Dogmatix

The government's strategy to boost economic growth to its target of 5% next year seems to involve mainly promoting low end Chinese tourism and its digital wallet scheme. It will need a lot of Chinese tourists on zero dollar tours to counteract the increase in government debt caused by the digital wallet and other vote buying schemes as well as the initiative to drive high end foreign retirees out of the country through a remittance tax at 35% which will in turn impact the condo market.

Good. Now cancel the proposed tax on foreign remittances to Thailand. You can blame it on the Revenue Department like you blamed this one on the Finance Ministry.

She was treated with the contempt she deserves for her disgusting behaviour. Suck it up senator.

No. That is resolution 7/2528 (not 2/2528) regarding taxation of interest paid to foreign bank branches by their head offices overseas.

Your points are well made and I will not go through all of them. Much is still unknown, particularly the text and circumstances of 2/2528 which I have so far searched for in Thai in vain. I am not sure if Section 41 dates back to the original Revenue Code of 1938 or was added later but we can imagine that foreign sourced income was not a very important consideration when it was drafted and that few countries had notions of global taxation then either. Also we need to take into account that Thai parliaments often draft legislation with deliberate ambiguity to allow varying interpretations. Re the points above. For some who have been tax residents for decades your interpretation is effectively the year dot. Also for Thais, who are the intended targets, it is from whenever they started earning foreign source income. I have read Thai laws in the original extensively and the impression I get is that, since Thai is not a very precise language, the drafters will often use lengthy phraseology to make sure only one meaning is possible, if they want to be precise. That is why I surmised that the drafters of Section 41 didn't mean any previous tax years because they could have added wording to make that abundantly clear but didn't. I admit that is not conclusive but for me it is a weight of probability.

That means they should work overtime to re-establish their pro-democracy principles.

CRS (Common Reporting Standards) has been in place in most developed countries since 2018 and in Thailand only since 2023. It is a an agreement that banks and other financial service providers (mainly stockbrokers) will provide information to other jurisdictions on their tax residents. Since Thailand joined this year it is eligible to be sent information on any tax residents that have accounts in any of the other signatory countries and vice versa. The information provided year end balances and any payments received during the year. It is something the financial service provider are obliged to do by their national laws at their own expense. In the case of FATCA, which is imposed unilaterally by the US under threats, this has become so burdensome that many financial services providers have responded by axing all American owned accounts, eg Thai asset management companies and many Swiss private banks. However, CRS is an international agreement and companies don't have the option to axe foreign accounts for that. The Thai RD, being under pressure to increase tax revenue in permanently sluggish economic conditions due to appalling Thai economic management, took an opportunist view that it could use CRS as a means to increase revenue, while blaming it on international pressure.

Of interest to some may be this translation of an explanation of orders that can be issued relating to the Revenue Code that have a lesser forces than Acts of Parliament or Royal Decrees from the itax website https://www.itax.in.th/pedia/ประมวลรัษ Announcement from the Director-General of the Revenue Department Revenue Department orders Ministry announcement Ministry regulations Decision of the Tax Commission Supreme Court judgment , etc. Note: The Revenue Department's orders, which T.P. stands for "general," have the status of subsidiary laws in which the Revenue Department uses higher legal authority to enforce on a general basis, unlike the Revenue Department orders that P. is abbreviated from. "Practice" which is only a guideline for the work of the revenue officers. It is not directly enforced on the public RD Order P. 161/2566 is indeed just a directive to RD staff and is not directly enforceable on the public, as pointed out by Acharn Kittipong of Baker McKenzie in his Krungthep Thurakit article. It seems most peculiar that a major tax law change is announced first in a directive to staff only with only just over 3 months notice for taxpayers to comply with it after 38 years, despite the fact that they are not legally bound by it. The implication is that RD staff will illegally enforce it anyway without any supporting legislation. Acts of Parliament and Royal Decrees require a notice period of at least 90 days after announcement in the Royal Gazette before they can take effect. And yet taxpayers are only indirectly given notice via a directive to staff of a major tax law change after 38 years with no legally binding legislation. For a PM and finance minister from Pheua Thai, a party that prides itself on upholding democracy and democratic principles, to support this arbitrary style of imposing illegal changes to long standing laws rather than going through proper parliamentary procedures is nothing short of extraordinary.

