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Payroll & Tax in Thailand

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Thailand payroll & taxation

There are specific rules in Thailand depending on whether your company employs residents or non-residents. The key concerns for a company that needs to comply with tax laws in Thailand are net taxable income, social security contribution, value added tax (VAT), corporate income tax, specific business tax (SBT), and property tax. Moreover, international treaties to avoid double taxation, international social security agreements, free trade agreements and special tax regimes for specific industries or sectors can make an indirect impact on a company’s tax environment.

Your Payroll Options in Thailand

Remote Payroll

A remote payroll in Thailand is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Thailand. As per the Thailand Revenue Department a foreign company is defined as

-A company that carries out business functions in Thailand but is registered under a foreign law

-A company that does not carry on business operations in Thailand but derives income from Thailand

Thus a non-resident company is permitted to process payroll for Thailand residents who are on its payroll. Another option for a non-resident company to payroll its employees in Thailand would be to use a fully outsourced service like a GEO or PEO which will employ and payroll the staff on their behalf.

Local Payroll Administration

In some cases, a company will register their business in Thailand under one of the forms available but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with a commitment to Thailand may wish to run their own local payroll for all employees, foreign and local.  In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.  There will be a need for in country human resources personnel who have the background needed to manage a Thai payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations.  The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Thai employment laws.

Fully Outsourced Payroll & Employment

Companies can outsource the employment and payroll of their staff in Thailand to a GEO, like Shield GEO. This is possible for both foreign workers and Thailand nationals. This is the easiest, fastest and safest way to payroll staff in Thailand.

Shield GEO manages all aspects of payroll for workers in Thailand, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Thailand

Information Explanation
Currency ?

Thai Baht

(Thai: บาท, sign: ฿; code: THB)

Social Security Registration ?

An employer needs to register an employee as the “insured person” who starts working at the age of fifteen to sixty years old in the enterprise with 1 or more employees with the social security office within 30 days from the start of work.

Documentation Required for New Employees ?

Employment contracts and labour relations are governed by the Labour Protection Act, the Labour Relations Act, the Civil and Commercial Code, and the Labour Procedure Act. New employees in Thailand whether local or foreign are governed by the Labour Protection Acts B.E.2541 (A.D.1998).

Corporate Income Tax Rate

Companies in Thailand are generally taxed at 20%. Branch corporate income tax rate is also 20%. However, corporate tax rates may vary as follows.

  • Small companies with a net profit between 300,000-3,000,000 Baht are taxed at 15%
  • Small companies with a net profit over 3,000,000 Baht are taxed at 20%
  • Companies listed in the Stock Exchange of Thailand are taxed at 20%
  • Companies newly listed in the Stock Exchange of Thailand or the Market for Alternative Investment are taxed at 20%
  • Foreign companies engaging in international transportation are taxed at 3%
  • Foreign companies disposing profit out of Thailand are taxed at 10%
Sales Tax

Current Value Added Tax (VAT) rate is 7%.

Business entities with an annual turnover exceeding 1.8 million Baht per annum is legally obligated to pay VAT.

Withholding Tax

Certain income types paid to companies can be subject to withholding tax at the point of source.

Such withholding tax rates on pre-specified categories of income are as follows.

    • Dividends 10%
    • Interest 1%
    • Royalties 3%
    • Advertising fees 2%

Service and professional fees

      • If paid to a Thai or foreign company with a permanent branch in Thailand 3%
        • If paid to a foreign company not having a Permanent branch in Thailand 5%
        • Prizes 5%

 

Other Tax

Petroleum Income tax

An indirect tax paid on an annual basis on net profit earned while carrying out the business of petroleum exploration and production.

Act B.E. 2514 (status 1)                                                                  50%

Act B.E. 2522 (status 2)                                                                  35%

Act B.E. 2532 (status 3)                                                                  50%

Disposal of profits                                                                            23.08%

Withholding tax rates

(For transfer of petroleum)

Property or rights                                                                           50%

Payment of interest                                                                       50%

Payment of dividend                                                                      23.08%

Payment of interest                                                                        15%

Tax Figures

Information Explanation
Corporate Income Tax ?

Companies in Thailand are generally taxed at 20%. Branch corporate income tax rate is also 20%. However, corporate tax rates may vary as follows.

  • Small companies with a net profit between 300,000-3,000,000 Baht are taxed at 15%
  • Small companies with a net profit over 3,000,000 Baht are taxed at 20%
  • Companies listed in the Stock Exchange of Thailand are taxed at 20%
  • Companies newly listed in the Stock Exchange of Thailand or the Market for Alternative Investment are taxed at 20%
  • Foreign companies engaging in international transportation are taxed at 3%
  • Foreign companies disposing profit out of Thailand are taxed at 10%
Income Tax Rate ?
Grossed income Tax Rate (%)
0-150,000 exempt
150,001-300,000 5
300,001-500,000 10
500,001-750,000 15
750,000-1,000,000 20
1,000,001-2,000,000 25
2,000,001-4,000,000 30
Over 4,000,001 35
Sales Tax ?

Current Value Added Tax (VAT) rate is 7%.

Business entities with an annual turnover exceeding 1.8 million Baht per annum is legally obligated to pay VAT.

Withholding Tax ?

Certain income types paid to companies can be subject to withholding tax at the point of source.

Such withholding tax rates on pre-specified categories of income are as follows.

  • Dividends 10%
  • Interest 1%
  • Royalties 3%
  • Advertising fees 2%
  • Service and professional fees

    • If paid to a Thai or foreign company with a permanent branch in Thailand 3%
      • If paid to a foreign company not having a Permanent branch in Thailand 5%
      • Prizes 5%

       

Employee Social Security (EE SS)

Employees are obligated to contribute 5% of employee salary upto a maximum of 750 Baht per month. An employee is obligated to contribute between 2%-15% of the employee’s monthly wage to the Social Security Fund (SSF).

Employer Social Security (ER SS)

Employers are obligated to contribute 5% of employee salary upto a maximum of 750 Baht per month. An employer is obligated to contribute between 2%-15% of the employee’s monthly wage to the Social Security Fund (SSF). This contribution should match the contribution made by the employee.

Payments

Information Explanation
Payment Mode ?

Manual/soft copy by cheque or online.

Frequency of Salary Payment ?

12 monthly pay periods.

Invoice / Payslips required ?

Available monthly as pdf.

Minimum Wage ?

Annual (US$) 3,012

Employee Entitlements

Information Explanation
Time Off Work ?

An employee is entitled to a minimum of 6 days of annual leave after working consecutively for one full year. For an employee who has not completed one year of service, the employer may provide an annual leave on a pro-rate basis.

Medical Leave ?

An employee is entitled to take sick leave with 30 days of paid sick leave per year. An employer may request a medical certificate if an employee is absent for three consecutive days. Days on which the employee cannot work because of injury or illness caused by work shall not be deemed sick leave.

Thailand

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