Teacher tax issues

Working your way through the teacher tax minefield

Eleven years ago I responded to a request for assistance on a teaching forum from a teacher whose school HR (Human Resources) staff would not help her obtain a refund of Thai Personal Income Tax (PIT), and since then I have obtained tax treaty refunds for more than four hundred teachers.

Since, in Thailand, employers usually expect employees to pay for their mistakes, it is hardly surprising that school HR staff are often reluctant to assist teachers with claims which, in many cases, are for more than the HR employee's own annual salary.

This reluctance is at the root of many excuses for not assisting teachers with tax treaty claims. HR staff are ill-equipped to deal with questions from the Revenue Department and are far more concerned with protecting their own positions than obtaining tax refunds for teachers who have left the country.

The purpose of this article is to dispel some of the myths, misconceptions, scare stories and absolute mumbo-jumbo surrounding these claims. In fairness, many teachers new to Thailand have never encountered such confusion and understandably choose to trust their employers, Principals and Revenue Department employees, most of whom are blissfully ill informed.

Sometimes school owners mislead perfectly honest and credible school administrators who, in turn, unwittingly mislead teachers. One former school Principal contacted me after he was misled by school HR staff and consequently cheated out of his own tax treaty refund.

There is a breathtaking level of corruption and dishonesty in Thailand and many school owners offer inducements to Revenue Department staff in order to avoid paying taxes to the Government; especially payroll taxes deducted from teachers who have departed.

Thailand has entered into Double Taxation Agreements (DTA's) with several countries but they are not just for the benefit of teachers. DTA's cover many aspects of international taxation including investment income, pensions, and film royalties.

The existence of an agreement does not therefore automatically indicate a teaching exemption. The terms of the agreements differ from one to another, but most provide for teachers to be exempted from PIT, usually for a two year visit to Thailand for the purpose of teaching.

Where it is applied correctly the exemption is for the full two years of the contract and not just two income tax years. Thus, if a teacher commences work in September, year 1, works through all of year 2 and completes the contract in August of year 3 that teacher will be eligible for a refund for those parts of years 1, 2 and 3 spent working in Thailand.

The American agreement, for example, exempts teachers of any nationality who were resident in the USA before commencing their first Thai teaching contract. The teacher does not need to be American, but to have been an American resident prior to visiting Thailand. The American agreement only exempts Americans if they were resident in the USA immediately before visiting Thailand to teach, and any Americans who were living in other countries should refer to Thailand's Agreements with those other countries.

There are agreements, notably with Canada, South Africa, Switzerland and New Zealand which do not provide an exemption for people who were resident in those countries, whereas other countries, such as Eire, do not have agreements with Thailand at all. The Revenue Department often apply this aspect incorrectly and refer to a teacher's nationality in determining a claim.

Obtaining a refund for a teacher from, say, Canada, who was resident in the UAE prior to Thailand, adds an extra layer of bureaucracy, plus a fee to the Emirates' Finance Department, to the procedure, but it is possible. Since the exemption depends upon a teacher's previous country of residence then, upon conclusion of a teaching visit to Thailand, the teacher may move on to a third country and if that country has a DTA with Thailand which includes the teaching exemption, the teacher will be exempt from income tax in the third country too.

Occasionally school administrators have informed teachers that claiming a refund is "against the law". No indication of any specific law is offered, however, just "the law" in general. This stems largely from the miserable situation many schools got themselves into in 2003. For several years schools applied the exemption at source, by not deducting tax from teachers' salaries, and relying upon their Thai Human Resources staff to determine who was eligible for relief and who was not.

This resulted in several schools receiving tax demands from the Revenue Department where they had failed to deduct tax from those teachers who were not eligible for the exemption. In the muddle that ensued Thai Revenue staff misinformed Thai school administrators of the proper regulations, those administrators provided school Principals with mis-information and many teachers paid back taxes unnecessarily. Others skipped the country leaving their schools to foot bills amounting to millions of Baht and many HR staff changed jobs in order to avoid blame.

