3 Important Issues about Payroll Management in Thailand

Payroll Management in Thailand

Payroll management in Thailand is one of the important responsibilities for every limited company. There are totally 3 concerned departments, which employers should realize for employees’ employment and payroll calculation. Followings are the rules and regulations from each department related to the calculation of payroll management in Thailand for limited companies registered in Thailand under Thai laws.

1.Employment Law & Employee Rights

Employment

  • The hiring contract in written is not required but is recommended to provide in order to prevent any issue of misunderstanding between employee and employer, which may cause any issue in law and regulations.
  • The employers must inform the employees 30 days in advance for the termination if needed. The immediate termination can be accepted if 1 month salary paid in advance instead of advance notification.
  • In case the employees break the company’s policies, the employers must warn by verbal, by written, and by parole document before termination. In this case, the employers can terminate the employees without advance notification after 3 warnings.
  • Severance compensation depends on the time employees worked; between 6 and 12 months receiving 30 days of severance, one and three years receiving 90 days of compensation, and so on.

Working Period

  • The maximum working hours for Thai employees is 48 hours per week, which can estimate as regular working period from Monday to Friday at 8:30 am. – 5:30 pm. with a half day working on Saturday or 2 Saturdays working per month.
  • Working more than 48 hours will be considered as Overtime and employers need to pay according to the number of hours worked.
  • Employers need to pay 150% of overtime working during weekday and 200% payment on weekend working.
  • 300% compensation for overtime working will apply for working on National Holidays as announced by the government.

Wage and Salary

  • The payment currency in Thailand must be Thai Baht, which is around 32 – 35 Baht per 1 US Dollar. The wage and salary will be paid monthly via cash or bank transfer.
  • Currently, minimum wage for Thai labor is 310 Baht per day and will be increased to 325 Baht per day within year 2018. And, the government guarantees 15,000 Baht per month for Bachelor Degree labors. However, the wage and salary in each province of Thailand is different depending on the living cost in each area.
  • Regularly, employers will pay for salary including overtime payment and other incentives and compensation altogether in one time per month. Also, the paid amount is already calculated and deducted the social security fund, personal income tax, withholding tax, and other deductions as considered in each company.

Leave Allowance

  • Thai employees will receive at least 6 days off after 1 year working according to the law.
  • The national holiday will be indicated by Thai government with at least 13 days per year.
  • The maternity leave allowance is 45 days off with paid but the employees can take up to 90 days off.
  • The allowance of sick leave is 30 days per year with doctor’s certificate request in case of more than 2 days leave.
  • The employees have the rights to take the business leave in case of important matters such as contacting with governmental offices and parents’ illness, and employers are responsible to pay during the days off.

For more information about Employment Law and Employee Rights, you can visit the Department of Employment official website: https://www.doe.go.th/prd/main/law/param/site/1/cat/5/sub/0/pull/module/view/list-label

2.Social Security Fund

Security Office of Thailand is a government institution which offers social security benefits to migrants holding temporary passports, using social security fund, which covers old-age benefits, unemployment benefits, child allowance, event of death, injury or sickness, and maternity benefit and workmen compensation fund, which covers sustaining injury or illness, disability resulted from work performance, and death or disappearance from work. (Credited by: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=42113328) Social Security Fund (SSF) is the fund contributed by employee and employer on a monthly basis, which the regulations are indicated as following:

  • Every limited company needs to process the social security fund registration after employing the 1st staff within 1 month. And, all staff list with social security contribution payment must include in the first of social security fund registration.
  • The contribution rate is normally 5% with based salary of 15,000 Baht. And, the contribution rate is extended according to the range of salary, which referred from the minimum wage increase.
  • The due of contribution payment is on the 15th of the following month. Late payment will be surcharged at 2% per month of the amount due.
  • Workmen Compensation (WCF) is the payment required to employer only for annual contribution. The contribution rate is based on the total annual salary paid to employees and the type of business of each company.

For more information about Social Security Fund, you can visit the Social Security Office official website: https://www.sso.go.th/wpr/

3.Tax Requirements & Withholding

Personal Income Tax (PIT) is a direct tax levied on income of a person. In general, a person liable to PIT has to compute his tax liability, file tax return and pay tax, if any, according to the tax year or calendar year which is 1 January to 31 December in Thailand.

  • Taxable Person
  • Resident – Any person lives in Thailand more than 180 days in any tax year.

The resident of Thailand is liable to pay tax for both incomes from Thailand and foreign sources brought into Thailand.

  • Non-resident – Any person lives in Thailand less than 180 days in any tax year.

The non-resident needs to pay tax for the income from Thailand only.

  • Tax Base
  • Assessable Income

Any benefits provided by an employer or other persons, such as a rent-free house or the amount of tax paid by the employer on behalf of the employee, are also treated as assessable income of the employee for the purpose of PIT.

  • Deductions and Allowances

Deductions amount is indicated by the Revenue Department depending on each type of income.

Allowances will be calculated after the deductions, which include the additional expenses such as home mortgage, provident fund, life insurance, child allowances, and donations.

Taxpayer shall make deductions from assessable income before the allowances are granted.

The calculation is: TAXABLE INCOME = Assessable Income – deductions – allowances.

Tax rates of the Personal Income Tax

Taxable Income (Baht)

Tax Rate (%)

0-150,000

Exempt

More than 150,000 but less than 300,000

5

More than 300,000 but less than 500,000

10

More than 500,000 but less than 750,000

15

More than 750,000 but less than 1,000,000

20

More than 1,000,000 but less than 2,000,000

25

More than 2,000,000 but less than 4,000,000

30

Over 4,000,000

35

 

  • Withholding Tax

For certain categories of income, the income payer has to withhold tax at source, file tax return and submit the amount of tax withheld to the District Revenue Office. The tax withheld shall then be credited against tax liability of a taxpayer at the time of filing PIT return. The following are the withholding tax rates on some categories of income.

Types of income (Baht)

Withholding Tax Rate (%)

1. Employment income

5 – 37

2. Rents and prizes

5

3. Ship rental charges

1

4. Service and professional fees

3

5. Public entertainer remuneration

   – Thai resident

   – Non-resident

 

5

5 – 37

6. Advertising fees

2

 

  • Tax Payment
  • Employers are responsible for submitting Monthly Withholding Tax (WHT) of employees to the Revenue Department.
  • The deadline of Withholding Tax submission is by 7th (for manual Submission) or 15th (for online submission) of the following month. The amount can be calculated using the tax table supplied by the government.
  • The employers are responsible for completing ‘PDN1 K report’ at the end of every year and submit to the Revenue Department.
  • The necessary information for tax payment is the employee name and salary, but each type of business and each company have the various documents required by the Revenue Department.
  • Filing of all reports can be done by any party but statutory forms need to be approved by the company’s authorized signatory.
  • The employees or taxpayers need to submit the Personal Income Tax by themselves, which the employers will provide the summary of salary and Withholding Tax payment for each tax year to each employee directly.
  • Any withholding tax which has been paid to the Revenue Department can be used as a credit against the tax liability at the end of the year.
  • Taxpayer is liable to file Personal Income Tax return and make a payment to the Revenue Department within the last day of March following the taxable year.

For more information about Personal Income Tax, you can visit the Revenue Department official website: http://www.rd.go.th/publish/6045.0.html

 

From these concerns, the payroll management in Thailand needs to be processed from the professional persons, who will not make any mistakes in calculation and documentation. SMEBAAS is ready to provide you  free consultancy for payroll issues including Social Security Fund and Personal Income Tax. Also, we are able to be your best advisory for the employment law and employee Rights.

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