Our guide to Payroll in Thailand

Doing Business in Thailand

Investing in Thailand

The Thai government welcomes inward investment from foreign investors to help develop the economy. Some incentives are available to encourage investors to support emerging industries within Thailand.

Basic Facts about Thailand

How to Say

Hello: Sawasdee (krub/ka)
Good Morning: Arun sawat
Good Evening: Sawasdee ton yen
Do you speak English?: Khun phoot pasa angkrit dai mai?
Goodbye: Laa gorn
Thank you: Khop khun (krub/ka)

Additional Phrases (Dates & Numbers):
Monday - Sunday: Wan Jan, Wan Angkan, Wan Phut, Wan Paruehat, Wan Suk, Wan Sao, Wan Athit
One to Ten: Neung, Song, Sam, Si, Ha, Hok, Jed, Paed, Gao, Sip

Registrations and Establishing an Entity

To operate payroll in Thailand, businesses must register with the Revenue Department, Social Security Office, and the Department of Business Development (DBD). Entity options include:

• Limited Company
• Branch Office
• Representative Office

Treaty of Amity

The Treaty of Amity is a treaty between the US and Thailand which creates favourable trade conditions.  The treaty allows citizens of the US to establish a business in Thailand with majority ownership, this is usually prohibited under the Foreign Business Act – usually the majority owner must be Thai national(s).  A company can register under the Treaty of Amity if at least 51% of the company shares are owned by US citizens.  Usually the directors of the company have to be US citizens. It should be noted that this exception for US citizens does not extend to all types of business activity.

Banking

It is not mandatory to make employee salary payments from an in-country bank account, however it is mandatory to make third party authority payments from an in-country bank account.

Working Week

The working week in Thailand is Monday to Friday. Generally, the working hours for commercial offices are from 0830 to 1730.

Employment Law

Annual Leave

Under the Labor Protection Act (LPA), an employee who has worked continuously for one full year shall be entitled to annual leave of not less than six working days.  

In the interests of the computation of leave, when the employee is paid a monthly wage
 
Monthly Wage * No. of days of annual leave
    30

Maternity Leave

In Thailand, an expecting mother is protected under the Labour Protection Act. Women employees are entitled to the following:

• 120 days of maternity leave including any holidays in that period

• Full pay: 60 days from the employer and 45 days from the Social Welfare Fund

• Protection from termination of employment due to pregnancy

Note: To be entitled to paid maternity leave, the woman must have paid contributions to the Social Welfare Fund for at least seven months before pregnancy.  
For further information, see the http://www.sso.go.th  
*** Update New maternity-related leave

Sick Leave

It is standard in Thailand to receive up to 30 days with pay. There are no particular calculation formulas for sickness payments.

National Service

As per the Labor Protection Act, an employee shall be entitled to take leave for military service for mobilization for inspection, for military training or for mass testing in accordance with the law on military service.

An employer shall pay a wage to an employee who takes leave for the purpose of military service under Section 35 equal to the wage on a working day throughout the entire leave period, but the number of such leave days must not exceed sixty days in a year.

Personal Business Leave

Employee must be given a minimum of 3 days business leave a year and full pay for a maximum of 3 working days a year while on business leave. 

Note: Personal business leave is different from annual leave and must be addressed separately in the work rules. The Labour Protection Act stipulates 3 days of paid personal business leave.

Tax & Social Security

The Thai tax year runs from 1 January to 31 December.

Individual Income Tax

Thailand has a progressive personal income tax system. Residents are taxed on worldwide income; non-residents are taxed only on Thai-sourced income.

Income Tax Rates (2024):

Social Security Fund (SSF)

Both the employee and employer have to contribute on a monthly basis.  The contribution rate is usually 5% with basic salary caped at THB15,000.00. THB 17,500 With the minimum wage being increased recently, it has been decided to extend the reduction in Social Security contribution rate. 