A few schools have again begun to pay teachers' salaries gross for the first two years using the teacher's nationality and not his/her residence status to determine entitlement, and are making the very same mistakes as before. Teachers who resided in a country which does not have a reciprocal exemption with Thailand, before visiting Thailand, are not entitled to the exemption however and, where schools fail to deduct tax from teachers who should have paid tax, Revenue Department auditors do eventually discover their mistake.

Teachers who are being paid without tax deductions under this scheme also become subject to internal Thai Revenue Department regulations which are additional to the tax treaties and those regulations are not open for interpretation in the same manner as the treaties are. In circumstances where a teacher continues to work beyond the second year, administration staff will usually commence deducting tax from the beginning of the third year without considering that the exemption only relates to a visit not exceeding two years. In these circumstances teachers whose visit exceeds two years are no longer entitled to the two-year exemption and should receive tax demands for the years when the school did not deduct tax.

There is no negotiation over this, even if the teacher left Thailand and returned with a new contract. Where they discover teachers in this situation the Revenue Department have learned from past experience and usually notify the Immigration Department in order to prohibit the teacher from leaving Thailand until the first two years' taxes are paid in full. This cannot be rectified and teachers have been presented with substantial tax demands in recent years.

School administrators, often concerned by past experiences, sometimes dissuade teachers from claiming the exemption by maintaining a teacher will have to pay tax in their home country if they claim a refund from Thailand. The teachers' tax exemption is contained within Double Taxation Agreements for a very good reason and by combining the treaty exemption with the residency rules of a teacher's home country it is possible for teachers to receive their teaching salary free from tax in both Thailand and the teacher's home country.

American teachers are usually covered by the Foreign Earned Income Exemption and British teachers who are not UK resident do not pay UK Income tax on overseas earnings. There are some instances where this is not so and it is important for teachers to obtain professional advice at an early stage in order to ensure that the Thai salary is not only free from tax in Thailand but also in their home country. Misunderstandings, bad advice, or mistakes cannot be always be rectified after the event.

Any competent advisor will be able to explain how the DTA exemption interacts with the residency rules in the home country. One representative has encouraged friends to contact me posing as interested clients in order to obtain information he was lacking in this aspect and I would strongly urge teachers to request evidence of recent successful claims from any advisor before agreeing to anything. The claim process is subject to regular changes and the UK residency rules, especially, have undergone considerable revision with effect from 2013, so anyone who has not obtained a refund in recent years may well be struggling to keep up with developments.

Part of the confusion surrounding these claims is that the official Thai translations of the treaties are worded in formal Thai language which many Revenue Department staff experience difficulty understanding and which is not a precise translation of the English version. A teacher may therefore submit a claim based upon the English version of a treaty only for the Revenue Department to challenge that claim using the Thai version.

In these circumstances the teacher and the Revenue Department may become embroilled in a spiral of correspondence with each firmly believing the other is in the wrong. Revenue Department Head Office staff will now refer to the English language version of a DTA for clarity, but this is not usually the case at local offices where the English language capability is insufficient for this purpose.

Another common misconception is that a teacher should return to his home country at the conclusion of the visit to Thailand but this is not so and there is nothing in any DTA which requires this. This misunderstanding is mentioned in a post on the TES forum plus other indications that the first visit ends when a teacher returns to his home country for a holiday, but these are merely excellent examples of what happens when Thai Revenue staff invent their own conditions and a teacher lacks the expertise to challenge them.

The exemption usually applies for the FIRST teaching visit not exceeding two years although some agreements provide for a three year exemption whilst others do not stipulate the visit has to be the first such visit at all. There is, however, widespread misunderstanding of what constitutes a "visit". Individual officers attempt to combine consecutive visits into one single visit in order to deny the exemption by maintaining that several consecutive visits constitute one continuous visit exceeding two years. This approach draws upon the additional Thai legislation which should only be applied in circumstances where a school pays a teacher's salary without tax deductions.

