Note: This post describes tax reform proposals discussed in 2024.
In 2025, the policy direction shifted: instead of tightening, the discussion now focuses on easing the taxation of foreign-sourced income.
See details in a separate post: Thailand to Relax Tax Rules on Foreign Income Remittance.
Introduction
Thailand has long been a magnet for expatriates, digital nomads, and retirees, thanks to its high quality of life and favorable tax regime. In 2024, reports suggested significant changes were on the horizon, potentially affecting the taxation of foreign-sourced income. While it’s important to stay informed, it’s equally important to maintain a balanced perspective. Here’s what you need to know.
Thailand’s Current Tax System: Remittance Basis
Thailand currently taxes foreign-sourced income on a remittance basis, meaning tax residents are only required to pay taxes on income that is transferred (‘remitted’) into the country. Income kept abroad remains untaxed, making this system particularly appealing to expats and digital nomads managing global income.
Under Section 41 of the Thai Revenue Code, individuals who stay in Thailand for 180 days or more in a calendar year are considered tax residents and are subject to these rules.
Shift to “Arising Basis” for Foreign Income Proposed
On June 5, 2024, the Bangkok Post reported that that Thailand’s Revenue Department is considering revising the tax laws to tax foreign income even if it is not remitted to Thailand. This proposed change would shift from the current remittance basis to an arising basis for the taxation of foreign-sourced income.
Under the arising basis, Thai tax residents would be required to pay taxes on their worldwide income, regardless of whether the funds are transferred to Thailand. This would bring Thailand closer to international tax standards and could potentially increase tax revenue. As of the June report, discussions were still in the early stages.
In a follow-up report on September 6, 2024, the Bangkok Post confirmed that the Revenue Department is actively drafting legislation to implement the arising basis for foreign-sourced income. According to Kulaya Tantitemit, the department’s director-general, the draft law would amend Section 41 of the Thai Revenue Code. If enacted, tax residents who have lived in Thailand for 180 days or more in a tax year would be required to pay taxes on foreign income, even if it is not remitted to Thailand.
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Understanding the Legislative Process and Timeline
Any amendment to the Revenue Code to implement such a reform would be a complex, multi-stage process involving various stakeholders. This process could take several years, and while discussions have begun, there is no certainty that the changes will be officially initiated. Lawmakers would need to thoroughly evaluate the potential impacts, and there is no guarantee the proposed changes will be approved. Therefore, significant changes are unlikely in the near future.
Potential Impacts of Tax Changes
If these changes are implemented, they would significantly alter how Thailand taxes foreign income, aligning the country’s tax system more closely with those of many developed countries, including members of the OECD (Organisation for Economic Co-operation and Development), which Thailand is actively seeking to join. While this could help increase tax revenues, it would also require careful consideration of all potential consequences.
These changes might expand Thailand’s tax base but could also make the country less attractive to expatriates, digital nomads, and retirees who currently enjoy favorable tax treatment on foreign income. This could have a ripple effect on sectors like real estate and tourism, which benefit from long-term foreign residents.
Foreign Income Tax Exemption for LTR Visa Holders
There are concerns about how these changes could affect the tax benefits currently enjoyed by Long-Term Resident (LTR) Visa holders.
The Long-Term Resident (LTR) visa program, effective since September 1, 2022, offers special tax and other benefits aimed at attracting “high-potential foreigners”. Tax benefits are provided under Royal Decree (RD) No. 743 (2022).
LTR visa holders in three categories are exempt from tax on foreign-earned income:
1. Wealthy Global Citizens
2. Wealthy Pensioners
3. Work-from-Thailand Professionals
This exemption applies to taxable income under Section 40 of the Revenue Code for the previous tax year, including income from work, business outside the country, or assets located abroad and transferred to Thailand. As the exemption is explicitly tied to remitted income—income earned abroad and brought into Thailand—a shift to a worldwide income taxation system would render the current framework insufficient.
If the Revenue Code is amended to tax global income regardless of remittance, the Royal Decree governing LTR visa benefits would likely need revisions to maintain these advantages. Given Thailand’s focus on attracting wealthy foreigners and skilled professionals, it is expected that any changes would preserve favorable conditions for LTR visa holders to ensure the country remains competitive.
Related Articles
Thailand to Relax Tax Rules on Foreign Income Remittance
Personal Income Tax in Thailand: A Complete Guide for Expats and Residents
Thailand’s Long-Term Resident Visa (LTR Visa): A Practical Guide
Thailand Approves 5-Year Tax Exemption on Crypto Profits
Conclusion
Initial reports indicate that a draft law to change Thailand’s tax system is in development, but the process is lengthy, and there is no certainty it will be enacted. Stay informed and avoid unnecessary concerns. For specific advice on how these changes might impact you, feel free to contact us.
