All You Need to Know About Thailand Rental Income Tax
If you plan to rent out your property in Thailand, many considerations for a successful rental business come into play. Such considerations include your property’s location, property prices, local competition, potential rental yields, and taxes, among others.
Of course, operating businesses in Thailand are generally subject to taxes, and renting out a property is not exempted. This is another important factor to consider when you operate a Thailand property for rent. Hence, you must pay Thailand rental income tax. This is a tax levied on the average annual income of a rental property. However, you must first know if you are indeed liable to pay any taxes. Read on below to find out.
Who Must Pay the Rental Income Tax?
According to the PWC’s Thai Tax Booklet, both residents and non-residents who gain income from employment or business carried in Thailand are taxed. Included here is the lease of property, as can be seen in the Thai Revenue Code Section 40.
So, if you own the property and earn from it, you definitely need to pay the rental income tax. Be it studio apartments for rent, luxury villa rentals, or townhomes for rent. Moreover, you can only be exempted from the rule if you purchased a lease from a developer.
In submitting rental tax, you must fill out the PND 91 personal income tax return on or before March 21. Failure to submit would result in penalties that usually equal the amount of tax required plus a serious surcharge. This will be expounded a little more in the article.
How Much Thailand Rental Income Tax Should You Pay?
The rental income will be taxed after deducting expenses incurred through the year from the gross annual income. Such expenses could include but are not limited to:
Realtor agency fee
In addition, the standard deduction is 10 to 30% depending on the type of property leased. The Global Property Guide has compiled a list of properties which include:
Buildings and wharves – 30% of income
Agricultural land – 20% of income
All types of land – 15% of income
Vehicles – 30% of income
Other types of properties – 10% of income
The standard deductible rate for owners leasing their own properties is 30%. In some cases, it is possible to charge greater than 30% especially if the expenses exceed the regular rate. Although, make sure to back up your claims with the right documents and receipts.
Furthermore, the NET amount of rental income is subject to the standard yearly rate of Personal Income Tax which is measured with the progressive tax rates. People with NET income reaching THB 150,000 are exempted from paying.
Tax rates in Thailand are as follows:
The tax rates for both residents and non-residents are the same in Thailand.
Aside from that, all persons paying assessable income, which for this case is the tenant, should be responsible for paying the withholding tax. With this, tenants should deduct 5% of the total rent value. The tenant will be required to file the Form CIT 53 and submit the amount of tax withheld to the district revenue offices within seven days of the following month in which the payment was made.
This withholding tax will be credited back to you, the landlord, if required after the calculation of the income tax liability is done.
Penalties and Surcharge
Additional tax may be filed on the grounds of inaccurate filling of income tax returns or failure to file a return, with penalty reaching 100% for the former and 200% for the later. The penalty can be reduced to 50% if the taxpayer submits a request or if the assessment officer thinks that the taxpayer did not intend to evade tax.
In addition, any person who fails to pay or remit tax within the given time frame is liable to pay a surcharge of 1.5% per month of the amount of tax to be paid or remitted.
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