Calculation of personal income tax deductions

     In calculating personal income tax, the law stipulates that each type of income can deduct expenses (operating costs) first, then subtract personal allowances to get the net income or taxable income to calculate tax based on the tax rate schedule.

     "Expenses" thus are one element in calculating tax, regarded as one of the tax benefits set by law. The income earner can choose to deduct expenses in two categories:

1st Category: Lump-sum deduction, set as a percentage as stipulated by law.

2nd Category: Actual and reasonable deduction.

Assessable income used for tax calculation is classified into 8 types (Article 40 (1) - (8)) with different rates of expense deductions for each type of income, summarized as follows:

1. Income from employment, such as salaries, wages, bonuses, allowances, etc., can deduct expenses by 50%, not exceeding 100,000 Baht.
2. Income from the performance of duties or work positions, or from services, fees, commissions, etc., can deduct expenses by 50%, not exceeding 100,000 Baht. (If you have income of types 1 and 2, combine the income of both types but deductions cannot exceed 100,000 Baht.)
3. Goodwill, copyright, or other rights can deduct expenses by 50%, not exceeding 100,000 Baht, or actual cost.
4. Interest, dividends, profit shares, etc., cannot be used for expense deductions.
5. Income from leasing properties can deduct actual expenses or at a flat rate.

• Houses, buildings, constructions, rafts can deduct expenses by 30%.
• Agricultural land can deduct expenses by 20%.
• Non-agricultural land can deduct expenses by 15%.
• Vehicles can deduct expenses by 30%.
• Other properties can deduct expenses by 10%.
• For lease-purchase agreement defaults, installment sales agreement defaults, deduct expenses by a flat rate of 20% only.

     6. Liberal professions can deduct actual expenses or at a flat rate.

• Arts contract, and construction can deduct expenses by 60%.
• Law, engineering, architecture, accounting, and graphic arts can deduct expenses by 30%.

    7. Contract construction can deduct actual expenses or at a flat rate of 60%.

    8. Other income beyond types 1 - 7 according to Royal Decree (No.629) 2017 can deduct actual expenses or at a flat rate of 40% and 60%.

Data updated on November 21, 2020

Source: The Revenue Department, 90 Phaholyothin 7, Phayathai, Phayathai, Bangkok 10400

Tel. +66 2272 8000

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