Provident Fund / Welfare Fund

Employers have the option of registering for a “provident fund” (offered by Thai financial institutions) instead of participating in the government’s “employee welfare fund” (overseen by the Department of Labour Protection and Welfare).

Depending on the fund’s prospectus, employees may contribute between 2% and 15% of their salary, and the employer matches this amount. Under the new rules, no matter what amount their employer is contributing, employees can contribute and deduct the maximum amount allowable—15% of annual wages or THB 500,000, whichever is lower. An employee can make higher contributions than the employer. Employee contributions are tax-exempt up to a certain limit, which means that yearly contributions up to that sum directly reduce the tax liability.

The payment for the provident fund must be submitted three days after payday and may vary depending on PF trustee. 

Workmen Compensation Fund (WCF)

In addition to social security contributions, the Workmen’s Compensation Act requires employers to pay annual contribution, at the rates of 0.2% - 1% of its employees’ annual wage depending on risk levels of the business. This contribution is to be used for paying workmen’s compensation in respect of work-related injury, or sickness, or loss of organs, or invalidity, or death, or lost to employees who are insured persons.

The annual wage per person for calculating the contribution amount is limited to Baht 240,000 per employee per year. The term “wages” means money of all kinds paid by an employer to an employee in return for work performed on a normal working day excluding overtime pay, holiday pay and bonus pay. 

Monthly Reporting

Employers are responsible for submitting Monthly Withholding Tax (WHT) on a monthly basis. The deadline is by 7th (manual submission) or 15th (online submission) of the following month. The amount can be calculated using the tax table supplied by the government.

Provident Fund (monthly)

The format of this is determined by the vendor.

Yearly

Payroll

Payroll reports must be kept for at least seven years.

Payslip

It is legally acceptable in Thailand to provide employees with payslips in either hard copy or online. Payslips are in English or Thai depending on the requirements of the company.

Payslip Example

New Starts

It is required for all new starts to be registered with the following departments within the first month of employment:

• Provident Fund registration is required with the appointed Provident Fund vendor.

• SS registration required with the Social Security Fund.

• Revenue Department (this is not required if the new starter is a citizen of Thailand. If the new starter is an expat and never had TAXID then the company should apply TAXID for the expat employee)

Registration is usually submitted together with monthly PF and SS forms.

To set up a new start the following information is required:

• PF – New hire form containing all the personal & employment information
• SS – Standardized New hire form (Form SPS1-03/1) 

The following documents are also required when setting up a new start:

• Passport
• Signed contract
• Work permit
• Working visa
• Personal I.D. Card (Thai staff)
• Tax ID card (expatriates only)
• Social Security Fund ID number (expatriates only) 

Leavers

All leavers must notify the local authorities if they are leaving their job by completing the following:

• PF – Termination form containing all the personal & employment information

• SS – Standardized termination form (Form SPS6-09)

Employee Benefits

Expenses

Travel expenses can be reimbursed through payroll or other ways; there are no specific rules.

To apply for a work permit the employee must first obtain a non-immigrant visa for themselves and all family members before traveling to Thailand.  This visa usually allows for a stay of 90 days but can be extended up to a year.  This visa can then be renewed each year.

There are several rules covering work permits in the Foreign Employment Act.

In the majority of cases all non-Thai nationals working in Thailand are required to have a work permit.  The employer can file for a work permit before the employee is in Thailand, however they will not obtain it until they are in Thailand.

A new work permit is required if there is a change in certain job details – such as change in occupation, employer or location.

For urgent work an employee may be allowed to work up to 15 days without a work permit, however this work may only be done once written notification has been received from the Department of Employment.

• Treaty of Amity: U.S. companies may qualify for majority ownership privileges.
• Conscription Policy: Male Thai citizens may be called for national service.
• Personal Business Leave: Specific to Thai labour law, minimum 3 days annually.
• Multiple Office Types: Investors may choose between limited companies, branches, or rep offices depending on needs.
• Form Sor Por Sor 1-03 & 6-09: Specific to employee registration and termination.

Further Information

For more information, or assistance with Thailand Tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.