Thailand income tax for expats: Pay less with a health insurance plan

Courtesy of our friends at Pacific Prime, here’s what you need to know about lowering taxes for expats in Thailand.

Person sorting through documents
Whether you haven’t given personal income taxes in Thailand a second thought or are regretfully comparing your pre- and post-tax income, you’ll be glad to know that there are a number of ways to lower your taxes. If you’d like to kill two birds with one stone, consider securing a health insurance plan. Not only will you safeguard yourself against sky-high medical bills, but you’ll also get to keep more of your hard-earned salary in the form of tax rebates. 
Related:The State of Health Insurance: report 2020-2021 - read about changes and trends shaping global - and regional - health insurance

What is personal income tax in Thailand?

According to the Thai Revenue Department, personal income tax is a direct tax levied on the income of a person. Essentially, this applies to an individual, an ordinary partnership, a non-juristic body of a person, or an undivided estate. In general, a person who is liable for personal income tax has to calculate his/her tax liability, as well as file a tax return and pay tax on a calendar year basis. The deadline for doing so is March 31st for the previous calendar year. Example: For your income earned between January 1st to December 31st, 2021, you’ll have until March 31st, 2022 to file your tax returns. If you’re working for an employer in Thailand, then chances are that your taxes will be automatically deducted at the end of each month. This amount will be indicated on your payslip. That being said, it’s still your responsibility to ensure that your taxes are filed correctly at the end of each tax (calendar) year. You can get more information by contacting the Revenue Department. Alternatively, your company’s HR team should also be able to guide you.

Who is considered a tax resident?

Taxpayers are classified into “resident” and “non-resident”. 
  • Resident: If you’re residing in Thailand for a period or periods aggregating more than 180 days in a given tax (calendar) year, you’ll be liable to pay personal income tax on income sources in the country and from abroad that are brought into the country. 
  • Non-Resident: If you are residing in Thailand for a period or periods aggregating less than 180 days in a given tax (calendar) year, you’ll only be liable to pay personal income tax on income sources in the country. 

What is the tax rate?

Taxation in Thailand is progressive and rises based on earnings:
Taxable income in THBTax Rate in %
more than 150,000 but less than 300,0005
more than 300,000 but less than 500,00010
more than 500,000 but less than 750,00015
more than 750,000 but less than 1,000,00020
more than 1,000,000 but less than 2,000,00025
more than 2,000,000 but less than 4,000,00030
more than 2,000,000 but less than 4,000,00035
Source: Thai Revenue Department

What are tax deductibles in Thailand?

Like many other countries, there are a number of personal income tax deductibles available in Thailand. Utilizing these allows taxpayers to reduce their annual net taxable income. Some examples of tax deductibles include child allowance, spouse (only if they’re without income) allowance, health and/or life insurance, and more. As such, the annual net taxable income can potentially be less than the annual income. 

How can expats lower taxes using health insurance in Thailand?

In order to lower personal income tax using health insurance in Thailand, expats are likely to use one or both of the categories below:
  • Health insurance for the taxpayer*: If you have a health insurance plan, you can use the premium amount as a tax deductible. However, the maximum amount that can be used for the deductible is THB 25,000. 
  • Health insurance for spouse: If your spouse has no income and you pay for their health insurance plan, you can use the premium amount as a tax deductible. However, the maximum amount that can be used for the deductible is THB 15,000. 

Case study:

If you earn THB 1.8 million per year, you’ll fall into themore than 1,000,000 but less than 2,000,000” income bracket.  Say you secured a health insurance plan for THB 40,000 per year, you will be eligible for a tax deductible of THB 25,000, which is the maximum amount.When filing your personal income tax return, you can expect to reduce your taxes by THB 25,000 x 25% (your corresponding tax rate) = THB 6,250.*If you also have a life insurance policy, please note that the maximum tax deductible for both health and life insurance premiums is THB 100,000. What this means is that if you have already claimed THB 100,000 of life insurance premiums as a tax deductible, you will not be able to use the THB 25,000 health insurance deductible. 

What documents are needed to use health insurance as a tax deductible?

When claiming a tax reduction based on health insurance, proof of a valid health insurance policy will be required as evidence. The following information will also need to be stated:
  • The insured person’s full name and ID information;
  • The premium payer’s full name and ID information (if different from the insured person);
  • The insurance company’s name, address, and tax ID information; and
  • The amount of the health insurance premium paid.
Note: The insurance policy needs to be paid during the tax (calendar) year for the tax deductible to be effective for the same year. 

Where can expats find a health insurance plan in Thailand?

When looking for a health insurance plan to lower your personal income tax in Thailand, it is advisable to be thorough in your search and evaluation of plans. This is because lowering tax is only one benefit of securing a health insurance plan, and you’ll want to ensure that the plan is actually suitable for your healthcare and lifestyle needs. Rather than simply looking at premiums, it is important to consider things like:
  • What coverage does the plan offer? Inpatient only (coverage if you are hospitalized overnight) or outpatient also (coverage if you are not hospitalized overnight)?
  • Do you want to add riders (optional extras) such as dental, vision, or maternity coverage? 
  • Are there any deductibles? This is the amount you must pay out of pocket before the plan kicks in. Low premiums may be enticing, but usually come with high deductibles. 
  • Is there worldwide coverage and global portability? In other words, will the plan cover you if you travel abroad and even relocate further down the line? 
  • And many other considerations. 
Given that sifting through thousands of plans online can be quite tiresome, you might want to check out Pacific Prime’s free online quotation tool. In just a few clicks, you’ll be able to compare health insurance plans from a vetted selection of the best plans from top local and global insurers. If (or more appropriately, when) you encounter any insurance jargon, you can also refer to their handy insurance glossaryA global, expat-focused health insurance brokerage in Thailand, Pacific Prime also offers plenty of support and assistance to newcomers. Check out their complete guide to moving abroad as an expat or reach out to their expert insurance advisors (many of whom are expats themselves) for free personalized advice. 

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