Thailand’s Remote Work Visa Scheme and Tax Implications: What UK Workers Need to Know

In recent years, remote working has become increasingly popular, allowing individuals the freedom to work from anywhere in the world. Thailand has emerged as an attractive destination for remote workers, thanks to its beautiful landscapes, rich culture, and modern infrastructure. To further cement its appeal and attract foreign professionals, Thailand introduced the long-term resident visa scheme (LTR visa) in September 2022. However, with this new visa category, tax implications arise for both remote workers and their employers. International Tax Review looks at what’s involved.

The Long-Term Resident Visa Scheme

The LTR visa scheme offers foreign workers an opportunity to work remotely from Thailand while retaining the flexibility to travel in and out of the country without permanently relocating. Of the four types of LTR visas available, the work-from-Thailand professional visa is designed to attract remote workers.

To qualify for an LTR visa, applicants must meet minimum income requirements and have at least five years of relevant work experience in the past decade. Additionally, if the foreign employer is a public company listed on a stock exchange, or a private company operational for at least three years with a combined revenue of over $150 million in the last three years, the application is eligible.

Tax Implications for Remote Workers

Under Thailand’s Revenue Code, individuals are liable for personal income tax on income received from a post held in Thailand, regardless of whether it is paid in or outside the country. Being present in Thailand for 180 days or more within a tax year classifies an individual as a tax resident, subjecting any employment income brought into Thailand to Thai income tax.

A tax exemption has been introduced for holders of the work-from-Thailand professional LTR visa in relation to income earned from employment abroad and brought into Thailand. However, there are currently no guidelines on whether remote workers for foreign employers are considered to have employment or a post held in Thailand, potentially making them liable for tax.

Thailand has double taxation agreements (DTAs) with over 60 countries, including the UK. Generally, these agreements determine that employment income is taxable in the country where the work is performed, based on the employee’s physical presence. However, if the foreign employer does not have a permanent establishment in Thailand, employees will not be subject to Thai tax on income earned from work performed in Thailand if their stay is less than 183 days or similar in the relevant period.

Understanding the Risks for Foreign Employers

Thailand’s Revenue Department has yet to issue guidelines on the taxation of foreign employers with staff working remotely in Thailand. The Revenue Code lacks a minimum requirement for an employee’s stay in Thailand to create a taxable presence for their foreign employer.

DTAs help provide more certainty, stating that business income derived from activities performed in Thailand by foreign enterprises is not subject to Thai income tax if the enterprise lacks a taxable permanent establishment in the country. However, certain ambiguities arise, such as whether an extended stay in a home office in Thailand creates a sufficient degree of permanence to establish a taxable presence. The duration of the employee’s presence in Thailand also impacts the potential establishment of a permanent presence. To mitigate the risk of creating a taxable presence for their employer, foreign remote workers in Thailand may consider limiting their stay.

Potential Tax Reforms

Although Thailand has taken steps to accommodate remote work with the introduction of new visa categories, issuing guidelines on the tax obligations of remote workers and their foreign employers could further attract foreign professionals. This would provide clarity and certainty for both remote workers and their employers, ensuring they understand their tax liabilities and obligations.

As remote work continues to grow in popularity, it is essential for both employees and employers to navigate the tax implications in their remote working arrangements. By staying informed and seeking professional advice when needed, UK workers exploring the opportunity to work remotely from Thailand can enjoy the country’s vibrant culture and picturesque landscapes while ensuring compliance with tax regulations.