How Double Tax Agreements and Foreign Tax Credits Work in Thailand

If you live in Thailand but receive income from another country, more than one tax system can sometimes apply to the same income.

You might receive a pension from overseas, rent from a foreign property, investment income or employment income. The country where the income arises may have a right to tax it, while Thailand may also have a taxing right because you are resident here.

That does not automatically mean you will pay tax twice.

Double Tax Agreements (DTAs) set out how the taxing rights of Thailand and another country interact and how double taxation should be relieved. The Thai Revenue Department’s November 2025 Manual for Foreign Tax Credit Calculation Tool states that Thailand has DTAs with 61 countries.

One of the main ways double taxation is relieved is through a foreign tax credit (FTC), which may allow qualifying foreign income tax already paid overseas to be credited against Thai tax.

A DTA does not automatically make foreign income exempt from Thai tax, and tax paid overseas does not automatically become a Thai foreign tax credit.

What is a Double Tax Agreement?

A Double Tax Agreement is a treaty between two countries that sets out how they tax people and income connected with both countries.

DTAs can contain different rules for different types of income, including employment income, business income, pensions, property income, dividends, interest, royalties and capital gains.

Each country’s domestic tax law is the starting point. The treaty then determines how their taxing rights interact and may limit what either country can tax.

Depending on the treaty and the type of income, a DTA may:

• Give one country exclusive taxing rights
• Allow both countries to tax the income
• Limit the rate at which one country can tax it
• Determine a person’s residence for treaty purposes
• Provide relief where both countries tax the same income

A DTA does not automatically make foreign income exempt from Thai tax or mean that all foreign tax paid can be credited in Thailand. It also does not necessarily remove a Thai filing obligation.

The important question is not simply: ‘Have I already paid tax overseas?’

It is: ‘Which country can tax this income, and what relief does the treaty provide if both countries can tax it?’

Tax Residence under Domestic Law and a DTA

Before considering a foreign tax credit, residence needs to be established.

Under Thai domestic law, an individual who stays in Thailand for an aggregate of at least 180 days during a calendar year is treated as a Thai tax resident for that year.

Residence under a DTA can differ from residence under domestic law. Where someone is resident in both countries under their domestic rules, the treaty may contain rules for determining residence for treaty purposes.

Source Country and Residence Country

International double taxation often arises because one country taxes income because of where it arises, while another taxes because of where the taxpayer is resident.

For example, someone living in Thailand may own a rental property overseas. The country where the property is located may tax the rent because the property is there. Thailand may also potentially tax qualifying foreign income because the individual is resident in Thailand.

Whether your foreign income falls within Thai tax is a separate question. Our guide How Thailand Taxes Foreign-Sourced Income explains the Thai residence and remittance rules in more detail.

‘Taxable only in’ and ‘may be taxed in’ Mean Different Things

Treaty wording matters.

If a treaty says income is ‘taxable only in’ one country, that generally gives that country exclusive taxing rights, subject to the full treaty wording and the taxpayer’s circumstances.

If income ‘may be taxed in’ a country, that usually means the treaty allows that country to tax it. It does not necessarily stop the other country taxing it as well.

Where both countries can tax the same income, the treaty’s double-tax-relief provisions become important.

A treaty may also limit how much tax the source country can charge. For example, it may cap the rate of tax on dividends or interest. Tax charged above that treaty rate should not automatically be assumed to produce a larger Thai foreign tax credit.

You therefore need to consider both the treaty article covering the income and the article dealing with the elimination of double taxation.

Treaties are Not All the Same

Not every DTA contains an article for every type of income.

The UK–Thailand treaty is a useful example. It contains a specific provision dealing with pensions arising from government service, but no general pensions article covering all private pensions and no general ‘other income’ article. HMRC publishes the current treaty text here.

If a treaty does not specifically allocate taxing rights over a particular income stream, the treaty needs to be considered as a whole, together with the domestic law of both countries.

