Many expats in Thailand are unaware of a new law, enacted in 2017, that offers health insurance tax allowance for holders of private medical insurance. The law states that if you held a health insurance policy from a Thai insurance provider on or after January 2017, you can reduce you taxable income by up to 15,000 baht.
How much income tax can you save?
The percentage you can deduct depends on your annual net taxable income, which is outlined below:
Net Taxable Income
|150,001 - 300,000||5%|
|300,001 - 500,000||10%|
|500,001 - 750,000||15%|
|750,000 - 1,000,000||20%|
|1,000,001 - 2,000,000||25%|
|2,000,001 - 5,000,000||30%|
|5,000,001 and over||35%|
If you are earning less than 1 million baht per year, you could save up to 3,000 baht.
If you are earning less than 5 million baht per year, you could save up to 4,500 baht.
This all depends on your annual net taxable income, which could be a lot less than your annual income if you take advantage of the many personal income tax allowances available.
How the health insurance tax deduction works: an example
To illustrate how this deduction works, let’s use the imaginary character Sam the expat.
- Sam works for an international company in Bangkok and earns 2.4 million baht per year.
- He pays 50,000 baht in health insurance premiums yearly, which according to the new law, makes Sam eligible for the 15,000 baht personal income tax allowance
- If the only deduction Sam claims is his annual health insurance premium, then his net taxable income is 2,385,000 baht, which places him in the income bracket of 2,000,0001 - 4,000,000.
- 385,000 baht of the 2,385,000 will be taxed at 30% because that is the only taxable amount in the bracket of 2,000,001-4,000,000.
- Sam’s tax on this bracket will be 115,500 baht (385,000 x 30%)
- Without the health insurance tax allowance, Sam would've had to pay 120,000 baht (400,000 x 30%) in this tax bracket; and therefore Sam saves 4,500 baht.
How can expats claim the deduction?
In some companies, a member of the HR or Tax department will assist expats in filing. If you can read Thai you can submit online on the revenue department's website. Be aware, you’ll likely need to show evidence that you hold a valid Thailand health insurance policy to the Revenue Department, in which case you’ll need to submit a copy of your premium receipt and a copy of your policy schedule.
If you qualify for a refund, you’ll be reimbursed within the coming weeks after you’ve submitted your income tax.
What other rules should you be aware of?
The new law states the maximum personal income tax allowance for both your health insurance and life insurance premiums cannot exceed more than 100,000 baht. That means if you have already used 100,000 baht of your life insurance premium as your personal income tax allowance, you cannot use an additional 15,000 baht from health insurance premium.
Need expert guidance for your personal income tax in Thailand? Contact Mazars for tax advisory services.