Dogmatix

2 hours ago, stat said:

OMG they really try hard to screw up! Thanks for this info!

 

PS: In Germany they did the same with small value parcels but they forced the sender to register with the Ger tax authorities and now the seller adds the VAT at the checkout when you buy the item.

 

 

Thailand's first effort was to go after large tech companies like Netflicks selling into Thailand without a permanent establishment to try to avoid tax. Made them register for VAT which I think has been fairly successful. The small packages tax was originally in the same bill but was dropped by the Prayut government. 

31 minutes ago, BestB said:

With them is not only about fees but also value that they put on.

 

Judy had a case where I bought something for 2000 baht but there was a discount 500 baht , all showing on the invoice and yet they insisted charging on 2000

what they gonna do with registered post ? Open up each parcel and put a value on it ?

manpower will need to triple to do all that and delays would be weeks if not longer in addition to many items possibly going missing or misplaced 

I had a problem like that on an expensive item ordered for 2,000 euros in a Black Friday sale with free shipping offered too.  The vendor put the gross value before discount and the shipping cost before deducting it on the invoice, then deducted the discount. Guess what?  I was forced to pay duty and VAT on the gross price plus shipping.

Amazon and Ebay and some couriers have been operating a system whereby Thai taxes are collected in advance which means that items can be delivered to your door.  The taxes are described as deposits and you could be charged more or get a refund.  On the rare occasions I have used this service, I have been charged more than the actual Thai import duty and VAT but not got refunds.  Others have told me they have received refunds from the Amazon service though.  Both Amazon and Ebay have never distinguished items valued at less than 1,500 baht and charged Thai tax on them anyway which was not refunded.  I guess the way to go for Aliexpress and for items drop shipped from Lazarda and Shopee from China to Thailand will be to do something similar but only charge VAT below 1,500 which is easier because the rate is a universal 7%, whereas import duty varies from 5% to 40%. There should also be a system to pay VAT online for packages sent by individual senders or those too small to get into this type of sender.  

But introducing it through a bureaucratic order, bypassing parliament without any of this in place and without worrying about the volume of packages on which the cost to collect it will be more than the VAT is undemocratic, shameful and stupid - all hallmarks of this latest Thaksin government. 

3 minutes ago, borderhopper2005 said:

Another scum from the populist premier.

Instead of imposing proper tax on the 0.1% of the super rich in the country, increasing financial burden on expats and ordinary Thais.

And will cause inflation and chaos with no benefit to anyone.

15 minutes ago, Confuscious said:

I don't know everything about VAT, but in my understanding VAT is a Tax on the ADDED VALUE.
As sending something by post or a similar carrier is not adding to the value of the item, there is no VAT to be paid.
If the VAT was paid in China, when sending the package to Thailand the VAT paid on China could be reclamed back.
Same like when you buy something in thailand and export this to another country, you can reclaim the VAT paid in Thailand back at the airport.
Or am I wrong?

If Thailand wants to apply an additional IMPORT tax on all postal packages, that's a complete different thing and I am not sure that other countries would be happy with that.

Packages not exempted by the current regulation are taxed on the landed cost value.  That means import duty applied to the landed cost which includes insurance and freight.  Then VAT is applied to that.  Some items like wine also have excise duty and municipal tax applied before the VAT.  But VAT has always applied to imports of goods in Thailand ever since it was introduced.  If you import products that are manufacturing inputs or you re-export the whole thing. as you say, you can claim the Thai VAT charged at import back.  But you cannot claim back any foreign taxes and I doubt China charges VAT on exports anyway.

The coup government tried to do this but shelved the bill.  It was revived by the Prayut government but they dropped the cancellation of this exemption, presumably because it was viewed as impractical and costly to implement relative to the amount of VAT, given the large volume of really low value items flowing in from China.  At least one can say that the Prayut government put things like this through the democratic parliamentary process with public consultation according to the constitution.  This latest Thaksin government rules by decrees put out by bureaucrats, like the foreign remittance tax.  Thaksin has always liked to rule by decree and just do things without any planning and preparation and let the system figure it out.  An example is his 30 baht healthcare introduced with no planning on the funding.  It made the government hospitals technically bankrupt, so they had to be bailed out by the government, while it was later determined under the Sarayudh government, after Thaksin got booted in the coup, that the cost of collecting the 30 baht was more than 30 baht. So it became free.  

