Thailand plans foreign income tax exemption for funds remitted within two years

Thailand will ease its recently tightened rules on taxing foreign-sourced income, which could benefit foreign business owners and other tax residents who keep profits abroad.

The Revenue Department is drafting legislation to exempt individuals from personal income tax on foreign earnings, such as dividends, interest, or capital gains, if the funds are transferred into Thailand within two years of earning them. Money brought in after that period would stay taxable, but the original invested amount abroad would still be exempt.

Officials say the goal is to encourage capital repatriation. The Director-General of the Revenue Department, Pinsai Suraswadi, estimates that Thai and foreign residents hold over 2 trillion baht overseas, much of which is parked abroad to avoid personal income tax rates that can reach 35%.

Current rules, in place since 2024, tax any foreign-sourced income brought into Thailand by tax residents, those who spend at least 180 days a year in the country, regardless of when the income was earned. For example, profits from a 2020 overseas investment remitted in 2024 are taxable under the current system.

Under the proposed reform, bringing such profits within a two-year window would be tax-free. The Finance Ministry is still finalizing the details, and there are conflicting signals on whether the measure would apply retroactively to funds remitted in 2024. Some officials expect implementation this year, while others suggest a longer timeline, with approval possibly by the end of 2025.

The plan also includes a separate exemption for capital gains from the sale of digital assets, including cryptocurrencies, which would run from Jan. 1, 2025, through Dec. 31, 2029. Both measures aim to attract foreign funds and boost domestic liquidity.