My point was that ในปีภาษีที่ล่วงมาแล้ว could mean "in the previous tax year" or "in a previous tax year" because Thai has no definite or indefinite articles. However, if parliament had intended it to mean taxation of income in prior years going back to the year dot, they would surely have made that clear by saying something saying similar to the wording used in 161/2566 to clarify that it meant in any previous tax year whatsoever. As you know Thai officialese never uses one word when 10 words would better convey the meaning. In fact, if parliament intended open ended taxation of past earnings, there would have been no need to even mention "previous tax year". They could have just stated that foreign sourced income is taxable. but using the phrase "in the previous tax year" was logical because it was consistent with local income from the previous tax year that has to be declared in annual tax return forms. I can't find Resolution 2/2528 (1985) but its existence to clarify that the Article 41 only referred to the previous tax doesn't appear to detract from the interpretation that parliament only intended to tax to tax the previous tax year, rather the opposite. At any rate Kittipong makes a good point that principles of taxation dictate that in cases of ambivalence in tax law, tax authorities should make interpretations in favour of tax payers.

Yes, but are they the ones that came up with that commentary?

I think there will be scammer phone calls. There are already loads of Thai scammer phone calls to individuals and corporate taxpayers persuading to transfer money to the account of a fake RD officer to lose their file. The accounts turn out to be in the name of some poor sod who was made to open the account for the scammers for a pittance and emptied out immediately. This could be a new business line for the expat financial services call centre scammers. It could also be a new line of business for RD inspectors who made unannounced visits to taxpayers' homes and indulge in extortion. We could start seeing tragic stories of elderly expats now verging on dementia getting cleaned out by RD and freelance scammers.

Vinit's statement that "tax collection is to comply with international standards on the exchange of financial information to promote tax transparency..." was a complete non-sequitur. International standards now require exchange of financial information and Thailand has now complied with that with much foot dragging 5 years behind schedule. International standards do not require taxation of foreign source income and countries in SE Asia such as Singapore and HK don't tax it and have intention of taxing it. Furthermore no countries I know of have a remittance tax on foreign source income like Thailand. So how could they be under international pressure to be the only country to do what they are now trying to do? This is a total distortion of reality to justify the overreach of the RD's authority.

I disagree with Sherrings' view that Section 41 was previously misinterpreted by the RD cine 1985 to mean that only funds remitted to Thailand were taxable and now the DG is correcting the error. If you look at the Thai, it is quite clear that the RD original interpretation was correct and that that was parliament's intent. The RD is now overstepping its authority by deliberately misinterpreting the Revenue Code to please a new government desperate for funding for popularist schemes. The Sherrings commentary, in common with most farang tax advisors, reads as if it was written by a farang who cannot read Thai and relies on translations.

This was some time ago before the RD computerised but when I became unemployed in Thailand and didn't work or have any Thai income for the whole of the next tax year, I was worried I had to continuing filing tax returns. But I was advised by the RD there was no need to file a tax return, if income was under the minimal taxable amount. So I didn't file for a few years until I started working again and re-entered the tax net. It is possible that nowadays with computerised systems they are more vigilant in tracking down people who exit the tax net and demanding an explanation. I think the rule about filing a tax return, is still the same. If you have assessable income, you are under an obligation to file a tax return. The allowances are a bit complicated but tax kicks in at 150,000 a year less basic allowances. The most basic allowance is 60k and there is another that is 50% of income or 100k whichever is the less. However, the Prayut government issued some advisory statements encouraging people under the minimal assessable income to file tax returns anyway, BSing that this would be used to identify low income citizens in need of assistance from the government, although this has not been forthcoming 555. The RD was obviously pushing for this ridiculous idea perhaps as a way to increase its budget and hire more staff with nothing to do. It can't be ruled out that the RD will overreach itself in future and demand tax returns from everyone regarded as of working age. With this new tax law plucked from thin air by the RD DG, the point at which a tax resident is obliged to do a tax return will become more important and will be more difficult to determine, viz Pensioner Mueller argued that he had not filed a Thai tax return because his income was below the assessable amount. The RD countered that it had to prosecute Mueller for not filing a tax return under Section bla bla bla of the Revenue Code because Mueller had made some assumptions of foreign tax credits that were not deemed allowable by the RD because he lacked the necessary notarised documents to prove his case and his funds had been comingled in a bank account in his home country prior to remittance to Thailand, making it impossible to determine exactly which inflows to Thailand were from taxed income allowable under the DTA. Therefore Mueller's assessable income was deemed over the minimum taxable amount and he was guilty of violating the Revenue Code by not filing a tax return.

