Thailand seeks to reverse brain drain with five-year tax breaks
THAILAND will slash by about 50 per cent the personal income tax rate of professionals who are willing to return home to work for companies as the nation seeks to attract manpower for industries ranging from electronics, automobiles, robotics and aviation.
Prime Minister Srettha Thavisin’s Cabinet approved the tax breaks on Tuesday (Jul 30) to lure “the cream” of overseas Thai workers, Deputy Finance Minister Paopoom Rojanasakul told reporters. Qualified Thais returning to their homeland will be required to pay a personal income tax of only 17 per cent for five years, Paopoom said. That compares with the maximum 35 per cent rate for residents who earn five million baht (S$186,789) or more annually.
Srettha, who came to office nearly a year ago after nearly a decade of military-backed rule, is under pressure to revive South-east Asia’s second-largest economy that has lagged the expansion of its neighbours. He has aggressively pitched Thailand as an investment and travel hub but the nation has been battling a shortage of professionals in high-tech manufacturing and services including in the all-important tourism sector.
Neighbouring Indonesia, which is similarly courting foreign investments, has also stepped up plans to halt the exodus of local talent and lure its migrants back home and bolster the nation’s pool of skilled labour. Both the nations have also offered special visas targeting digital nomads.
In Thailand, companies that employ returning Thais under the latest programme will be allowed to deduct 1.5 times their expenses of hiring them, according to Paopoom. The perks will be effective until the end of 2029, he said.
To qualify for incentives, Thai nationals must have worked overseas for at least two years and must have a bachelor degree. The programme will be open for sign-up until Dec 31, 2025, Paopoom noted.
“We want to bring them back to help develop Thai economy and select industries,” the Thai minister explained.
“The move will also help generate more tax revenue we haven’t got before” with the development of key industries, he said.
The government expects at least 500 professionals to take up the offer, which may lead to a tax revenue loss of about 120 million baht over five years, according to an official statement.
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