Changes made to the Personal Income Tax Filing for year 2012
There are a few changes being made to the tax laws in 2012, notably the Personal Income Tax rule for married couples.
Previously, Sections 57 Ter and 57 Quinque of the Revenue Code stipulated that if your marriage existed throughout the tax year, you and your spouse must file a joint tax return with the opinion that a wife may select to file her employment income, Section 40(1) income, separately.
However, on 4 July 2012, the Constitutional Court ruled that Sections 57 Ter and 57 Quinque of the Revenue Code are in breach of the constitution. Consequently, those two sections are no longer applicable. Hence, the government passed an Emergency Act to change the rules for married couples as follows:
- You and your spouse can file a tax return jointly as before, for all types of income or
- You and your spouse can file a tax return jointly, however either you or your spouse may select to file income from employment (Section 40 (1)) separately from the joint income by using PND.91 tax form or
- You and your spouse can file separate tax returns for all types of income received and pay personal income tax separately. In the case where certain income cannot be clearly identified as yours or your spouse’s, the following rules shall apply:
- Sections 40(2) – 40(7) income must be proportioned equally between you and your spouse.
- Section 40(8) income can be proportioned equally or as agreed between you and your spouse. When you and your spouse agree on a proportion, you must notify the tax officer and pay income tax on that amount accordingly.
Note: If you and your spouse choose to file tax return jointly as in a) or b), you and your spouse are responsible for any tax payable incurred together. On the other hand, if you and your spouse choose to file tax return separately, each of you is responsible for any tax incurred separately as well.
Contact MSNA for preparation and filing of personal income tax returns in Thailand.
Amount of deductible expenses for the computation of personal income tax
Deductible expenses are personal expenses that may be deducted to calculate the Thai personal income tax depending on the category of assessable income of a taxpayer as follows:
- For the income under the categories of assessable income (1), (2) and for copyright under (3), a deduction of 40% is allowed subject to a maximum of Baht 60,000.
- For the income under the category of assessable income (3), other than for copyright and under (4), no deductions are allowed.
- For the income under the category of assessable income (5), the rates of deduction vary from 10% to 30% depending on the type of rented property.
- For the income under the categories of assessable income (6), (7) and (8), the rates of deduction vary from 30% to 85% depending on the type of income or type of business.
Moreover, the deduction of expenses in relation to assessable income under categories (5) – (8) may be made on an actual basis only if satisfactory evidence of the expenditure can be provided to the tax authorities.
Consult MSNA for Thai personal income tax computation.
Employee stock option – personal income tax
Today, THAI ACCOUNTANT answers a question from one of our payroll clients regarding the options to buy stocks of a parent company by employees of a Thai affiliate company.
As employees of a Thai affiliate company of an overseas parent company in the USA, it is stated in the terms of our employment that we have an option to purchase stocks of the parent company at a price lower than the market price. When we use this option to buy the stocks, will we be required to pay for tax?
An option to purchase stocks of the parent company at a price lower than the
market price is considered assessable income derived from employment within Thailand (income under Section 40 (1) of the Revenue Code), and considered as income derived from the posts in Thailand under Section 41, first paragraph. Therefore, you shall include the benefits received from the purchase of stocks at a price lower than market price as your assessable income for personal income tax purpose. The assessable income of Thai employees derived from the purchase of stocks of a parent company (these are shares which are not publicly traded in the Stocks of Exchange of Thailand) is calculated from the market value of the stock less the exercise price of the stocks on the day ownership is
transferred to the employees.
Furthermore, any contributions the Thai affiliated company made to the purchase of stocks in the parent company as part of the scheme are considered as benefits from the employment under Section 40 (1) of the Thai Revenue Code, and are thus required to be included as assessable income for the purpose of calculating personal income tax.
More to consider:
Gains derived from the sale of shares on a stock exchange in the USA are assessable income under Section 40 (4) (b) and are regarded as overseas sourced income, and therefore subjected to Thai income taxes if you are considered to be a Thai tax resident and the proceeds are brought into Thailand in the same year they were received, in accordance with Section 41, second paragraph.
When you received dividends on the shares acquired from the exercise of the stock options, it is also considered as overseas sourced income, according to Section 41, second paragraph, and therefore subjected to Thai income taxes if you are considered to be a Thai tax resident and the income was brought into Thailand in the same year the dividend was paid.
Learn more about personal income tax and Thailand taxation. Contact MSNA for further information.