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Archives for February 2022

Parents’ Allowance for Computation of Thai Personal Income Tax

In one of our previous posts, we talked about personal allowance for parents that is allowed for the computation of Personal Income Tax and filing with the Revenue Department. However, only Thai citizens can use parents allowance for computation of Thai Personal Income Tax.

In this article, we would like to explain that if you and your spouse (who is not working and has no income) support your parents, you may use a parental care allowance of THB 15,000 for each qualified parent given that they meet the following conditions:

  1. You/your spouse is a legitimate child (not adopted) of the parent
  2. At the end of the year, either of your mother and father is at least 60 years of age and must be under your care and financial support
  3. Your qualified parent must not have assessable income exceeding THB 30,000 (including exempted income)

For each qualified parent you are claiming the allowance, you must provide a Parental Care Certificate showing their personal Identification Number and the amount of the allowance. However, if you have a sibling who is also supporting your parents, only one can claim for a parental care allowance.

On the other hand, if you are a non-Thai taxpayer, you can claim for parental care allowance if your qualified parent is a Thai citizen.

Contact MSNA for assistance in filing your personal income tax returns in Thailand.

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Double Tax Agreement

The Double Taxation Agreement or DTA is a tax treaty between 2 countries. Currently Thailand has double taxation treaties with 61 foreign countries which cover taxes on income and capital of individuals and juristic entities.

In order to be considered a Thai tax resident and be entitled to treaty benefits, a tax payer must be one of the following:

  1. An individual who stays in Thailand for a consecutive 180 days or more in a tax year;
  2. A juristic person who is registered under the Civil and Commercial Code of Thailand

A Double Taxation Agreement applies to only income taxes such as personal income tax, corporate income tax and petroleum income tax. Other indirect taxes such as the Value Added Tax (VAT) and Specific Business Tax (SBT) are not covered by the DTA. Although the DTA does not specify any specific amount of income and tax rate in general, it prescribes whether the source or resident country is entitled to tax on certain income. If the source country has taxing rights, the income will be taxable according to the domestic laws of that country.

A Double Taxation Agreement  also stipulates a tax rate level on investment income such as dividends, interests and royalties. Therefore, the source country can tax such income at a rate not exceeding the rate prescribed within the treaty. Normally, the tax rates within the DTA are lower compared to the domestic tax rates in order to decrease tax impediments to cross border trade and investment. However, some articles of the DTA clearly do not accept the source country to exercise taxing rights on income such as income from international air transport and business profits provided that the business is not carried through a permanent entity in the source country.

In general, Thai double taxation treaties place a resident of the foreign country in a more favorable position for Thai tax purposes than under the domestic law, for example, the Thai Revenue Code of the Revenue Department. It provides income tax exemption on business profits (industrial and commercial profits) earned in Thailand by a resident of a foreign country if it does not have a permanent establishment in Thailand. In addition, the withholding taxes on payments of income to foreign juristic entities not carrying on business in Thailand may be reduced or exempted under the double taxation treaties.

Thai taxation has a unique tax structure thus, consulting with Thai tax experts is highly recommended. Consult with MSNA Group, for the best Thai tax advice.

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