With so many amateurs trying their luck with claims this interpretation has become the norm and, where claims are rejected, the costs of an appeal are prohibitive. Officers regularly seek to apply their own conditions in these circumstances, insisting the teacher should have remained outside Thailand for whatever period of time they can think of before returning to Thailand. That time period will simply be adjusted in each individual case to ensure the teacher is denied the exemption, which is why there is such confusion over how long a teacher should remain outside Thailand between visits.

There are robust arguments and international case law, especially from the US in 2010, against the amalgamation of consecutive visits, although simply because a Revenue officer agrees to something on one occasion does not preclude that Officer from changing their mind twenty-four hours later if it appears they can get away with it, and teachers have handed back refunds in these circumstances without challenge, so it is hardly surprising so many Revenue offices take this approach.

When a teacher returns to Thailand for a second or subsequent teaching visit, the teacher must pay tax FOR THAT SUBSEQUENT VISIT. Some Revenue Officers misunderstand this aspect and believe that upon returning to Thailand the teacher must pay tax for the first visit too, even if there are several years between visits.

This is a different misunderstanding from that which sees Revenue officers seeking to combine consecutive visits. This argument accepts that there are two separate visits but asserts that a teacher is only permitted one visit and when a second visit is made the exemption should be withdrawn for the first visit. After receiving a legitimate refund of tax paid during the first visit there should be no question of teachers having to repay that money unless the claim itself was fraudulent, and therein lies the source of further confusion.

In some instances where a teacher has left Thailand, providing a school administrator with Power of Attorney, Revenue Department Staff with limited experience have requested the school administrator sign a letter confirming the refund will be repaid upon the teacher returning to Thailand. School administrators are an obliging lot and will sign the letters simply because they have no authority to challenge the Revenue Department. Teachers are still falling foul of this.

Some schools maintain they can obtain tax treaty refunds but in reality they are not filing claims under the relevant tax treaties at all; they are merely doctoring the teachers' original tax documents, understating the salary paid, in order to obtain a refund. Teachers who have been the victim of this treatment have been obliged to pay the refunds back upon their return to Thailand, even several years later, and are misled into believing they are refunding a tax treaty claim. In fact they are simply handing back a tax refund which was obtained improperly, and the time period for making a genuine claim has been lost in the process.

It is also sometimes suggested that by banking a refund cheque the teacher is "money laundering". This comes from a misunderstanding of sections 341 and 269/5 of the Thai Criminal Code. Money laundering is a practice whereby the proceeds of an illegal activity are given the appearance of having a legitimate origin. There is nothing illegal about these treaties and they may be viewed on the Revenue Department website.

The Revenue Department are hardly likely to promote a money laundering activity on one section of their website and warn people about the dire consequences of money laundering elsewhere on the same website. Most foreign banks are, however, unfamiliar with Thai cheques and, as money laundering regulations have become stricter, banks have begun rejecting cheques issued by Thai banks.

There are, however, procedures which allow Thai cheques to be cleared through the international banking system but they are not widely known. This aspect is becoming increasingly relevant since Thai banks are freezing accounts which remain inactive, even those accounts that are substantially in credit. It is easy to see how a teacher might believe these claims are illegal if his bank refuses to accept a Thai cheque due to money laundering concerns.

One remarkable explanation for failed claims provided by Thai HR staff is that the Revenue Department operate a lottery and teachers only receive refunds where they have lucky Taxpayer Identity Numbers. Any teacher who accepts this should seriously consider whether Thailand is really for them.

My favourite assertion, however, is that "the school is paying the teacher's tax". It would be more correct to say the school is deducting tax from the teacher's gross salary and paying it to the Revenue Department. It is possible for a school to pay the teacher's tax but in this situation the regular Personal Income Tax paid by the school must be regarded as additional salary, and additional tax must therefore be paid on the tax which the school pays. This "double grossing" calculation works thus (2555BE figures):

NET SALARY ThB 1,000,000

Personal Income Tax:
150,000 NIL
350,000 @ 10% = 35,000
500,000 @ 20% 100,000

Employee's Gross 1,135,000

Employer's tax on tax
( 135,000*100/70*30%) 57,857

Total tax therefore ThB 135,000 + ThB 57,857. = ThB 192,857.

