When a company in Thailand pays travel insurance premium for their employees, the premium will be considered the employees’ assessable income, which needs to be included in their personal income tax calculation unless all the following conditions are met:

1. Only the premium covering medical expenses is allowed.
2. The premium is paid to an insurance company operating in Thailand.
3. The premium is for a group insurance policy (not for individual employees) with coverage of not longer than one year.

For Thai accountants who want to refer to the Thai tax law, the Ministerial Regulations No. 126 (1966), section 2 (77), specifies the conditions of insurance premiums if paid by an employer on behalf of the employee, that will be exempt from the tax calculation purpose. If not all of the conditions are met, the paid premium has to be added to the employee’s personal income (to calculate his withholding tax) at the end of the month since the Thai tax law consider the insurance premium an added benefit derived from work.

Experienced Thai accountants know that the Thai Revenue Department has a more lenient practice. If the company has a written policy that it will pay for the travel insurance for its employees when travelling for the company’s business, the premium will not become the employee’s assessable income (even though not all of the above conditions are met). This policy should be signed by the authorized signatory and kept in the company main document file. Good Thai accountants know to attach one copy to the insurance premium payment voucher.

Doing business in Thailand, you want to work with good Thai accountants. MSNA can help with your Thailand tax and accounting needs.

Today THAI ACCOUNTANT got a VAT question from a Thai headhunter company who recruit an employee overseas to work outside Thailand.

Scenario 1: If the employee is recruited inside Thailand to work overseas and is hired by the overseas company, the Headhunter’s service is done in Thailand, but the end product is used overseas. The Headhunter does not have to charge 7% VAT on its service fee to the overseas client.

Scenario 2: If the Headhunter Company recruits an employee (inside or outside Thailand) to work for a Thai client company on a project overseas, then the Headhunter has to charge 7% VAT on its invoice to the Thai client company.

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