Thailand Car Benefits Personal Income Tax
Tax Insight | November 2012
Thailand does not have fringe benefits tax, and employees in Thailand are required to pay personal income tax on employer-provided fringe benefits provided to them.
But whilst the Thai tax code specifically prescribes that both accommodation and housing allowances are fringe benefits income no mention is made about cars and car allowances.
The answer to this question is found in Supreme Court Tax Case No 7536/2554.
A taxpayer (a senior government official) received a monthly car allowance in addition to his monthly salary and position allowance. The taxpayer argued to the Revenue officers that his car allowance was not a fringe benefit subject to personal income tax because it was paid to him in lieu of being provided with a car by his employer, which he was entitled to, due to his senior government official status.
The Supreme Court acknowledged that the car allowance was received by the taxpayer in lieu of him receiving a car from his employer, to which he was entitled, and noted that if the taxpayer had received a car instead of a car allowance, he would not have been subject to tax.
But the Supreme Court also noted that the car allowance received by the taxpayer was not subject to any rules or restrictions. This means the Court said, the taxpayer is free to spend his monthly car allowance on anything he chooses, which, upon retirement, he would have legal ownership of, which is the same nature as the position allowance.
This is not the same as being provided with a car, which is the same as being provided with an office, office equipment and office air-conditioning, which, upon retirement, the taxpayer has no further rights to use, and therefore, such things are not fringe benefits income.
The Supreme Court's ruling was that the taxpayer's monthly car allowance is fringe benefits income under Section 39 and Section 40 (1) of the Revenue Code, and also makes it clear that being provided with a car is not fringe benefits income in Thailand.
This Tax Insight Article is general information only. It should not be used to determine any matter without consulting with an experienced Thailand tax advisor.