In every instance where I have encountered schools maintaining they are paying a teacher's tax an examination of the tax records reveals that the only tax being paid is the regular amount ( ThB 135,000 in the above example) and not the grossed up figure ( ThB 192,857 above). In these circumstances the net pay scheme is commonly used to disguise a reduced level of tax payments to the Revenue Department in the year the teacher departs.

Using the above example of a teacher earning a net salary of ThB 1,000,000 net in a full year, we have established that the full year's tax amounts to ThB 135,000. Hence the monthly net salary is stated as ThB 83,333 and the monthly tax paid to the Revenue Department amounts to ThB 11,250, resulting in a monthly gross salary of ThB 94,583. This is fine for a complete twelve months but in the year of departure there will usually only be seven months' salary, and schools are re-calculating the tax payments using the net salary they have contracted to pay, but over seven months, not twelve, and paying a lesser amount to the Revenue Department, resulting in an overall reduction of gross salaries and the teachers effectively receiving a a pay cut without knowing it. Using the example here of a teacher with net salary of ThB 83,333 the tax payments for the final seven months reduce to ThB 6,012 per month thereby reducing the gross salary by ThB 5,238 to ThB 89,345. This is perfectly legal (ignoring that the teacher has been kept in the dark) but the reduced amount of tax paid is still the teacher's money and can be reclaimed.

Determining who may claim what is only part of the process, and as with many aspects of life in Thailand it is not what you do that determines whether a claim is successful, but the way that you do it. Anyone who thinks they are simply going to hand a form in to the Revenue Department and receive a cheque with ease will be very disappointed.

There is considerable prejudice directed against teachers claiming these refunds and in some instances school administrators will collaborate with Revenue Department officers in order to mislead and confuse teachers so as to deny them the refunds they are entitled to. Most Revenue Department staff would rather have their teeth pulled without anaesthetic than hand a Farang hundreds of thousands of Baht, and many school HR staff are of the same persuasion.

Revenue Department officers will often be "too busy" or maintain it is not their job when presented with claims. This is generally an indication that the Officer is out of their depth. Most Revenue officials are only familiar with repayment claims under ThB 10,000. Being confronted with claims for millions of Baht worth of refunds presents Revenue officers with more responsibility than they ever expected and they will consequently put off handling a claim indefinitely with all manner of ingenious excuses.

One disgraceful practice which, again, receives mention on the TES forum, is to insist that teachers attend an interview at the Revenue Department. This request will be made after the teacher has left Thailand and is totally unnecessary. Where a teacher does return to attend such an interview it is highly probable that subsequent "interviews" will be requested until such time as the teacher abandons the claim.

As part of the claim process the Revenue Department require internal tax documents from the school where the teacher worked and paid tax. Some schools do not provide the documents for a variety of reasons. Suffice to say, if a teacher breaks contract, the school may be very obstructive, even if professing to remain professional. Teachers who break their contracts are fully entitled to claim tax refunds but should consult a tax specialist in confidence long before leaving the school.

It should be noted that some advisors will pass confidential information to Principals in exchange for an "easy life" while others will not. I am aware of one teacher who chose to circulate offensive letters about his Principal and was so mystified over the delay obtaining a tax refund he took to writing even more offensive letters to people in the hope of improving his chances. Take my word on this, it doesn't work. Where a school deliberately withholds documents vital to the claim process the teacher is entitled to hold the school responsible for the loss of his/her tax refund and where my lawyers have drawn this to a school's attention we have subsequently achieved exceptional levels of co-operation.

It is not unusual for certain schools to under-declare a teacher's salary and consequently the tax documents provided to the teacher do not always agree with amounts paid to the Revenue Department. Sometimes the Revenue Department do not even know the teacher existed. If a school can successfully under-declare, say, ten million Baht worth of salary, there is a potential tax saving of three million Baht.

