The Revenue Department of Thailand is in the process of drafting new law to ease tax burdens on foreign income remitted to the country. This initiative aims to incentivize Thai tax residents to bring overseas earnings back into Thailand for the purpose of stimulating domestic investment.
Under the current legal framework, which took effect on 1 January 2024, tax residents of Thailand are subject to personal income tax on foreign-sourced income that is brought into Thailand in any year, regardless of when the income was earned. The applicable tax rates are progressive, ranging from 5% to 35%.
This legal change represents a significant shift from the former legal basis. Previously, only foreign income earned and remitted to Thailand within the same tax year was subject to Thai personal income tax. Income earned abroad and repatriated in a later year had been excluded from tax.
However, the Revenue Department clarified that foreign income earned before 1 January 2024 and remitted into Thailand after that date remains subject to the previous rules, meaning such remittances are not taxable if brought in after the year of earning.
To align the taxation regime with economic policy objectives, the Revenue Department is drafting a royal decree to amend the current criteria. Under the proposed rule, tax residents of Thailand who earn income abroad is exempt from Thai personal income tax if the foreign sourced income is remitted to Thailand within the year it was earned or in the following year.
For example, if a tax resident of Thailand earns income overseas in 2025 and brings it into Thailand in 2025 or 2026, that income would be exempt from tax under the new law. However, if the income is remitted to Thailand after 2026, it will be taxed under the standard rules.
This amendment is designed to encourage timely repatriation of funds and support domestic investment, particularly at a time when economic recovery and capital mobilization are key government priorities.
Thai tax residents—defined as individuals who spend 180 days or more in Thailand during a tax year—are subject to person income tax on both domestic and foreign-sourced income.
According to a source from the Finance Ministry, the residency principle remains a cornerstone of Thailand’s personal income tax system. However, the rigid application of this rule in recent years has inadvertently discouraged some Thai nationals who invest or work abroad from remitting income back into the country.