This is the case that really ditched Prinn. He assaulted this lady when she was a minor actress without big connection but later she married Nat with a net worth many multiples of Prinn and family who went all out to get his wife's rapist. He almost fell out with the Democrat Party and changed sides. Anna coming out publicly inspired many other victims and Nat no doubt contributed unlimited legal fees to get them to file charges.

That is a translation for guidance only of the standard PNG 90 tax return form you have to fill in, if you have any income that is not income from employment in Thailand with tax withheld by the employer, in which case you use PNG 91. There is nowhere on this form to apply for foreign tax credits. The RD does have a system for doing this but I have no idea how it works. I guess you have to go along to the RD in person. You are not allowed to use the English translation form to file your taxes, as it is for guidance only. I advise caution is using it too, since I have found instances where the Thai version had been revised with new items added that were omitted from the translation which also made the numeration wrong. Also the guidance in English is sometimes incomplete. It is impossible to fie using the online system without a good knowledge of Thai because messages keep popping in tiny Thai letters. The RD likes to make it look as if everything is bilingual for the convenience of foreigners but that is not quite the case.

I think this will definitely happen. I have had to provide details of tax residence and TIN within the last two years to maintain bank and securities accounts in countries that joined CRS reporting in 2018. So it could take a while in Thailand but sure as God made little green apples.... And Thai banks don't care about shutting down foreigner bank accounts either. When the anti-money laundering law came out in the early 2000s, the BoT issued a very unclear announcement about foreigner bank accounts which some banks like BBL interpreted as only allowing bank accounts for foreigners with WPs. BBL started checking WPs when foreigners came into the bank and closed down accounts of some people who didn't have one. I went into a BBL branch to get a new bank book while between jobs and told they would close my account of over 10 years, despite the fact I was a PR. I argued that the BoT notice required a tabian baan for address verification and that foreigners were only asked for WPs because most didn't have a tabian baan but I had a blue one. I had to get on the phone to head office to sort out to old bag I was arguing with and save my account but others were not so lucky. KBANK never did this and eventually the hysteria died down.

Here is 10 year old article from the Nation which discusses the difficulty of getting foreign tax credits for those earning money from employment overseas who need to remit the money to Thailand for living expenses. https://www.nationthailand.com/business/30210696 This is going to apply to many of Thailand's overseas labourers whose families in Thailand depend on their remittances, as well as expats. I note one part in particular referring to use of DTAs: "But even then, actually getting the FTC from the Thai Revenue Department is not easy. Success in getting the FTC depends on presentation, defence and how an FTC refund request is substantiated and documented to the Revenue Department." That makes clear that in the few cases the RD currently has to deal with, getting the RD to accept foreign tax credits will depend on the documentation provided and discretion of individual officials.

I think Kittipong mentioned the possibility of a Royal Decree because constitution does allow the government to issue Royal Decrees to deal with emergency matters of government finance, although many of these have been challenged in the past, e.g. Yingluck's Royal Decrees to create a huge budget for flood relief in 2011 that wasn't even touched for years, and perhaps never was, because it was for several different ministries and agencies and they failed to come up with a coordinated plan. But governments usually get away with issuing unnecessary Royal Decrees. I would guess the Royal Decree for the LTR exemption was also unnecessary because it was hardly an emergency but I didn't see anyone challenge that. So I think, as legal scholar, Kittipong has to acknowledge that a Royal Decree would be a possibility but I am sure his preferred route would be an Act of Parliament to change such a long standing provision of the Revenue Code. A Royal Decree would at least be subject to some scrutiny and public debate and would have to be approved in a cabinet resolution, forcing Srettha to get coalition partners, who may have hundreds of millions salted away in Panama papers companies, on board.

Very useful comparison. It would be much more of a nightmare in Thailand because they are incapable of setting up clear rules like this and so much is left to the discretion and interpretation of different government offices and individual officials, not to mention endemic corruption and extortion. One of the recommendations made me laugh - open a new offshore account every year. Did it occur to the writer how difficult it is to open offshore accounts nowadays or just onshore accounts with an overseas address? You have to find a bank that will do it first. Then go through their KYC and compliance regulations. One Swiss banker told him he tried to open an account for a guy who had made many millions from crypto. The bank's compliance department spent months demanding document after document and finally rejected the application. I can see the point of opening new accounts to segregate funds but I don't think this is a viable approach for expats here.