I assume this will be totally chaotic with huge backlogs created to collect tiny amounts of tax per package.  Right now you have to go to a post office and stand in long queues to pay taxes on overseas packages over 1,500 and they open every single one over 1,500 too. Anything that looks a bit out of the ordinary and may need an unobtainable import licence, like herbal supplements, you have to pick up from the postal customs at Laksi in Bangkok.  I assume there are some provincial offices but probably only in provincial capitals.  Often they have no clue what needs an import licence and have to go off and ask someone. But technically all supplements need an import licence. So this could destroy iHerb's large Thai business which comprises many supplements unavailable in Thailand.  So the business may just be destroyed rather than going to Thai middlemen.  

The whole argument about introducing fairness for Thai middlemen that want to sell the same products marked up is obviously complete BS and I am sure they don't even believe that story themselves but don't want to tell the truth that they are trying to grab as much tax as possible and don't care if it costs more to collect it than the tax or that it will be inflationary. If Thais can buy the items direct from China with VAT added by no mark up from a Thai middleman, that is, of course, what they will do.  But what is actually happening is that Thai and Chinese middlemen operating in Thailand are taking orders from Thais without keeping any stock themselves.  When they get an order, they get the several huge  Chinese stockists to drop ship individual packages direct to the Thai customers.  Since import duties are still exempted under 1,500, this system will continue.  Thai middlemen don't want to keep stock and, if they imported in bulk, they would have to pay both import duty and VAT.  So still more expensive than shipping direct from China. 

Even though this has been talked about since the coup government bill planned to introduce it in 2016 or so, it is still and as unthought through as can be and is likely to cause chaos.  If they have to do it, far better to announce that planning is in progress to make it viable and set u a system of online payment, so that goods can still be delivered by postmen without causing chaos at post offices and backlogs.  They should also just accept the declarations of most of the low value packages without opening them up, as they do now.  Opening an addition 1 million + small packages a month is going to require additional staffing and space and is not worth the cost. 

56 minutes ago, Highlandman said:

 

 

Even 4 years ago you had to pay duties on a $10 item if imported through DHL or another courier unless the item was a document or book (and even if it was a book but with an assessed value above 1500 Baht it would have been subjected to import duties if the tax hadn't already been collected at the time of shipping). Supplements were taking 3 weeks to clear customs, which is why I vowed to never ship them with a courier again. Whereas postal deliveries are very efficient with no delays.

 

 

  
The exemption from import duties and VAT has only ever applied to things coming by post.  Things coming by courier never had any exemption. 

3 hours ago, Jeffrey346 said:

Just received an item declared at $185. no VAT was charged

The Customs Dept order has not yet been posted in the Royal Gazette. 

On 4/28/2024 at 8:28 AM, Mike Lister said:

I hadn't come across Area Office before. My previous understanding was that the country is divided into Regions which are then subdivided into Districts, a District being equal to an Amphur.

 

Looking at the TRD org chart is seems Regions are subdivided into Area Offices and Area branches. I interpret this to mean that the old District Offices are now Area offices  that may not map directly onto Amphurs in every case and that more remote locales have Area branches! 

 

Regardless, the largest and most capable office in any area  is the Regional Office but the District Offices (now Area offices) are where to file a return.

