Thai Revenue Department Proposes Tax Exemption for Foreign-Sourced Income Remittances to Thailand, Hoping to Attract Investments

Panuwat Luangwila, Deputy Director-General of the Thai Revenue Department (“TRD”), announced that the TRD is drafting legislation to amend the current tax regulations governing foreign-sourced income brought into Thailand for Thai tax residents. The proposed amendment will ease the rules by granting a tax exemption for tax residents of Thailand who remit foreign-sourced income to Thailand within two tax years (calendar years), meaning remittances made during the year in which the income is earned or the following year. However, income brought into Thailand after this period will remain subject to Personal Income Tax (“PIT”). 

Current tax laws and regulations, specifically Section 41 of the Thai Revenue Code and Departmental Instructions No. Paw 166/2566 and Paw 167/2566, state that tax residents of Thailand who bring in foreign-sourced income earned on or after 1 January 2024 are required to include the income in their Thai PIT returns and pay taxes on it at progressive rates (from 5% to 35%) when they remit the income into Thailand during any tax year (calendar year). It is understood that the intent of this law is to mitigate taxes lost on foreign-sourced income tax residents of Thailand earn but do not bring into Thailand during the same tax year.

The new proposed legislation would allow for a two-year grace period; foreign-sourced income earned from 2024 onward that is remitted into Thailand within two tax years will be eligible for a tax exemption. Income remitted after that period will be taxed under normal tax rules. However, the draft legislation must be approved by the Cabinet and reviewed by the Council of State before it can be enacted as a ministerial regulation. It is expected to take effect starting with the January–March 2026 tax filing period, and to cover income earned from 2024 onward.

The initiative resulted from the TRD's observation that Thai tax residents have invested more than Baht 2 trillion abroad in a wide range of assets, including real estate, insurance products, mutual funds, stocks, and debt instruments, and that these investments yield returns in the form of interest, dividends, capital gains, and other income, in amounts estimated to be in the hundreds of billions of baht annually. Encouraging the remittance of these funds could stimulate the domestic economy significantly, which aligns with the policy direction of the Finance Minister, who wants to encourage Thai tax residents with foreign income to reinvest in Thailand.

The two-year window also addresses practical issues, such as delays in receiving dividends distributed at the end of a fiscal year, which might otherwise prevent timely remittances. The Deputy Director-General emphasized that the goal is to create an incentive, not a penalty, and to promote reinvestment in Thailand.

In response to expressed concerns over double taxation, the TRD affirmed that Thailand complies with international standards, by offering a foreign tax credit mechanism. Under this mechanism, taxes paid on income earned in foreign jurisdictions can be ‘credited’ against Thai tax liability, subject to the lesser of the two amounts, either the foreign tax paid or the Thai tax due on the same income. This credit mechanism is in line with Thailand's network of double taxation treaties, which currently covers 61 countries and territories worldwide.

This article is intended to provide only a regulatory overview, and does not provide a comprehensive analysis or constitute legal advice. Should you have any questions on this or on other areas of tax law, please do not hesitate to contact our Tax Team at SCL Nishimura & Asahi Limited.

Areeya Ananworaraks
Counsel

Pairaya Yangpaksi
Associate

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