On 8th July 2015, the Thailand taxation rules for advance (upfront) rent income were amended by a Ministerial Notification issued by the Minister of Finance.

This Insight updates you about this Thailand personal income tax matter.

Under Thailand's personal tax law, there is no accrual basis rule for individual taxpayers as there is for corporate taxpayers under the corporate tax law. The personal tax law applies to income when it is received (i.e. cash received basis) which means individual taxpayers earning advance (upfront) rental income are subject to tax on the advance (upfront) rental income in the year of receipt.

The 8 July 2015 Ministerial Notification

The 8th July 2015 Ministerial Notification has been issued to relieve the Thai tax burden in the year of receipt. It prescribes as follows:

From and including the 2014 tax year:

1. If an individual wishes, he or she is permitted to recognize advance hire of property rent income over the number of years of the agreement by filing a current year's tax return and tax returns in advance (for each of the future years) and paying the personal income tax for all of those tax returns on or before 31st March in the year following receipt of the advance rent income. For example, if a taxpayer receives advance rent income of 30 million Baht for granting an immovable property lease for 30 years, he or she is allowed to recognize income of 1 million Baht in 30 tax returns, file the current year tax return and the 29 advance tax returns, and pay the personal income tax on all 30 of the tax returns on or before 31st March of the year following the receipt of the 30MB advance rental income;
2. If an individual wishes to utilize the method under 1 but a current year's tax return and advance tax returns are not filed and the tax has not been paid within the 31st March of the year following the receipt of the advance rental income, the taxpayer is still allowed to utilize the method under 1, but he or she shall additionally pay a surcharge (a late payment interest charge) at the rate of 1.5% per month or fraction of a month from 31st March to the date of filing and payment; and
3. If an individual does not file advance tax returns and pay income tax for the advance tax returns at all, the tax audit officers are empowered to assess income tax on the whole of the advance rent income in the year of receipt.

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