Income Tax In Thailand For Expats: Pay Less With A Health Insurance Plan | Editorial

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Courtesy of our friends at Pacific Prime, here’s what you need to know about reducing taxes for expats in Thailand.

Whether you haven’t thought about personal income tax in Thailand, or regretfully comparing your before and after tax income, you’ll be happy to know that there are a number of ways to lower your taxes. If you want to kill two birds with one stone, consider securing a health insurance plan. Not only will you protect yourself against sky-high medical bills, but you’ll also be able to keep more of your hard-earned paycheck in tax cuts.

What is personal income tax in Thailand?

According to Thai Revenue Department, personal income tax is a direct tax levied on a person’s income. It is essentially a natural person, a partnership, a non-legal body of a person or an undivided succession. In general, a person subject to personal income tax has to calculate their tax payable, file a tax return and pay tax on the basis of the calendar year. The deadline to do so is March 31 for the previous calendar year. Example: For your income earned between January 1 and December 31, 2021, you will have until March 31, 2022 to file your income tax returns. If you work for an employer in Thailand, chances are good that your taxes will be automatically deducted at the end of each month. This amount will be indicated on your payslip. That being said, it is still your responsibility to ensure that your taxes are filed correctly at the end of each fiscal (calendar) year. You can get more information by contacting the Ministry of Revenue. Alternatively, your company’s HR team should also be able to guide you.

Who is considered a tax resident?

Taxpayers are classified into “residents” and “non-residents”.

  • Resident: If you reside in Thailand for a period or periods totaling more than 180 days in any given fiscal (calendar) year, you will be liable for personal income tax on sources of income in the country and from abroad that are imported into the country.
  • Non-resident: If you reside in Thailand for a period or periods totaling less than 180 days in any given fiscal (calendar) year, you will only be liable for personal income tax on the sources of income in the country.

What is the tax rate?

Taxation in Thailand is progressive and increases with income:

Taxable income in THB Tax rate in%
0-150,000 Exempt
more than 150,000 but less than 300,000 5
more than 300,000 but less than 500,000 ten
more than 500,000 but less than 750,000 15
more than 750,000 but less than 1,000,000 20
more than 1,000,000 but less than 2,000,000 25
more than 2,000,000 but less than 4,000,000 30
more than 2,000,000 but less than 4,000,000 35

Source: Thai Revenue Department

What are the tax deductions in Thailand?

As in many other countries, there are a number of personal income tax exemptions in Thailand. Their use allows taxpayers to reduce their annual net taxable income. Some examples of tax deductions include family allowance, spouse’s allowance (only if they have no income), health and / or life insurance, and more. Thus, the annual net taxable income can potentially be less than the annual income.

How can expats reduce their taxes using health insurance in Thailand?

In order to reduce personal income tax by using health insurance in Thailand, expats are likely to use one or both of the categories below:

  • Health insurance for the taxpayer *: If you have a health insurance plan, you can use the premium amount as tax deductible. However, the maximum amount that can be used for the franchise is 25,000 THB.
  • Health insurance for the spouse: If your spouse has no income and you pay for their health insurance plan, you can use the premium amount as tax deductible. However, the maximum amount that can be used for the franchise is 15,000 THB.

Case study:

If you earn 1.8 million THB per year, you will fall into theincome bracket greater than 1,000,000 but less than 2,000,000 ”. Suppose you have purchased a health insurance plan for 40,000 THB per year, you will be entitled to a tax deduction of 25,000 THB, which is the maximum amount.When filing your income tax return, you can expect to reduce your taxes by 25,000 THB x 25% (your corresponding tax rate) = 6,250 THB.* If you also have a life insurance policy, please note that the maximum tax deduction for health and life insurance premiums is THB 100,000. This means that if you have already claimed 100,000 THB in life insurance premiums as tax deductible, you will not be able to use the 25,000 THB health insurance deductible.

What documents are needed to use Medicare as tax deductible?

When applying for a tax reduction based on health insurance, proof of a valid health insurance policy will be required as proof. The following information must also be indicated:

  • The full name and identifying information of the insured person;
  • Full name and identifying information of the premium payer (if different from the insured person);
  • The name, address and tax identification information of the insurance company; and
  • The amount of the health insurance premium paid.

To note: The insurance policy must be paid during the fiscal (calendar) year for the tax deduction to be effective for the same year.

Where can expats find health insurance in Thailand?

When you are looking for a health insurance plan to reduce your personal income tax in Thailand, it is advisable to be thorough in your research and your evaluation of the plans. This is because lower taxes are just one of the benefits of purchasing a health insurance plan, and you’ll want to make sure the plan is actually right for your health and lifestyle needs. . Rather than just looking at the bonuses, it’s important to consider things like:

  • What coverage does the plan provide? Hospitalization only (coverage if you are hospitalized overnight) or outpatient also (coverage if you are not hospitalized overnight)?
  • Would you like to add riders (optional extras) such as dental, vision or maternity coverage?
  • Are there any deductibles? This is the amount you have to pay out of pocket before the plan takes effect. Low premiums can be attractive, but usually come with high deductibles.
  • Is there global coverage and global portability? In other words, will the plan cover you if you travel internationally and even move out later?
  • And many other considerations.

Since sifting through thousands of plans online can be quite tedious, you might want to check out Pacific Prime’s Free Online Quote Tool. With just a few clicks, you will be able to compare health insurance plans from a verified selection of the best plans from the best local and global insurers. If (or more precisely, when) you come across insurance jargon, you can also refer to their insurance glossary. A global health insurance brokerage focused on expats in Thailand, Pacific Prime also offers a lot of support and assistance to newcomers. Discover their Complete guide to moving abroad as an expat Where contact their expert insurance advisors (many of whom are expatriates themselves) for free personalized advice.

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