The Cabinet approved a draft ministerial regulation on July 30, 2024, to revise tax measures promoting sustainable investment in Thailand. The measure aims to support high-potential Thai individuals working abroad and in 15 target industries, encouraging them to return to work in Thailand, with tax benefits for both employees and employers.
Key Takeways
- For employees, personal income tax will be reduced to a maximum of 17% of income. Employers can now deduct labor expenses at 1.5 times the contract amount, an increase from the previous one-time deduction.
- The objective is to attract 500 high-potential Thais and boost investment in targeted industries under various acts including the Competitiveness Enhancement Act and the Investment Promotion Act.
- Employers in specific sectors can deduct 1.5 times the wage costs for qualified employees from the law’s effective date until December 31, 2029 for corporate income tax purposes.
For employees, personal income tax will be reduced to a maximum of 17% of income. Employers can deduct labor expenses at 1.5 times the contract amount, up from the previous one-time deduction. The initial goal is to attract 500 high-potential Thais, stimulating investment in targeted industries under the Competitiveness Enhancement Act, the Investment Promotion Act, and the EEC law.
The 15 target industries are automotive, electronics, high-quality tourism, agriculture, food, and biotechnology, transportation and logistics, automation and robotics, aviation, aerospace, and space, biofuels and biochemical, petrochemical and chemical products, digital, medical, defense, circular economy support, international business centers, and other industries requiring specific expertise such as technology research and financial consulting.
To qualify for the tax reduction, individuals must be Thai nationals with a minimum of a Bachelor’s degree and have worked abroad for at least two years. They must return to Thailand from the effective date of the Act until December 31, 2025, and be employed under an employment contract with a company or legal partnership in targeted industries, earning taxable income under Section 40(1) of the Revenue Code.
Additionally, they must not have worked in Thailand in the tax year in which the tax reduction is first claimed and must not have resided in Thailand for at least two years prior to that tax year, or if they have resided there, must have resided there for a total of less than 180 days in that tax year. They must have stayed in Thailand for a total of at least 180 days, except in the first and last tax year of claiming the benefits, where a stay of less than 180 days is permitted.