When the school presents teachers with a variety of reasons (see above) as to why they should not claim and, especially, resists requests for tax documents, but then suddenly begins offering a free tax refund service, teachers are seriously deluding themselves if they think they will receive a tax refund once they have left Thailand. This situation is compounded by inefficiency in the Revenue Department itself and there are occasions when schools have paid the teachers' taxes properly but the Revenue Department have simply failed to record the payments correctly. Determining whether the school or the Revenue Department is at fault can be an arduous task since each will usually attempt to apportion blame to the other.

The Revenue Department are wary of teachers since there have been a significant number of opportunistic claims from individuals who regard the Revenue Department as some form of lottery, and many such claims are rejected leading to rumours that it is "illegal" to claim treaty relief once again. There have certainly been claims by teachers who know full well that they are ineligible to claim and, at best, these opportunistic claims serve to delay legitimate refunds since the Revenue Department have very few properly trained staff for this work so every failed claim they examine delays a genuine one.

New passports especially cause suspicion since they are sometimes an indicator that the teacher has deliberately lost or withheld a previous passport revealing an earlier teaching appointment in Thailand. One of Thailand's largest and otherwise most respected international schools has resorted to submitting claims for any and all teachers who depart. The submission of substantial numbers of opportunisitc claims from the same school does not create a favourable reputation for that school with the Revenue Department, especially considering the amount of Revenue Department officials' time that is being wasted.

It is common for the Revenue Department to request sight of an expired passport, and where they think a teacher may have worked in Thailand previously Revenue Officers will not repay a single Baht until they are certain a claim is justified. Of course this provides yet another excuse to stall a claim indefinitely and a request for an expired passport is often simply another deliberate obstruction. The Revenue Department have also been known to request that the teacher return to Thailand in order to attend an interview in the Revenue Department office, with the prospect of the claim being rejected if the teacher fails to attend. If a teacher does comply with this request there is every likelihood that a second meeting will be scheduled once the teacher has, again, left Thailand.

Principals have been known to recruit teachers with the promise they will not have to pay tax in Thailand, referring to the relevant tax treaties as proof, without mentioning the school itself has no process in place for reclaiming the tax it deducts. In these circumstances schools are sometimes offering free assistance from their own HR department in submitting claims. It must be stressed that this is not a "blanket" exemption and some teachers are not entitled to claim. Where it transpires a false claim has been intentionally submitted, with the full co-operation of the school, it is the teacher, and not the school, that will be held responsible.

Where a false claim is submitted through a school the teacher can expect the Principal to protect his own interests by distancing himself from the teacher and even dismissing the teacher for bringing the school into disrepute. The following is the exact wording of a message I received from a Principal in such circumstances, after assisting a teacher in submitting a claim through the school:

"He (the teacher) was only helped by one of the secretaries but signed his own papers so he faces some difficult questions by himself......his contract has not been renewed".

The author of this message has since left Thailand, but his ideas on how to avoid responsibility for failed claims have most certainly been passed onto other Principals including his successor who was bewildered to learn that the Revenue Department would not co-operate with the school concerned.

This particular school lost all credibility with the Revenue Department and sending along the same HR staff who previously presented false claims with a fresh consignment did not improve the situation, but the HR staff have now created an informal agreement with their local Revenue Department which excludes roughly one third of that school's teachers from ever receiving refunds.

Added to all of this is the further complication that many Revenue staff and school administrators are from poor backgrounds. The knowledge that teachers are reclaiming millions of Baht sometimes results in documents being withheld and claims being obstructed in the hope of obtaining an "incentive". Following on from my success we now have a remarkable number of school administrators who have become overnight tax advisors. The ruse here is to withhold documents from my staff in order to "prove" we cannot obtain the client's refund whilst offering their own services to the teachers themselves. Some school HR staff are also resorting to offering teachers' contact details for sale to the highest bidder.

In some instances schools are even employing relatives of the owners as "tax attorneys" and these individuals are the source of many misunderstandings. One school Principal even recommended the services of a "lawyer" without mentioning she was his Thai girlfriend. Thai "lawyers", often nothing more than visa specialists, are not beneath offering school HR staff incentives in exchange for introductions to teaching staff which leads to some totally inexperienced individuals trying their luck. It is remarkable that these individuals weren't obtaining refunds before I arrived on the scene, and a good many still aren't. Their services continue to be offered to teachers by the schools concerned, however, for obvious reasons.

