Guru Speak

According to government statistics, there are currently almost 20,000 foreign nationals in Thailand holding work permits relating to the field of education, and therefore we hope this article is helpful to many of you, whether you are a teacher, or are involved in the management of an educational institution.

Of course there are criteria which must be met, and restrictions on this tax exemption. The main criteria are that firstly the teacher, professor or researcher must be working at a recognised educational or government institution. Secondly, the employment must be temporary in nature.

The tax exemption for people who meet the above criteria is generally for a maximum of two years, and if the exemption is applicable, the employer does not have to withhold tax on compensation or salary. If tax is withheld, it may be refunded, provided that an application is submitted within three years.

Of course, as is the case with many doubletaxation agreement provisions, the actual implementation is subject to the local authorities' interpretation. As noted earlier, a tax exemption is available to eligible people who do not stay permanently, or for more than two years. Clearly then a question arises as to what happens if a teacher, for example, comes to work in Thailand on a twoyear contract, and then some time later enters into a new twoyear contract to teach here again.

Thailand's rules state that if a person claiming this exemption at any time fails to fulfil the requirements, all taxes previously exempted must be repaid, together with a surcharge of 1.5 per cent per month.

There are no clear guidelines which will help in determining when an employment is considered permanent, or what steps must be taken to become eligible for a "new" exemption once the initial twoyear exemption expires. Employers, teachers, professors and researchers therefore need to assess carefully whether contractual arrangements are appropriate to support any exemption claimed.

Obviously any tax exemption has its attractions, however individuals and institutions wishing to use this one should seek professional advice to ensure an expensive mistake is avoided!

This information is intended as a general guide only. Tax law is complex and professional advice should be taken before acting on the information provided.