Payroll in Thailand has two statutory pillars. The employer withholds personal income tax from each salary payment under the Revenue Department's progressive schedule and credits it against the employee's year-end liability, and both employer and employee contribute to the Social Security Fund at matched rates on a capped wage base. Employment income is taxed on a graduated scale that exempts the lowest band entirely and rises by steps to 35% at the top, per the Revenue Department's English guide. The mechanics are straightforward by regional standards, but they assume a registered Thai employer; a foreign company without a Thai entity cannot operate them directly, which is where an employer of record comes in.
Personal income tax and employer withholding
The Revenue Department's published schedule for employment income runs in steps: the first 150,000 baht of net income is exempt, then bands taxed at 5%, 10%, 15%, 20%, 25% and 30% as income rises, with income over 4,000,000 baht taxed at 35%. Employees deduct a standard expense allowance from employment income, which the Department's guide states as 40% capped at 60,000 baht, plus personal allowances, before the schedule applies. The employer's duty is withholding at source: tax is computed on the employee's projected annual income, withheld from each payment, and remitted to the Revenue Department, with the amounts credited against the employee's final liability when the annual return is filed by the end of March of the following year.
Social security contributions
Thailand's Social Security Fund is funded by matched contributions. PwC's Thailand summary states that all employees contribute 5% of salary up to a maximum of THB 875 per month, that employers contribute an equal amount, and that the government adds an equal contribution as well. The cap means social security is a fixed, small cost at professional salaries: once pay passes the contribution ceiling the monthly amount stops rising. Registration with the Social Security Office, monthly deductions and remittance, and reporting of joiners and leavers are employer obligations from the first eligible employee. The fund covers sickness, maternity, disability, death, child allowance, old age and unemployment benefits for insured employees.
The compliance calendar
The rhythm of Thai payroll is monthly withholding and remittance of income tax and social security, then an annual reconciliation: employees file personal income tax returns by 31 March for the previous calendar year, per the Revenue Department, and employers issue the withholding certificates employees need to file. Provident fund contributions, where an employer offers one, run alongside social security as a voluntary supplement. Severance under the Labour Protection Act scales with length of service and sits outside payroll until an employment ends, but it is a real liability that should be accrued. Figures above are as stated by the sources below at authoring time; rates and caps change, so verify before running a first payroll, and nothing here is tax or legal advice.
Entity, or employer of record
To operate any of this, a company needs a registered Thai employer: tax registration for withholding and a social security employer account. A foreign company hiring one or two people in Thailand without an entity typically uses an employer of record, whose Thai entity employs the staff, runs the withholding schedule and social security contributions above, and handles work permits and visas for foreign hires, an area with its own quota and capital rules. The EOR's monthly fee substitutes for entity setup and local payroll administration. At larger Thai headcount, or where the business needs its own licences, a Thai entity with a local payroll provider becomes the cheaper and more flexible structure; several vendors in this site's index publish Thailand coverage and prices.
Questions people ask about payroll thailand
What income tax does a Thai employee pay?
A progressive schedule per the Revenue Department: the first 150,000 baht of net income is exempt, with bands at 5%, 10%, 15%, 20%, 25% and 30% as income rises and a 35% top rate above 4,000,000 baht. The employer withholds against this schedule each pay period.
What are Thailand's social security rates?
Employee 5% of salary and employer an equal 5%, each capped at THB 875 per month per PwC's summary, with the government contributing an equal amount; contributions stop rising once pay passes the ceiling.
When are Thai tax returns due?
Annual personal income tax returns are due by 31 March following the tax year, per the Revenue Department, with half-year returns by 30 September for certain non-employment income categories. Employer withholding is remitted monthly through the year.
Can a foreign company payroll staff in Thailand without an entity?
Not directly; withholding and social security require a registered Thai employer. The usual route is an employer of record whose Thai entity employs the hire and runs payroll, with work permit sponsorship for foreign nationals where needed.