Thailand Advance Rental Income Personal Tax
Tax Insight | July 2015
On 8 July 2015, Thailand's Minister of Finance issued a new Ministerial Notification, which amends the personal tax income recognition rule for individual persons receiving advance (upfront) property rental income in Thailand.
There is no accruals basis rule for individuals under the Thai personal tax laws as there is for corporate entities under the corporate tax laws. Thai personal tax laws impose income tax on income as and when it is actually received (i.e. on the cash received basis).
But back in 1985, Thailand's then Finance Minister issued a Ministerial Notification, which permitted individuals who received upfront hire of property rental income for their granting of long-term leases to recognize their advance hire of property rental income over the number of years of the lease agreement ... provided they file advance tax returns (for all of the years they have received rental income in advance) prior to the end of the financial year in which the advance rentals are received (i.e. prior to 31 Dec of the year of receipt) ... and if they did not do so, they would lose their entitlement to recognize their advance hire of property rental income over the number of years of the lease agreement and they would be liable to personal tax on the whole of the advance rentals received in the year of receipt (in accordance with the cash received basis), plus penalty and surcharge.
The 8th July 2015 Notification of the Ministry of Finance "relieves the burden of this and in order to encourage individual taxpayers to comply with the tax law and pay their personal taxes", amends the prescriptions in the 1985 Notification.
From and including the 2014 financial year, the tax rules for individuals receiving advance property rental income under long-term property lease agreements are as follows:
This Tax Insight is general information only. It should not be used to determine any particular matter without consulting with an experienced Thailand tax advisor.