INDIVIDUAL TAXATION

Nonresidents are liable to tax on income derived from Thai sources. Married couples may opt to have joint tax liability; although the wife needs to file a separate tax return on her employment income, the couple´s combined taxable income will essentially be credited to the husband´s.

Personal income tax returns must be filed on or before 21 March in respect of taxable income received during the preceding calendar year.

INCOME TAX

Nonresident taxpayers can avail of the spouse allowance and child allowances only if their spouse or children are residents of Thailand. No other allowances are extended to nonresident taxpayers.

RENTAL INCOME
The taxable income is determined after deducting expenses incurred from gross income. A standard deduction of 10% to 30% is permitted for rental income depending on the type of property leased.

The standard deductions for rental income vary according to the rental income classification:

• income from buildings and wharves - 30% of income
• income from agricultural land - 20% of income
• income from all types of land - 15% of income
• income from vehicles - 30% of income
• income from other types of properties - 10% of income

If houses, buildings, and floating houses are rented out by the owner, 30% of the gross rent can be deducted for expenses. The actual expenses incurred can be deducted, especially if it is higher than the standard deduction stated above, but it must be supported by documents.

Rental income is subject to a 5% withholding tax.This tax is then credited to the final tax liability of the taxpayer, when he files an income tax return.

CAPITAL GAINS
Capital gains derived from the sale of immovable property are taxed at the standard income tax rates. The capital gains can either be included in the aggregate income or taxed separately.

If the gains are taxed separately, the tax liability is subject to a special computation and the maximum tax rate applicable is 20%.

The taxable gains earned from selling a Thai property are computed as the selling price or the market value of the property less some deductions. The deductions are percentages of the gross amount, and these percentages depend on how long the property was held before the sale or the transfer.

The actual expenses incurred can be deducted, especially if they are higher than the standard deductions stated above, but it must be supported by documents.

The balance from the above computation will be divided by the number of years the property was held, whereby the outcome is taxed at the appropriate tax rate. The resulting tax liability will then be multiplied by the number of years the property was in the taxpayer´s possession to arrive at the final tax liability.

But if the property was acquired as a gift or by inheritance, 50% of the proceeds (selling price or market value) are deductible as expenses. The balance or 50% of the proceeds will be divided by the number of years the property was held, and the outcome taxed at the appropriate tax rate. The resulting average tax liability will then be multiplied by the number of years the property was held to arrive at the final tax liability.

PROPERTY TAXATION

House and Land Tax

This is a property tax levied on rented properties. It is payable annually at a flat rate of 12.5% of the assessed annual rental value of the property. Only owner-occupied and vacant dwellings are exempt from property tax.

Property taxes are deductible against income tax liability, if the property is utilized in earning rental income.

Local Development Tax

This is a property tax levied on the value of the land, excluding improvements. It ranges from 0.25% to 0.95%, payable annually. The tax base is the assessed annual value of the land, as determined by the district authority.

Land subject to the house and land tax is exempt from the local development tax.