon credit certificate, a carbon credit certificate will be issued within 20 working days from the date of completion of the review.
      Surrender of Carbon Credit Certificate
      The surrender of carbon credit certificate can be conducted through Thailand Carbon Credit Registry (“TCCR“) which is electronic platform for carbon credit market. 
      Trading of Carbon Credit CertificatesTrading of Carbon Credit
      The seller and buyer of carbon credit must have an account registered with TCCR, and every transaction (i.e. sellign and trading) has to be moitored and approved by the carbon credit registrar appointed by the TCCR.
      Tax Benefit
      Profits earned by business  from the sale of carbon credits in Thailand under T-VER  will be exempted from corporate income tax.
      Banking of Carbon Credit CertificatesProvisions regarding banking and carbon credit certificate are not mentioned in the guideline of T-VER, including the expiration date of  carbon credit certificate.
      Compliance with GHG Emission Intensity TargetsTGO will assessed the GHG emission amount of the business under T-VER for the improvement of GHG emission reduction.

      Source: International Business August 2024 (antea-int.com)

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      Thailand: Purposed Changes to Personal Income Tax Exemption on Severance Pay

      The Ministry of Finance has put forward a draft ministerial regulation to revise the personal income tax exemption on severance pay. This proposal aims to update the existing threshold established in clause 2(51) of Ministerial Regulation No. 126 (B.E. 2509), as amended by Ministerial Regulation No. 217 (B.E. 2542).

      Current Exemption

      Under the current ministerial regulation, employees receiving severance pay in accordance with the Labor Protection Act B.E. 2541 and State Enterprise Relations Act B.E. 2543 are eligible for tax exemption. This exemption applies to the portion of severance pay not exceeding the salary for the last 300 working days, with a maximum limit of 300,000 baht. Notably, this exemption excludes severance pay received due to retirement or the expiration of fixed-term employment contracts.

      The existing regulation aligns with Section 118 of the Labor Protection Act B.E. 2541 (No. 1), which mandates severance pay for employees with over 10 years of continuous service.

      Legislative Changes

      The Labor Protection Act B.E. 2562 (No. 7) amended Section 118, introducing a new severance pay rate for employees with over 20 years of continuous service. This amendment increased the severance pay to not less than the salary for the last 400 working days.

      Proposed New Exemption

      In response to these legislative changes, the Ministry of Finance has drafted a revised ministerial regulation. The key changes in the draft revised ministerial regulation are:

      1. Increasing the tax-exempt portion of severance pay to the amount not exceeding wages or salary for the last 400 working days.
      2. Raising the maximum exemption limit from 300,000 baht to 600,000 baht.
      3. Applying the new exemption to severance pay received from 1 January 2023 onwards.

      Objectives

      The proposed changes serve two main purposes:

      1. Aligning the tax exemption regulations with the amended Labor Protection Act B.E. 2541.
      2. Providing tax relief to employees facing termination, especially in light of economic challenges.

      Implementation Status

      The Cabinet has approved the draft revised ministerial regulation. It will come into effect upon publication in the Royal Gazette.

      This revision aims to update the tax exemption on severance pay to reflect recent changes in labor law and to provide increased financial support to employees during employment transitions.

      Source: International Business August 2024 (antea-int.com)

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      ANTEA – International Comparison 2024

      Thailand: Electronic Invoicing

      Antea International Comparison is a quarterly publication that provides you an overview of trends and international tax developments by comparing tax issues in different legislations around the world, that may affect those doing business in multiple locations.

      Constant legislative, regulatory, and judicial changes, along with globalization, economic shifts, and operational adjustments, are challenging issues. Now more than ever, in an increasingly globalized world, companies must have a total perspective and awareness of tax issues, and this publication aims to cover key tax topics which should be of interest to businesses operating internationally.

      This edition includes numerous country focus pieces, in which it is analyzed the Electronic
      Invoicing across various countries. Find out more about this digital system that optimizes
      the issuance and receipt of invoices, improving efficiency, reducing costs, and facilitating
      tax compliance.

      two pens beside macbook
      DefinitionA tax document generated as electronic information which can be accessed and reused in an unchanged manner and is electronically signed by using an Electronic Certificate
      Applicable regulationThe key applicable laws are as follows:
      1. The Revenue Code of Thailand
      2. Electronic Transaction Act B.E.2544
      When compulsory?It is an alternative for the business operators
      Compulsory for all clients?No. However, business operators may participate in ad-hoc campaigns issued by the government in issuing E-tax invoice and receipt for tax exemption of its clients/customers
      How to implement it?To implement, business operators can choose one of these options;
      (1) E-Tax Invoice & Receipt
      – Must be a VAT-registered business operator
      – The business operator must have an Electronic Certificate obtained from the Certification Authority
      – Must have a trustworthy method to generate, send, and store electronic documents
      – The Revenue Department must approve prior to the implementation
      – To file an E-tax invoice to the Revenue Department, it can be sent via 3 methods; (1) Host to Host, (2) Service Provider, (3) Web upload

      (2) E-Tax Invoice by Time Stamp (By Email)
      – Must be a VAT-registered business operator
      – The business operator with a revenue of less than 30 million Baht is recommended.
      – Only E-tax Invoices can be conducted (E-Receipt is not included)
      – The Revenue Department must approve prior to the implementation
      – Clients/customers will receive E-tax invoices via email only.
      – E-tax invoices will be automatically sent to the Revenue Department without further filing
      Additional info about e-invoice

      Unlike E-Tax Invoice & Receipt, E-Tax Invoice by Time Stamp does not require an Electronic Certificate as a draft E-Tax Invoice will be sent directly to the authority and it will consider and certify the same before sending back an official one directly to the clients/customers
      Invoicing programThere is no official invoicing program for the business operators
      ObjectivesTo facilitate the business operators in making tax invoices/receipts, to reduce the process of sending reports to the Revenue Department and to reduce documents to be stored by the Revenue Department
      When IT programs adapted?There is no official IT program, only the e-filing website of the Revenue Department is available for tax filing
      Certified billing softwareThere is no certified billing software
      QR codeQR Code is not compulsory
      ConclusionsE-Tax Invoice & Receipt and E-tax Invoice by Email are an alternative for business operators to adopt in making tax invoice/receipt
      Qualifications specified by the relevant laws are required to be met
      There is no official invoicing program, IT program or certified billing software in Thailand at the moment
      The implementation of E-Tax Invoice & Receipt intends to minimize the process of generating, sending, and storing paper records, for both business operators and tax authorities
      The main responsible authority is the Revenue Department

      Source: ANTEA – International Comparison 2024

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