Personal Income Tax

Tax

Table of content

What is the personal income tax?
Tax is ?
Personal income tax is ?
Deductions and expenses
How much is the personal income tax?
Filing personal income tax

What is the personal income tax?

It’s really unfortunate that taxation is not included in the basic curriculum of Thai education, and many Thai people lack knowledge about tax matters. As a result, many people pay taxes incorrectly due to their ‘ignorance of taxes’ or are classified as ‘tax avoiders,’ or pay taxes ‘more than they should’ because of a lack of tax planning. Today, I will explain to those who have just started working and those who need to understand how much personal income tax they need to pay, how much they need to pay, and how to file taxes without being fined.

Tax is ?

The money or benefits that citizens must pay to the government or the governing party to fund various expenses in governing the country are called taxes. The core concept of taxation revolves around one key principle: taxes are levied based on our income. If we have income, we must start paying taxes. The more income we have, the more taxes we pay, and the less income we have, the less tax we pay.
In this article, we will focus solely on income taxes. Taxes imposed by the government on other aspects, such as inheritance taxes, property taxes, etc., will not be discussed here.

Personal income tax is ?

Personal Income Tax is a tax calculated from our income within one calendar year, assuming that we are ordinary individuals and do not derive income in the form of businesses such as companies or limited partnerships. This type of tax is often calculated based on our actual income.

To determine our income, tax authorities utilize various tax-related data that occur each year, regardless of whether we are aware of it or not. For instance, when we undertake freelance work, part-time jobs, or are employed by a company, we are typically issued a tax withholding certificate. This document serves as evidence that we have received income, as it details the amount paid to us and the taxes withheld by the employer. Therefore, if we receive such a certificate, it is a reminder that the tax authorities have information about our income.

For those interested in checking what income information the tax authorities have about them, they can do so by accessing the following link. https://epay.rd.go.th/wps/portal/RD/FAQ/!ut/p/z1/lVPJbsIwEP0VeuBSKbEJWXtDiIqWUgUQDfEFxY6ztCROjCHQr69DKnURJcWHkZd5b8YzbwACK4DyYJ_GgUhZHmzk2Ufmuu-Y9ngyhNB9hhDOXAgnrmtoD4YFXgACaCtqS3JRiAT4POwQlguaiy6MgvJkOlsacJJ832s1piBpCHwcGgRGlqP0LaopuuOYSqCHtmJJ08M6iSLbPsU5AdfljvIj8G-B15Ydks_wjzWALXinwV-gb_AXArTi0UWXOoO2P_gyB-uLYdy779UMzpOhGRDqOvD2Ka3AMmc8kw1dXFn1cWsE81wEbzhdz5ajucT-btrVXa9IpjYk6idJuauJHtvKK8WbvpYlGkht1oI8CLD6tzgle7xhuJmBQY77dgwQpxHllKs7Lq8TIYrtXRd2YVVVasxYvKEqYVkXnoMkTE7J6qcnKLI3_E6xMZ9HCzcbYns6Ohj7aZR5CsLH6uYDFhfYrQ!!/dz/d5/L2dBISEvZ0FBIS9nQSEh/?search_query=*

The bank account transactions during the COVID-19 pandemic have increased due to the rise in online sales. Tax authorities require this information to verify the income. While the amounts of income may not be significant, the number of transactions can be substantial. This could be interpreted as income from sales without considering expenses or costs. In summary, personal income tax is calculated based on our income, as mentioned earlier.

Deductions and expenses are crucial when discussing income.

Calculating taxes based solely on income can be extremely unfair because regardless of business size—small, medium, or large—there are always costs and expenses. For example, let’s say we sell an item for 100 baht. However, we cannot simply use the full 100 baht to calculate our taxable income because our actual income comes from the profit, which is different.
Tax authorities understand this well, so they establish guidelines on what qualifies as deductible expenses and how much they are. This is to ensure that the “net income” is used for tax calculations. If anyone is interested in learning more about the topic of “deductions and expenses” as defined by the law, click here.

How much is the personal income tax?

First, let’s calculate the net income. This means subtracting our expenses and various deductions from our income, as explained earlier. We’ll get a value known as ‘net income.’

Next, do we use this net income to calculate taxes? Tax payments for individuals are not fixed percentages like in many countries. They are tiered. For example, in the year 2022, the personal income tax rates are as follows:

  • Net Income up to 150,000 baht: No tax
  • Net Income from 150,001 – 300,000 baht: Tax rate of 5%
  • Net Income from 300,001 – 500,000 baht: Tax rate of 10%
  • Net Income from 500,001 – 750,000 baht: Tax rate of 15%
  • Net Income from 750,001 – 1,000,000 baht: Tax rate of 20%
  • Net Income over 1,000,000 baht: Tax rate of 35%”

Before we begin the calculation, I’d like to point out a common mistake that some people make. Let’s say, for example, that someone has an annual income of 500,000 baht. The tax calculation should be based on a tiered system. The first 150,000 baht is tax-free. For the next portion, from 150,001 baht to 300,000 baht, the tax rate is 5%. This is the first tax bracket. Then, for the income from 300,001 baht to 500,000 baht, the tax rate is 10%. This constitutes the second tax bracket.

Now, we can proceed with our tax calculation.

Filing personal income tax

Can be done in two ways: firstly, by printing out the forms and submitting them at the nearest tax office, and secondly, by filing taxes online.

I’ve personally tried both methods, and I can confidently say that filing taxes online is much more convenient. The tax authority’s website provides a user-friendly interface where you can input your information. It then calculates your taxes and offers suggestions based on your income and expenses. It’s incredibly easy to use. Additionally, if you notice any mistakes or find that the tax amount is too high while inputting your data, you can save or draft the information without actually submitting it to the tax authority.

Overall, I highly recommend using the online platform for filing taxes. https://efiling.rd.go.th/rd-cms/

However, please be cautious as there are deadlines for tax filing. Regardless of whether you file online or offline, you must submit your tax return no later than March of the following year. If you file online, you have until April 9th.

If you find that the tax you owe is quite high and you have multiple sources of income, whether from your profession or personal business, I recommend consulting with a tax expert to plan your taxes properly and minimize your tax liability. If you’re unsure whom to consult, you can reach out to our office’s legal advisors. We have tax experts who can help you plan your taxes and provide accurate guidance on tax filing.

Article by Champ Lawyer

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