It should be considered that the interests of the school and the teacher may sometimes conflict, especially since some schools are not submitting the full amount of payroll tax to the Revenue Department. In these circumstances schools will usually appoint their own specialist to provide a free service to teachers only for the teachers to ultimately be informed that they are not entitled to a refund for some unfathomable reason. In these cases it is quite possible that the school concerned never paid the payroll tax over in the first place, and no refund claim was ever made.

In Thailand many Revenue Department Officers have trouble differentiating gossip from the law. It only takes just one Officer to have an epiphany, possibly influenced by someone with absolutely no tax experience whatsoever, and the entire process comes to a standstill in any particular office.

The uninformed opinion of somebody's older relative can often outweigh anything written in an international treaty, and therein lies another problem with these claims. Teachers are relying on what the staff in local Revenue offices tell them. Try explaining to Noy in Jomtien tax office that the terms she is imposing are other than or more burdensome than those imposed by the IRS, especially when her mother thinks otherwise.....it is, of course, much easier, given all of the above, to just tell the Farang teacher that these claims are illegal, that the exemption has been terminated, that it doesn't apply if you return for a second visit, etc. etc. which is where we were eleven years ago.

If you have any tax issue questions, you can call Stephen (the writer of this article) directly on 02 742 5189 or email

Stephen's website.


I work in the industrial company in bangpoo industrial state as documentation personnel. My previous work was as a teacher in Ramkhamheang Institute of Language and I was able to get my tax refund by the help of my employer. Now in my current company, it seems that the business officer doesn't know what to do about how to process my tax refund. What are the documents needed to be submitted in Revenue Department from my employer in order to apply for a tax refund this year April 2016?

By Van Oliveros, Samutrapkarn (1 year ago)

@Graham Smith ... You're kidding, right? The level of writing ability these days is deplorable.

By MarkCM, Sydney (2 years ago)

I have worked part time for a language school, which were exempt form tax via the education department, now a new tax law was introduced in August 2015, of 2015, now I am being asked to pay tax for the full year should this be from the date of when the new law was introduced?

By Graham Smith, Bangkok (2 years ago)

Hi there,

I read this article and to be honest i did not understand a thing! I am in my second year of teaching in Phitsanulok. I earn 30,000 plus 3,000 for living expenses. I have free and private health insurance. The first year i never paid tax from my salary until the end of the year when i got a bill for 2,400 bht which worked out at 300 bht a month. Two of my collagues in their first year also never got taxed but I was told it was because they are married to a Thai.

The second year I have been taxed 1,410 bht per month whilst my married colleagues get 990 taxed. According to the new tax rules -all the salary including living expenses is to be taxed.

Please help.

Jamie from the Uk.

By Jamie, Phitsanulok (6 years ago)

Where to look? Maybe Dry Cleaning shops.It's probably lining some politician's pocket by now.

By keekwai, Chanthaburi (6 years ago)

just wondering, where do i start to look if i want to claim tax back for the year 2008..can any1 help me? thanx

By David J Barry, Thailand (6 years ago)

Never mind. Here they are here.

Thailand personal Income Tax 2010-2011

Thailand individual income tax rates are progressive to 37%.

Taxable Income (Baht) Tax Rate Tax Amount Accumulated Tax
0 - 150,000 Exempt - -
150,001 - 500,000 10% 35,000 35,000
500,001 - 1,000,000 20% 100,000 135,000
1,000,001 - 4,000,000 30% 900,000 1,035,000
4,000,001 and over 37%

Seems it has not changed since 2008.

By keekwai, (6 years ago)

"How much tax should you be paying?"

I can't see this question actually answered anywhere here. I still have the old 2008 excel Tax Calculator .. how about an update of figures so others who still have it can update it?

By keekwai, Chantha see this question answered anywhere here.b (6 years ago)

Yes, it is not as good as the tax calculator on ajarn last year. Please, put the tax calculator back on ajarn.

By jt, (7 years ago)

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