It is also important to check that you are reading the current treaty position. A DTA may have been amended by a later protocol or modified by the Multilateral Instrument (MLI). The UK–Thailand Convention, for example, dates from 1981 but has since been modified by the MLI. The Thai Revenue Department’s DTA database identifies treaty status, protocols and MLI modification status.

How Foreign Tax Credits Work in Thailand

Where both countries can tax an income stream, a DTA may allow qualifying foreign income tax to be credited against Thai tax.

‘Qualifying foreign tax’ broadly means foreign income tax actually paid on the relevant income where the applicable DTA permits Thailand to give credit.

The Revenue Department’s November 2025 manual explains the ordinary tax credit method for individuals where Thailand is taxing as the residence country. If a treaty instead provides relief through an exemption method, the FTC tool is not the appropriate calculation and the treaty’s double-tax-relief provisions need to be considered separately.

Three FTC Rules to Remember

• The credit is capped
• Calculations are made separately by country and income type
• Excess foreign tax above the Thai credit limit cannot be carried forward

How the Thai Credit Limit is Calculated

A foreign tax credit is not an unlimited deduction from Thai tax.

The Revenue Department’s calculation broadly uses:

Thai FTC limit = Foreign income remitted into Thailand ÷ Total assessable income before expenses and allowances × Thai tax payable

The total assessable income in the denominator is measured before expenses and allowances are deducted. The Thai tax payable used in the calculation reflects the normal tax calculation after applicable expenses and allowances.

You also need to identify the foreign income, the foreign income tax attributable to it and how much of that income was remitted into Thailand in the relevant tax year. Where money comes from an account containing several sources of funds, good records are important so that the source of the remittance can be established.

Worked Example

Suppose you have:

• THB 400,000 of relevant foreign income remitted into Thailand
• THB 1,000,000 of total assessable income before expenses and allowances
• THB 120,000 of Thai tax payable after the normal Thai tax calculation

The Thai FTC limit is:

400,000 ÷ 1,000,000 × 120,000 = THB 48,000

You then compare that THB 48,000 limit with the qualifying foreign income tax attributable to the remitted income.

If you paid THB 60,000 of qualifying foreign tax, your Thai credit is limited to THB 48,000. If you paid THB 35,000, the allowable credit is THB 35,000.

The allowable credit is therefore the lower of the qualifying foreign tax attributable to the remitted income and the Thai FTC limit.

Foreign Tax Must be Separated by Country and Income Type

Foreign income and foreign tax cannot simply be combined into one total.

The Revenue Department requires FTC calculations to be carried out separately by source country and type of income. If one foreign tax payment covers several types of income, the tax may need to be apportioned.

The Revenue Department gives an example of THB 600,000 of salary income and THB 400,000 of royalty income with THB 200,000 of total foreign tax. The tax is apportioned as THB 120,000 to salary and THB 80,000 to royalties, with the two amounts dealt with separately.

This can be particularly relevant where one foreign tax assessment covers several income streams.

Other Rules that Affect the Credit

Which Foreign Taxes Count?

The FTC tool concerns income tax paid overseas. Taxes other than income tax cannot be entered into the tool, and penalties and surcharges are excluded.

Other overseas charges such as social security contributions, VAT or property taxes are not foreign income tax for the purposes of the Revenue Department’s FTC tool. The income tax must actually have been paid and the relevant DTA must permit the credit.

What Happens to Excess Foreign Tax?

If qualifying foreign tax exceeds the Thai credit limit, the excess cannot be carried forward to subsequent tax years.

Converting Foreign Income and Tax into Baht

Foreign income must be converted into Thai baht. The Revenue Department allows the relevant Bank of Thailand reference buying rate from the preceding business day. The manual links this rule to Section 9 of the Revenue Code.

What if There is No DTA with Thailand?

The Revenue Department’s current FTC guidance states that if the source country does not have a DTA with Thailand, a foreign tax credit cannot be claimed for that foreign-sourced income under the mechanism covered by the manual.