 

https://www.rd.go.th/english/6015.html

I read something in Thai a few weeks ago that said that taxpayers in areas not covered by an RD branch or sub branch and wishing to deal with RD officers face to face should go to their district office but I can't remember where that was.  I assume there are a handful of RD officers stationed in these district offices but have never encountered them.  Fiscal responsibilities upcountry are otherwise with the thesabans and thesaban tambons which cover areas that are not the same as tambons that are subdivisions of the amphurs.  Land and buildings tax is collected by the thesabans and the dividing lines are totally arbitrary.  I have two pieces of land in a medium sized town upcountry that are contiguous, in the same condition of unsuccessfully trying to grow bananas  and in the same amphur, with the same Treasury Dept appraisal prices but are in two separate thesabans that collect Land and Buildings Tax at different rates, based on their view of whether the land is utilised or vacant. 

That gives an idea of how whacky and inconsistent tax assessment can be upcountry.  Given no regulations or guidelines on the remittance tax, zero understanding of DTAs or anything "foreign" and limited command of English, there is no reason to assume that assessment of remittance tax will be any less whacky or less inconsistent upcountry that Land and Buildings tax.

29 minutes ago, Mike Teavee said:

Isn't that just LIFO (Last in First Out) which is what the UK typically uses for any kind of assets.  

I am not an expert on the UK's non-dom rules, which are LIFO ++ or modified LIFO.  HMRC demands that in remitting funds to the UK, a non-dom must prioritise the funds that will incur the greatest UK tax liability first. Roughly speaking and simplifying it the priority of types of funds would be something like this"

1. Foreign source income - foreign tax unpaid.

2. Foreign source cap gains - foreign tax unpaid.

3. Foreign source income - foreign tax paid.

4. Foreign cap gains - foreign tax paid.

5. Capital that is non-taxable in the UK.

Unsurprisingly they want to rig things so that they collect as much tax as possible.  In the UK cap gains are  subject to a lower maximum rate of tax and are filed separately, so they don't push you into a higher tax bracket like they do in Thailand.  In Thailand it will be mainly foreign cap gains that will cause a problem because there are special arrangements for individuals for cap gains from SET listed stocks )exempt) and property (taxed according a complex set of rules but not lumped in with regular income. 

Since there are not regulations in Thailand, I wouldn't be surprised, if the RD will start insisting that the income taxable in Thailand at the highest rate is deemed to have been remitted.  That will mean them demanding information on all sources of income in the account, so they can assess the correct priority of remittances.  In lieu of government certified documents in a format that is similar to what exists in Thailand that RD officers can understand, the line of least resistance will be to ask the taxpayer to submit it all and we will decided later, resulting in a decision to tax the whole lot without approving any tax credits. 

Khun Lavaron the DG of the RG who issued order P. 161/2566 just before being transferred is now elevated to permanent secretary at the finance ministry.  He has now announced that he will be getting rid of the exemption from VAT on small packages under 1,500 baht imported by post. Because it will take too long to do this using the normal democratic process of amending the customs law in parliament, he will order the Customs Dept DG to issue an order to short circuit the democratic process.  The Postal Customs department has no plans for how it will open and assess for tax an additional 15 million small packages a year, many of which are low cost items from China costing less than 100 baht.  The current system involves not delivering taxable packages but summoning recipients to post offices and often to the Postal Customs office in Laksi,, Bangkok, for clarification, even for quite common items like musical instrument accessories like reeds.  Often they challenge declarations and look up online to see if they can find a similar item selling for more than the declaration and use that value instead. 

It seems like this order introduced with no planning will create total chaos at post offices and cause huge backlogs.  Without doubt the cost of collecting under 7 baht in VAT on the packages under 100 baht will cost more to  collect than the tax raised, just like the 30 baht medical charge had to be scrapped because it cost more than 30 baht to collect. At the very least, they should set up a way to pay online and let the packages be delivered by the postmen as normal. They could just asses the items under 1,500 without opening them. But they have no online system and probably will want to open everything to check it is properly declared.

It seems like there is a patern with this government and Khun Lavaron in particlar. Rule by decree to avoid parliamentary scrutiny and public consultation. Introduce measures that require detailed planning without any planning or preparation, will likely cost more to administer than revenue collected and will cause chaos.  The same is true of the same official's plan to tax remittances. They have no plans of preparation for a far more complex issue than taxing international packages. But under the new Thaksin regime, the bureaucrats need to show they are getting things done.  No problem if the systems to implement it takes years to put in place or it turns out to be net money loser. 

