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Thailand is strategically located in the heart of Southeast Asia. As part of the ASEAN Economic Community, the country represents a perfect gateway to the region for globally expanding businesses. Its well-educated workforce ensures an attractive talent pool employers can leverage to build their local presence and conduct business in Thailand.
However, businesses should be sure to fully understand the compliance and tax implications linked to the payroll process before they establish a local entity and hire local employees. In the 2021 Global Payroll Complexity Index, Thailand ranked number 35 of the world’s most complex countries to process payroll in. Foreign businesses should therefore be prepared to encounter challenges when setting up and processing payroll in Thailand.
Employers have to register with several government bodies and authorities before they can start processing payroll in Thailand. Registrations include:
Registration for income tax withholding with Thailand’s Revenue Department
Registration as an employer with the Social Security Office within 30 days from the day the business hired its second employee—taking into account only employees aged 15 to 60
Registration as an employer with the Workmen’s Compensation Fund within 30 days from the day the business hired its second employee—certain types of employers are exempt
New hires must also be registered with the Social Security Office and the Workmen’s Compensation Fund. An in-country bank account is required for making payments to local authorities.
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Employers in Thailand have several obligations with regard to their employees’ income tax and social security contributions. They are notably responsible for calculating, deducting and remitting the respective amounts to the local tax and social security authorities. The mandatory social security contribution rates are low, but employers can choose to offer their employees a higher level of social protection by setting up additional insurance funds for them.
Individual income, including income earned from employment, is taxed at progressive rates which go up to 35%. The basic tax rate is 5% and applies to annual income between THB 150,000 and THB 300,000. Employees earning less than THB 150,000 per year are exempt from paying income tax. The top rate is 35% and applies to income exceeding THB 5,000,000 per annum.
Taxable income from employment includes wages and salaries as well as bonuses, gratuities and other employer-provided benefits—certain exceptions apply with regard to the taxation of certain employee benefits. Several deductions have to be considered when calculating employee income tax, including mortgage interest payments, charitable donations, health and life insurance premiums and voluntary provident fund contributions. Every taxpayer is entitled to a standard personal allowance. Further tax allowances are available to employees with children and other dependent family members.
Both residents and non-residents are taxed on income sourced in Thailand. Income earned outside of Thailand or derived from foreign sources is only subject to local income tax if the money is brought into the country during the tax year in which it is earned. Individuals are considered tax residents if they spend more than 180 days of the respective calendar year in Thailand.
2022 Tax Bands
Corresponding Tax Rates
Employers in Thailand are responsible for withholding income tax from employee salaries and wages during the monthly payroll process. The withheld taxes must be submitted to the Thai Revenue Department no later than 7 days after the end of the month for which the wages and salaries were paid. Late payments are subject to fines.
A payroll tax return must be completed and submitted within the same timeframe—employers filing electronically may have an extended deadline for submitting the return. Employers are further required to file an annual withheld income tax statement. The annual return is due by the end of February of the following year.
Individuals file an annual tax return for the final income tax assessment. The due date is 31 March of the following year. Spouses are allowed to file a joint tax return. The tax year corresponds to the calendar year.
Both employees and employers are required to contribute to the Social Security Fund which is administered by the Social Security Office. The contribution rate is set at 5% for employers as well as for employees (only applicable to employees aged 15 to 60). Contributions are capped at THB 750 per month. It is the employer's responsibility to deduct the employee’s share of the contributions from his or her salary and remit the withheld amount to the respective authority along with the employer-paid share of the contributions.
Contributions must be paid on a monthly basis, not later than 15 days after the end of the month to which they relate. The payment must be accompanied by a social security declaration detailing the deducted amounts. The declaration can be filed either electronically or in hard copy.
In addition, employers who have more than one employee are required to register with the Workmen’s Compensation Fund—certain exceptions apply to employers in specific industries—and pay an annual contribution which is due in January or March. The contribution amount varies depending on the risks associated with the employer’s business activity. Rates typically range between 0.2% and 1% of the employee’s earnings. A salary cap of THB 240,000 per year applies.
The Social Security Fund covers employees in case of illness, injury, maternity, invalidity/disability, unemployment, death, and old age, but employers can set up and pay into an additional pension fund on behalf of their employees. The law does not stipulate a minimum contribution rate, but employers are required to contribute at a rate equal to or higher than the employee’s own contributions. Payments to the pension fund must usually be made within 3 days after the employee’s payday.
Employees in Thailand are entitled to various benefits. These include:
Annual leave and public holidays: at least 6 days of paid annual leave; employers choose 13 public holidays from the official list that is published on an annual basis by the government authorities
Maternity leave: 98 days of maternity leave, of which 45 days are paid by the employer and the social security authority respectively; remaining 8 days are unpaid
Sick leave: up to 30 paid sick days per year; thereafter, unpaid sick leave can be taken; sick pay is provided by the employer
For more information on employee benefits and other employment requirements in Thailand (including severance pay and termination procedures), check out our Global Hiring Guide.
Minimum wages in Thailand vary from one region to the next. The lowest minimum wage rate is currently (November 2022) set at THB 328 per day (applicable in the provinces of Yala, Pattani, Narathiwat, Nan, and Udon Thani). The highest minimum wage rates must currently be paid to employees in the provinces of Phuket, Chonburi, and Rayong where minimum pay cannot be lower than THB 354 per day. It should be noted that employees in certain professions are entitled to higher minimum wages. Furthermore, different rules apply to foreign nationals working in Thailand.
There is no legal obligation for employers to pay their employees an annual bonus or a 13th salary, but overtime pay is mandatory. According to Thai labor law, employees required to work overtime on a normal working day are entitled to a 50% wage supplement on top of their normal hourly wages. Overtime pay rates for work on public holidays and days off is even higher and go up to 300% of the employee’s usual hourly earnings.
It is mandatory to process payroll and pay employees at least once a month. Authorized payment methods include cash, cheque and direct deposit. Cash payments require a written receipt with the employee’s signature. Bank transfers to Thai employees can be made from foreign bank accounts.
For each pay period, employees must be provided with a payslip. Payslips can either be provided electronically or in paper form. Another payroll-related requirement for employers is recordkeeping. According to the law, employers must collect and retain payroll records for at least 7 years.
Learn about tax reporting, compensation laws, registration requirements and more in our free Payroll Guide for Thailand.
This country guide is for informational purposes only and should not be construed as legal advice. The content of this guide contains general information, and although we update this guide regularly, it may not reflect current legal developments. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this country guide.
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