Contracting in Thailand: A Guide for International Contractors
Thailand is a well-known destination for travellers of all types and could be of real interest to international contractors as well. If you have experience or specialities that are valued by Thai clients (or multinationals with branches in Thailand) then there are a few ways for you to set up a working relationship.
This will describe the visa requirements, work options, tax rates and filing, and how to stay compliant inside of Thailand. The country has been known to take a fairly strict view on whether expats are allowed to stay long term.
What visas do I need to be a contractor in Thailand?
Because of its popularity with expats, Thailand has restricted their visa rules in recent years for those looking to work or live in the country. There is no self-employment visa, and contractors will likely need to obtain a Non-B employment visa and work permit with a Thai sponsor.
The initial 90-day Non-B (non-immigrant) visa must be applied for at a consulate outside of Thailand and is valid for one year once the work permit is approved. During the initial 90-day visa validity, the work permit is applied for by the Thai sponsor. You can renew within the country and does require address reporting at immigration every 90 days.
There is a new ‘smart visa’ available since 2020 for digital nomads who may already be working for foreign clients online, while in Thailand on a tourist visa. It is valid for four years and requires evidence of a contract with a foreign company. It’s not valid for working with Thai companies.
How do I get paid while contracting in Thailand?
Work as a self-employed freelancer
Due to the stringent visa rules, it is not possible to legally work as a freelancer for Thai companies. You will need to work as an employee or use one of the other options.
Set up your own limited company
It is possible to set up your own limited company in Thailand and then ‘lease’ yourself out to Thai clients. Because all of the registration and documentation are in Thai, you will need local professional help to accomplish this. Setting this up is only practical if you have long term plans to work in the country and have a high demand skillset.
Work with an umbrella company in Thailand
An ideal solution is to work with an umbrella company in Thailand, who will be an intermediary with your Thai clients. Considering the need for a visa sponsor and help to bridge the Thai language and cultural differences, an umbrella company is well suited for contractors that have found Thai clients. The umbrella company will withhold taxes, make social contributions and then issue a payslip each month.
How do taxes work for contractors in Thailand?
The first THB 150,000 of income is tax-exempt, and after that, the rates range from 5% to 35% depending on income level. Expat employees who work for a registered Thai “International Business Center” providing services to its affiliates, will pay a flat 15% income tax as long as they are in the country a minimum of 180 days and earn at least THB 200,000 per month.
Limited companies will pay a 20% corporate tax on retained earnings after deductions.
Tax residency rules in Thailand
Tax residency will occur if you stay longer than 180 days in Thailand, meaning taxation of worldwide income. Many countries have tax treaties with Thailand to offset any potential double taxation at home.
Anyone who has taxable income must register for a Tax ID number (before earning the income) at the Revenue Office by presenting their passport or ID card. The process for filing your tax return involves:
Step 1: Determine the relevant form to submit.
- PND90: For a taxpayer with income not only from employment.
- PND91: For a taxpayer who received income from employment only.
Step 2: Collect the required documents. This usually includes:
- Your 13 digit taxpayer ID (and your spouse’s taxpayer ID if you are filing jointly).
- Spouse’s passport number.
- Withholding tax certificates.
- Documents regarding government retirement allowance and payments from any government pension funds.
- Documents relating to mortgage or any debts, rental income or expenses, any dividends earned, the sale of property and the sale of any units in a mutual fund or equity fund.
Step 3: Fill in all fields on the form.
Step 4: Submit online or file as a hard copy at any Revenue Department Area Office
You must pay additional tax by cash or cheque if you file at a Revenue Department office.
Any tax refunds will be mailed as a cheque and this must be deposited within 6 months from the date of issue. If filing online, any tax due must be paid electronically and any tax refunds will be mailed to you as a cheque.
What are the social security contributions in Thailand?
Social security contributions in Thailand are quite low, at 5% of salary up to a maximum of THB 750 per month (about USD $25). The employer and government contribute an equal amount as well.
Can I work remotely for a company in Thailand from my home country?
The travel restrictions due to the pandemic have forced many contractors to work remotely from their home country. You may find it advantageous to begin working with a Thai client remotely, and then when restrictions loosen you could apply for a work permit. This gives you a chance to demonstrate your value and skills without the need to travel, which could translate into an on-site position in the future.
Your Thai clients will just remit payment as you complete milestones, and there will be no other Thai compliance steps for either of you. You will pay taxes at home and are free to work with clients from other countries at the same time.
How do I stay compliant while contracting in Thailand?
As you are contracting in Thailand, you will be concerned about compliance with laws and regulations. Your primary compliance risks are:
- Meeting tax and social contribution requirements
- Business registration for limited companies
- Work permit validity and sponsorship
That is a lot to overcome, especially for new contractors, and you might need the help of an umbrella company to take over many of these tasks. Contractor Taxation has licensed, verified umbrella companies in Thailand who are ready to assist you with setting up your contract and making sure that your payments are secure. Here are some of the benefits of using an umbrella company:
- Handles all client payments, tax withholding and any social contributions
- Issues you a payslip each month, to a Thai or foreign account
- Can sponsor work permits
- Helps set up the Thai contract with the client
- Moderates any disputes with your client
- Advises on access to totalization and double taxation treaties
Unless you are prepared to handle all of this on your own, you may find that an umbrella company is a valuable partner as you embark on contracting in Thailand. Please contact Contractor Taxation with your questions about how an umbrella company can work for you.