The purpose of this post is not to generate replies about the postal tax (there is another thread for that) but to show that the new system in taxation is not introduce new taxes without thinking it through or caring what chaos it causes.  

On 4/27/2024 at 5:39 PM, stat said:

 

Your guide does not answer the questions what accounting system will be used Lifo, Fifo or percentage of funds for TRD, so the issue is completly open and no one knows. The documentation of feeds only help when you know which accounting method can/should be used. This is the main problem.

There is yet another method, I think used in the UK for remittance tax on non-doms' remittance of income.  Income is remitted first, then capital.  For example you have 100k and earned 50K in capital gains and dividends in a tax year.  You want to remit 20k declaring it as 18k tax exempt principal and 2k taxable income.  No dice. HMRC requires you to remit all the 50k taxable income before you can remit the tax free principal. So First out income, last out principal FOILOP may be the new Thai accounting standard when they get around to it.

6 hours ago, Yumthai said:

 

https://www.rd.go.th/fileadmin/user_upload/lorkhor/newspr/2024/FOREIGNERS_PAY_TAX2024.pdf

 

Foreign-sourced income
If a foreigner derives income from sources outside Thailand, such income is subject to income tax if the two following conditions are met:
- such income has been earned in any tax year starting from 1 January 2024 onward by a foreigner who stays in Thailand for 180 days or more in a tax (calendar) year, and;
- such income earned has been remitted to Thailand (wholly or partially), even if that remittance occurs in a later tax year.

 

The second condition does not precise what the individual tax residency status is (or has to be) when the remittance occurs.

 

Either it is interpreted like CC 1161 i.e.: tax residence does not matter, then this will override the current law stating "A non-resident is, however, subject to tax only on income from sources in Thailand.",

OR

it is interpreted like the tax filing service company, CC 1111, and Prachuap i.e.: Thai tax residence is implied when the remittance occurs, matching with the current law stating "A non-resident is, however, subject to tax only on income from sources in Thailand."

 

Choose your side, I vote for the majority.

 

At least the linked document from the RD says documents to show tax paid overseas can be in English or Thai but, since this is a PR release, and not an order to RD officers, they may choose to demand certified translations to Thai, notarised by the MOFA anyway. 

They say ominously that tax documents certified by the foreign government are "recommended" which no doubt means obligatory in many RD offices.  Actually demanding government certified documents will save the officers a lot of trouble, given that most Western countries will not supply them.  A perfect solution for RD officers. 

3 hours ago, Yumthai said:

Maybe indicate that, as per several people reports, getting a TIN and being able to file a tax return is not 100% granted and at local TRD discretion.

Anyone who wants a TIN and is refused one face to face should ask the official to put that in writing or film him or her saying that.

The provision for tax filing for singles is 60k of income, other than income from employment, and 120k income from employment, including employment income from pensions.  But what is unclear here is whether state pensions are included in this.  There are no Thai state pensions and this form of income is not mentioned anywhere in the RC.  So are state pensions income from employment?  Not really because they are not paid by employers.  Are they derived from employment?  Yes indirectly because most countries only pay them to retired workers who generally have to pay contributions. Perhaps an issue to be decided by the Tax Court.  Whether they are considered income from employment has a bearing not only on whether they are taxable at all but on whether the 100K allowance for income from employment is applicable to them

If you have income over 120k or 60k, depending on the type of income, but no taxable income and you want to be 100% compliant with the letter of the RC, by all means get a TIN, if your tax office will give you one, and go ahead and file a tax return. In deciding this and/or calculating tax, it is up to you whether you decide that remitted state pension income is income from employment, income from investment, or not assessable income at all because it is not mentioned in the RC.  Personally I would not bother to file for the time being, if my remitted income is below the tax threshold. That provision is not enforced on Thais and it is unlikely it will be enforced on foreigners at this time.  The situation with expat tax returns will be highly chaotic and there will widespread non-compliance with the reinterpretation from both Thais and foreigners, largely because confusion due to the RD's refusal to publish any clarifying guidelines.  So the idea that the RD is going to start trying to track down foreigners who remitted peanuts into the Kingdom to fine them 2,000, when they don't do this with Thais, is preposterous.

