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Published on March 12, 2008

Since anyone in receipt of income is required to file an annual tax return, you should consider taking action to ensure that all taxable income is declared and that you benefit from the favourable tax deductions and allowances that are available to reduce your taxable income.

The scope of personal income tax covers residents and non-residents, with a resident defined as an individual present in Thailand for 180 days or more in any one tax year. A resident is subject to tax on all income from sources in Thailand and income derived from sources outside of Thailand, should such income be brought into the country during the tax year in which it is earned.

However, a resident of Thailand who is over 65 can be excluded from income up to Bt190,000. A non-resident individual is subject to tax only on income earned from domestic sources.

Recipients of various types of income subject to personal income tax are entitled to standard deductions, depending on the nature of the income received. For those employed, a deduction of 40 per cent but not more than Bt60,000 is given, while contractors and those involved in certain other business activities may opt to deduct either the actual expenses incurred or 40-85 per cent of the income, depending on the nature of the business activities.

Besides the standard deductions, taxpayers are entitled to a range of personal allowances. These include Bt30,000 for the taxpayer and - unless separate returns are filed or the taxpayer has been in Thailand for less than 180 days - Bt30,000 for the spouse. For those with a family, a further deduction of Bt15,000 per child up to three children may also be claimed.

If a child is under 25 and a full-time student abroad, this deduction can be taken. For each child studying in Thailand the amount that can be claimed is increased by an educational allowance of Bt2,000.

Other available allowances include up to Bt50,000 for life-insurance premiums paid to a Thai insurer for a policy with a term of at least 10 years, up to Bt100,000 for home-mortgage interest paid in Thailand, up to Bt300,000 for contributions to both a provident and a retirement mutual fund, and up to Bt300,000 for contributions to a long-term equity fund. A deduction may also be available for certain qualifying charitable deductions that can be documented.

Finally, remember to claim a credit against income-tax liability for any tax withheld at the source by the payer of the income.

Failure to file a tax return and remit any tax due by March 31 will subject the taxpayer to an interest surcharge of 1.5 per cent per month, capped at the amount of tax left unpaid.

With the submission deadline looming, the opportunity to review your tax position and ensure that you receive all of the tax allowances to which you are entitled should be a priority.

n James Harley is a manager at KPMG Phoomchai Group. This information is intended only as a general guide. Tax laws are complex, and professional advice should be taken before acting on the information provided.