This does not make the income automatically outside Thai tax or remove a possible filing obligation. The income still needs to be considered under Thai domestic tax rules.

What Evidence Do You Need?

The Revenue Department requires taxpayers to prepare and retain evidence supporting the income, foreign income tax paid and remittance into Thailand.

This can include:

• Foreign income tax returns and evidence of payment
• Foreign withholding tax certificates and final tax returns showing final tax paid / withheld for that year
• Official tax receipts or other evidence of tax payment
• Bank transfer records or statements showing the remittance into Thailand

The Revenue Department also publishes a separate document checklist for foreign tax credit claims.

Good records become particularly important where several countries or income types are involved, or where one foreign tax assessment covers more than one income stream.

Unsure How the DTA  Applies to Your Income?

f you receive income from overseas and are unsure how a Double Taxation Agreement may affect you, we can help you understand the key issues.

Our support team can talk through your situation, explain the main points to consider and help you understand whether you may need further tax advice.

Using Thailand’s Foreign Tax Credit Tool

The Revenue Department’s Foreign Tax Credit Calculation Tool for Personal Income Tax is aimed at individual taxpayers who have spent at least 180 days in Thailand in the relevant year, have foreign-source income arising from 1 January 2024 onwards and have remitted foreign income into Thailand from 1 January 2024 onwards.

Income earned before 1 January 2024 should not be entered into the tool even if it was remitted later. The Revenue Department states that such income is not subject to Thai personal income tax under the rules covered by the calculation.

Once calculated, the credit is reported as follows:

• PND90: Item 11, Tax Calculation → Foreign Tax Credit
• PND91: Item (a) → Foreign Tax Credit

For e-Filing, the Revenue Department says the system automatically calculates and populates the foreign tax credit information.

A foreign tax credit reducing your Thai tax to zero does not automatically remove a filing obligation. Tax liability and the requirement to file are separate questions.

Common DTA and Foreign Tax Credit Mistakes

‘I paid tax overseas, so Thailand cannot tax me’

Both countries may be entitled to tax the income, with the treaty providing relief through a foreign tax credit.

‘Thailand has a DTA with my country, so my income is exempt’

Treatment depends on the particular treaty, the type of income and the method used to relieve double taxation.

‘May be taxed in’ means only that country can tax it

It generally gives that country a taxing right. It does not automatically remove the other country’s taxing right.

‘Whatever tax I paid overseas can be deducted from my Thai tax’

The foreign tax must qualify, the treaty may restrict the source-country rate and the Thai foreign tax credit is capped.

How to Check Your Position

For most expats, a sensible sequence is:

1. Establish your Thai domestic tax residence
2. Check whether treaty residence also needs to be determined
3. Identify the source and type of each income stream
4. Establish whether the income falls within Thai taxation
5. Check whether Thailand has a DTA with the source country
6. Check the current treaty, relevant protocols and MLI status
7. Check whether the treaty contains a provision covering that type of income
8. Check each country’s taxing rights, any treaty rate limit and the method for eliminating double taxation
9. Calculate any available foreign tax credit and retain the supporting evidence
10. Determine your Thai filing position

You can use our Double Tax Agreement Library to find Thailand’s treaty with your country and our country-specific guides where available.

If you are still establishing whether overseas income falls within Thai tax in the first place, start with How Thailand Taxes Foreign-Sourced Income.

The key point is straightforward: a DTA does not necessarily stop two countries from taxing the same income. It determines how their taxing rights interact and, where double taxation arises, how relief should be provided.

Need Help with Foreign Income and Thai Tax?

If your income, investments, pensions or assets span more than one country, working out the correct Thai tax position can involve more than simply checking whether a DTA exists. Expat Tax Thailand can help you establish how the relevant DTA applies, review foreign tax already paid, calculate available foreign tax credits and identify what needs to be reported on your Thai tax return.