43 minutes ago, JimGant said:

 But if you have no taxable income, and thus owe no tax -- 100% of zero is zero; 200% of zero is zero. Yawn. And that 2000 baht fine for not filing if you have over 120k in assessable income, even tho' you're 380k baht shy of having any taxable income -- is still an unsubstantiated rumor, that really doesn't make any sense when you hold it up to the light.

 

 

Exposed to back audits for the past decade? How many new agents will be required just to determine which farangs were here for over 180 days, and in which years? 

 

***Moderator Note: personal attack and flame removed***

60k of income is the point where single people have to file tax returns.  The 2,000 fine for not doing so is fact because it is in the RC.  But there is no record that I know of anyone being fined for not filing when no tax was due.  It is a relatively recent amendment that many or most low income earners don't know about.  The policy was to try to get more people who do their own business filing, so that when they later hit taxable income, it will be automatic for the RD. I don't think it has been very successful and the policy is virtually unenforceable because they know there would a huge backlash, like when the government sued an impoverished old woman for the refund of her 600 a month old age allowance that she wasn't entitled to because she was drawing a miniscule army pension because her son was killed in the army by an explosion caused by an NCO's negligence. 

I think many expats who earn less that the taxable amount will be very daunted by filing tax returns and won't bother and I can't blame them.  I doubt that they will be pursued by the RD and fined.  In future, however, it is possible that Immigration will link up the RD and demand tax returns for visa renewal but there has been no talk of that yet.

10 hours ago, paddypower said:

what I am interested in seeing, for the 2023 tax year, is what my tax accountant does with a fairly large amount of dividend income. its taxed on a w/h basis at 10%. and I do understand the rules for gross up to claim a refund (they're somewhat onerous). in prior years it was tax free. anyone else in a similar position - i.e. with a large Thai dividend income?

I have done this once manually with a hard copy form which was a monstrous PITA and about half a dozen times online which is relatively simple with all the tax computation done for you. To do online you need to register in the TSD (SET share registry) portal. Once you have done that you will be able to access copies of all your dividend certificates, assuming your Thai broker has registered you properly with them properly from their side (not a given - a couple of my accounts were not registered properly with TSD because they got my name wrong, so there was no match with the TSD data).  Once you get into your account at the TSD portal, there is a place where you are asked to give permission for them to send your dividend data to the RD. 

You fill in tax return form PND90 and click on the menu to complete the section for Section 40.4.b (40.4. ข) dividend income.  There will be an option to click on for your dividend data at TSD to be transmitted directed.  Click on it all your dividends will suddenly show like magic in your tax return with the corporate tax rates and you tax credit and tax rebate will be calculated.  There are a few listed companies that refuse to use TSD as their registrar, notable some of the REITs.  For those you have to fill in the data manually.  

Your Thai accountant can do all this for you.  They can apply for an online tax account and the TSD account. Mobile numbers and OTPs are needed to set them up.  I don't think TSD sends OTPs after you have set it up.  The RD does but you can changed the phone number after setting it up.  You can in fact let your accountant set it up using their own phone number.  I do it for the missus who set up both accounts with her own phone number. I changed that to my own number for her own tax account and the TSD didn't send OTPs to get into her TSD account. The RD didn't object the same phone number was linked to my account.

I find it worthwhile to claim the dividend tax credits because I get rebates of more that the amount of tax that was withheld but it depends on your income and deductions.  I invest the maximum permitted in an LTF which gives me a 500k deduction that helps.  Many people are unaware of the fact that anyone with assessable income is eligible for the LTF deduction.  You don't have to be in employment but the asset management firms generally refuse to accept Americans as clients because they don't want to be bothered with FATCA.

