Tax deductables in Thailand

[limbo]

Have been told that if you pay for your own privat insurance, the full amount is deductible from tax. Anyone can confirm this?

[BaronTT]

The most relevant aspects of this is that for life insurance policies, there's a maximum 50,000 baht premium per year per person and that the duration of contract must be 10 years or more.

[radioman]

Do I understand this correctly?

 

If I pay Thai income tax based on expat minimum requirement for a WP of 50,000 baht per month, about 4000 baht per month income tax I think.

 

Then if I take out a 10 year insurance for self, family, etc with a guaranteed maturity return of at least the capital invested plus some nominal interest with a premium of say 4000 baht per month giving a total annual premium of 48,000 baht, (less than the 50,000 maximum.

 

At the end of the year I could use this as a deductable and not pay any tax ???

 

Cheers,

M.

 

[exileexpat]

No..

 

If you make 50,000 per month ( 600,000 annually your tax rate would be ... 0-100,000B would be exempt; 100,000-500,000B would be at 10% and 500-600,000 would be at 20 percent. ( so you would pay 0 + 40,000+ 20,000) so 60,000 for the year.

 

But if you use the 50,000 bhat life insurance deduction your upper tax rate would be reduced to 550,000 (600,000- 50000 life) so you would pay 0+40,000+ 10,000) . You would save 10,000B and hence the real cost of the policy would only be 40,000.

 

It is an outstanding deal in that when you are above 500,000 a year you save 20% for every bhat you invest in. If you are above 1million salary per year you can save 30% etc. WHere else can you get a 20%-40% return on your investment the very first year!

 

The same format applies to LTF ( long term equities), RMF ( retirement mutual fund), Province funds, life insurance, charity, mortgages etc)

[exileexpat]

I have a few deductions.. Life, mortgage, kid, and LTF.. For the LFT you can invest up to 300,000B but it has to stay in for 5 years. It is basically a way of keeping money in the SET so it is more stable. You invest in the LTF every year for 5 years , then withdrawl the money and reinvest it annually after that. Basically you have a huge tax deduction for life. I am sure they are going to fix this loophole. Thai tax rates are very high for what you get, especially if you make a decent living. But with these tax deductions, no capital gains tax on investments it can be reasonable. But it means investing the money in Thailand which some people really dont feel confortable with.

 

But I have seen a shitload of people who leave thailand with nothing but a beer belly and some damn good stories.

[radioman]

Ok, understood and worky worky. But surely if you have to maintain the policy for 10 years then that is how long it would take to 'realise' the return, no?

 

Cheers,

M.

[BaronTT]

You get the deduction every year, as you pay the premium. If you want to surrender the policy after say 5 years, you can. You'll still have received the deduction for the previous years.

 

But if you want to maximize your return, keep the policy inforce until it matures.

 

(In a way, there's generally a built in penalty for early surrenders in life insurance policies, but this has nothing to do with taxes.)

[limbo]

So, it's only for life insurance but not for health insurance?

[exileexpat]

life insurance but you can get an add on health insurance policy with places like INGlife

[Chlp]

Private health insurance is also tax-deductible.

 

I work for a private school and I buy my own insurance at BUPA. I give the premium payment receipt to the admin at the school who does the taxes for the teachers. It was used as a deduction and I got a tax refund.