Long-Term Resident (LTR) visa has been granted to a highly-skilled professional. How does the 17% personal income tax flat rate work in practice?

Congratulations to highly-skilled professionals whose Long-Term Resident (“LTR”) visa is approved and stamped in their passport.  Those LTR professionals with potential eligibility to pay personal income tax at a 17% flat rate may however now have questions about how this tax benefit can be obtained in practice.

To remind, LTR is the visa scheme introduced by the Board of Investment (BOI) in 2022, allowing a foreigner to stay and work in Thailand up to 10 years with various privileges, sometimes including tax benefits. You can study the details of the LTR visa scheme in this link: https://www.pricesanond.com/knowledge/visas-and-work-permits/introducution-of-new-long-term-resident-ltr-visa.php

BOI will have been the main contact for considering and granting the LTR visa application, working closely with the Immigration Bureau and the Department of Employment.  The BOI does not however deal with tax matters, and the taxpayer is required to contact the Revenue Department (“RD”) directly in relation to the 17% flat rate possibility.

The RD has currently issued two relevant regulations, which are:

  1. Royal Decree Issued under the Revenue Code Governing Reduction of Tax Rates and Exemption of Taxes (No. 743) B.E. 2565 (2022); and
  2. Notification of the Director-General of the Revenue Department Regarding Income Tax (No. 427) Re: Prescribing rules, procedures, and conditions on income tax reduction and exemption for long-term resident

In summary, a foreigner who is potentially eligible to pay tax at the flat 17% rate must arrange to have his/her employer file a notification with the RD, identifying the applicant and confirming his/her entitlement.  In so doing, the employer will activate the employee’s entitlement – without need for response from the RD.  The employer must thereafter withhold at the 17% rate on payments of assessable income to the employee concerned, and the employee must file annual personal income tax returns as prescribed by law in respect of the income in question.

If the employee has other taxable income, not associated with the LTR scheme, then he/she should file separate personal income tax returns.

Any assessable income paid to the employee prior to the employer’s notification to the RD will not qualify for the 17% flat rate tax.

Should the employee fail at any time to observe any applicable requirements, including with respect to filing of personal income tax returns, he/she will forfeit the right to pay tax at the 17% flat rate and must pay instead at the normal graduated personal income tax scale.

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This update is written for general information only. It does not constitute advice, and consultation with professional advisors is recommended.