How Thai Life Insurance can reduce
Personal Income Tax in Thailand
| Example of tax calculation with
and without life insurance. |
| Description |
Standard deductions |
Including Insurance Premiums |
| Income |
5,000,000 |
5,000,000 |
| Expense |
60,000 |
60,000 |
| Allowance |
|
|
| Personal |
30,000 |
30,000 |
| Spouse |
|
|
| Children |
|
|
| Children’s education |
|
|
| Parent |
|
|
| Life Insurance premium |
|
100,000 |
| Pension Life Insurance premium |
200,000 |
|
| Housing Interest |
|
|
| Social security fund |
|
|
| Provident fund |
|
|
| Donation |
|
|
| LTF/RMF |
|
|
| Total Allowance |
30,000 |
330,000 |
| Net Income |
4,910,000 |
4,610,000 |
Thai insurance companies provide two types of life
insurance which trigger a personal income tax deduction in Thailand:
1. A regular life insurance policy - Deduction for premiums up to THB100,000
per year. The policy must be contributed to for a minimum of 5 years with
10-year coverage.
2. A Pension Life Insurance Policy - Deduction for premiums up to THB
200,000 per year under the following conditions:
* The amount claimed for this deduction must not exceed 15% of the
taxpayer’s annual assessable income.
* The sum of the Pension Life Insurance premium and any contributions to
either: a provident fund, government pension fund, welfare fund under the
private school law and/or any investment in the Retirement Mutual Fund (RMF)
must not exceed THB 500,000 in any calendar year.
* If a taxpayer does not fully claim a regular life insurance deduction
(clause 1 above) up to a maximum of THB 100,000 they may claim up to a
maximum of 300,000 baht tax deduction on contributions to a Pension Life
Insurance policy.
Contributions to the policy must be maintained for a minimum of ten years.
The pay-out period should be between the ages of 55 and 85 but requests for
payment prior to this will be considered providing there have been
contributions for five years.
Example
Below is an example which illustrates how someone who earns THB 5,000,000
per year would benefit by purchasing life and pension life insurance.
Summary
If someone with an income of THB 5m pays THB 300,000 total in
life and pension life insurance premiums, those premiums would be added to
the tax allowance. The tax rebate would amount to THB 111,000; making the
net premium price just THB 189,000. With a calculated return of 37%, the
percentage gain over the net premium would be 58.7%, without including
annual growth of the investment. At the same time he/she has the peace of
mind of having a life and pension insurance - a potentially useful benefit.
Even better, you can show your beneficiaries (e.g. Thai wife etc), that they
will benefit if you should unfortunately part this mortal coil earlier than
planned. However, I suppose, on the other hand it may just encourage them to
help you on your way…in other words - Caveat Emptor!
| Tax Calculation |
| Net Income |
Rate |
Income Amount |
Tax Payable |
Income Amount |
Tax Payable |
| 1 - 150,000 |
0% |
150,000.00 |
0 |
150,000 |
0 |
| 150,000 - 500,000 |
10% |
350,000.00 |
35,000 |
350,000 |
35,000 |
| 500,001 - 1,000,000 |
20% |
500,000.00 |
100,000 |
500,000 |
100,000 |
| 1,000,001 - 4,000,000 |
30% |
3,000,000.00 |
900,000 |
3,000,000 |
900,000 |
| over 4,000,000 |
37% |
910,000.00 |
336,700 |
610,000 |
225,700 |
| Total Tax |
|
1,371,700 |
|
1,260,700 |
|
| *** Saving of THB 111,000 |
|
The above data and research was compiled from sources
believed to be reliable. However, neither MBMG International Ltd nor its
officers can accept any liability for any errors or omissions in the
above article nor bear any responsibility for any losses achieved as a
result of any actions taken or not taken as a consequence of reading the
above article. For more information please contact Graham Macdonald on
[email protected] |
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