Page 166 - _21-0619 OK

The International Journal of the Royal Society of Thailand
Volume XII, 2020

1 percent of income-earners who pay income taxes in Thailand, and about the
efficacy of the income taxation system.

We first explain how the sample of the top 1 percent households is derived.
Then the structure of income sources of the top 1 percent is analyzed, using the
income tax forms from the 0.3 percent sample from the RD, which, as we shall

conclude, represent mainly the top 1 percent in terms of employment income.
This is then compared to evidence from other available sources on the level and
structure of income sources of the top 1 percent in Thailand. The fourth section
reports the tax burden of the top 1 percent as shown in the sample forms, both in
terms of tax paid and as a percentage of net income before tax. The last section
offers some remarks on these findings and some suggestions for improving
the PIT system.

The top 1 percent households in the 0.3 percent sample of personal
income tax forms from the Revenue Department

According to the population census, there were around 20 million
households in Thailand in 2010. There were thus 200,000 households in the top
one percent, represented in our 0.3 percent sample by the 600 records with the
highest declared net income before tax (gross income less expenses).

Levels of income and income sources of the top 1 percent in 2012

Average net income reported in the top 600 sample records was about
7
2.6 million baht per year, accounting for 20.8% of the total on all forms in the
sample. This indicates a high level of income concentration at the top, similar to
that found in the US.

7 Net income is calculated here as gross income less expenses as permitted in the personal income
tax regulations. We shall use the term taxable income to refer to net income less deductions of
allowances and donations, noting that the first 150,000 Baht of taxable income is effectively tax
free, being subject to a 0% tax rate. In the year 2012, the revenue code allowed percentage
deduction of expenses at 70% in relation to “contracting” and 60-80% in relation to “business and
other” income 40 (8)) without evidence of actual expenses. The percentage deduction allowed
for these incomes in 2017 has been reduced to 60%. Source: Royal Decree issued according to the
text in the revenue code on definitions of expenditures to be deducted from income assessable
(No. 629) A.D. 2007 (พระราชกฤษฎีีกา ออกตามความในประมวลรัษฎีากรว่าด้วยการกำาหนดค่าใช้จ่่ายที่ี�ยอมให้หักจ่ากเงินได้
พึงประเมิน (ฉบัับัที่ี� 629) พ.ศ. 2560)

158 Towards A Fairer Personal Income Tax

5/1/2565 BE 09:04
_21-0619(155-166)9.indd 158 5/1/2565 BE 09:04
_21-0619(155-166)9.indd 158