3 hours ago, Mavideol said:

I have been through all the unnecessary steps, including that one as well, and was told (by the 3 tax master at the 3 provinces I visited) to get tax refund one needs to be on a tourist visa, and apply when leaving the country, I explained to them that I collect a small interest from a term deposit account and was told that could NOT ask to be refunded the tax whithheld by the bank, been there done that, maybe the other provinces have a different view, but these 3 didn't give a damn about my request for a tax ID

They got this the wrong way round. Short term tourists cannot get the refund of the tax withheld because they are unable to get a TIN. Thais and foreigners with TINs can get the tax refunded. There is a space on the tax return form to declare interest income and, if had a TIN already, you could have filed a tax return by yourself and claimed the tax back within consulting any tax masters.  You can also avoid having the tax withheld by signing the consent form described in my above post.

The 3 provincial tax masters must have misunderstood that you wanted claim VAT rebates on shopping.

2 hours ago, Mavideol said:

since when do you have it.... maybe CM it's different from down the south. I have a couple 1,000's withheld from my savings for the past 6 years and gave up on it as there's too much confusion as to how to get the TIN, small change not worth my time

Actually there is a section of the RC that says you are entitled to receive interest from banks with the 15% withholding tax deducted, if you are willing to sign a consent form to allow the bank to automatically report details of your interest received the RD.  If you receive a total of more than 20k in interest from all accounts in a year, you have to declare that in your tax return and they will tax you the 15%.  I have never done that because I only found out about it recently.  I have also never claimed back interest because savings rates have been stuck at a miserable 0.5% forever, despite lending rates being at a 20 year high and it involves going round the banks to get a certificate of tax deducted.  If you own shares on the SET, the dividend tax credit is very useful, however, if you don't have too much other income, and well worth going to the effort to claim. You can get back more tax than was deducted from the dividends but Thai stocks have gone nowhere in about 7 years.

Looking at the current versions of Section 41 para 2, the para that was reinterpreted through order P, 161/2566 last September, on the RD's website, I notice that the Thai version has notes in the text saying See Order  P. 161/2566 and See Order P. 162/2566 with links to the orders,  so that Thai readers will understand clearly what the current state of play is as far as the RD is concerned.

   ผู้อยู่ในประเทศไทยมีเงินได้พึงประเมินตามมาตรา 40 ในปีภาษีที่ล่วงมาแล้วเนื่องจากหน้าที่งานหรือกิจการที่ทำในต่างประเทศ หรือเนื่องจากทรัพย์สินที่อยู่ในต่างประเทศ ต้องเสียภาษีเงินได้ตามบทบัญญัติในส่วนนี้เมื่อนำเงินได้พึงประเมินนั้นเข้ามาในประเทศไทย
            (ดูคำสั่งกรมสรรพากร ที่ ป.161/2566)
            (ดูคำสั่งกรมสรรพากร ที่ ป.162/2566)

However, the English version has no notes or links and still reads. 

"A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part."

Although one accepts that its English translation is only for guidance, given that it knows that thousands of foreigners are deeply impacted by its capricious reinterpretation, it seems remarkably obtuse and unhelpful of the RD not to provide the same clarification to foreign readers that it has totally changed the meaning of the para in the same way it has done for Thai readers.  It is not particularly helpful for the RD officers who will have to deal with foreigners' tax returns that the RD has not bothered to add the clarifying notes either. But this unhelpful attitude towards foreign taxpayers is probably reflective of what can be expected in next year when the first tax returns have to be done under the reinterpretation.

9 hours ago, topt said:

Ok so a little more involved than your original comment which imo alluded to those retired and not earning in Thailand.

The posts about another fellow, who is retired and not earning in Thailand, who got a surprise RD visit in addition to my Danish friend are earlier in this thread.  What I meant was that in addition to those cases involving expat pensioners there are posts in other threads about RD officers making surprise visits on farangs doing business in the wife's name, or officially visits to the wives.