He is listening to Thaksin's faceless team of spin doctors who arrange his PR schedules and write his scripts. This one was presented as a fantastic way to refute the opposition attacking him over the funding for the 10k digital wallet and other populist wastrel schemes. It served a purpose for a few days on the evening news to make it look as they would force foreigners and rich Thais to pay for those schemes. Then they move on to new PR initiatives without worrying about the long term damage done to the Thai economy as well as the wreckage they will cause to the lives of many expats with Thai families.

By back to back loans what Kittipong meant was, for example, X Co based in HK borrows HK$ and lends them to a subsidiary of Thai based Z Co in HK. Meanwhile Z Co in Bangkok reciprocates by borrowing in baht which it lends to a Thai subsidiary or affiliate of the HK based X Co which uses the funds to invest in a Thai project. X Co in HK is, of course, a shell company established in HK by a wealthy Thai investor for the purpose of repatriating funds to Thailand tax free. The profits of the new Thai venture remain in Thailand but principle can be remitted offshore with interest if desired. Alternatively, the loan could perhaps be structured as a convertible with an option to convert to equity and not bother with servicing and the debt. The super wealthy will find ways around this. For regular expats some type of loan mechanism may be possible, if you have an offshore company with a bank account or another name you can route money through. A loan agreement could be set up that rolls up all interest as a bullet payment for a 10 year term which is extendable indefinitely at the discretion of the lender. Perhaps naturalized Thai citizens can adopt a Thai name and lend to themselves from an account in their birth name. 555. The RD might need to come up with another reinterpretation to reclassify this type of loan as income but it would probably take them many years to track the unrepaid loans. One could also issue a new loan to repay the principle and forgive the interest which would be taxable in remittance and restart the clock.

RD officers showing up at the homes of octagenarian farangs enjoying quiet retirement - “You farang, you live Thailand. You pay money now”. It has happened already to younger retirees under the existing rules.

Someone sent me Kittipong’s article in pdf format but it was published by Krungthep Thurakit here https://www.bangkokbiznews.com/finance/investment/1091100# Krungthep Thurakit is part of The Nation. So perhaps they will publish it in English on their website (still miss the print edition). Another point raised by Kittipong that I don’t think I included in my quick summary was that the RD order failed to instruct RD staff to take into account DTAs when applying it’s apparently off the cuff and unlawful reinterpretation of the Revenue Code. The RD spokesman mentioned DTAs but that was only a verbal comment to newsmen. You would think the order would include at least a basic principle regarding the application of DTAs, such as in cases where a DTA allows either contracting state to tax an income source, will the RD’s policy be to allow tax credits and tax the differential or tax the whole lot and let the taxpayer claim a tax refund from the other contracting state. The UK’s HMRC for example, has an established mechanism for claiming DTA tax refunds with a form available online for this purpose.

Here's the first rebuttal (in Thai in Pdf file attached). l have seen from a Thai legal expert, Prof Kitipong Urapeepatanapong, who is or was chairman of Baker McKenzie and many other things. Here is a resume from 2019 https://www.psh.co.th/storage/content/about-us/management-structure/board/2021/kitipong.pdf. I will summarize the salient points of Prof Kittipong's article. Kittipong argues that the RD order is only a directive to RD staff and doesn't have the force of law. So RD staff are ordered to tell taxpayers about the new distorted interpretation but taxpayers should follow the established tax law and ignore them. The RD doesn't have the power to reinterpret the law which has stood without challenge for 38 years. If there is to a be a reinterpretation, this should be the role of the Tax Court. He says the reinterpretation flies in the face of established tax law principles which require that, if a law is unclear and has two possible meanings, it should be interpreted in the way that is more favorable to taxpayers. He states that, if the government insists on changing the law, the correct way would be to amend it through a Royal Decree or an Act of Parliament. In this respect he urges a complete overhaul of the Revenue Code through parliament along principles similar to Singapore which incentivize taxpayers to pay tax by making laws fair and easy to comply with without excessive rates of tax that encourage taxpayers to avoid tax and keep money out of the country. If they insist on going ahead with a type of global taxation, it should be properly thought through with all types of income and overseas tax practices and DTAs thoroughly reviewed first. He urges the government to consider carefully the potential revenue that can be collected from this reinterpretation vs the likely long term damage that would be caused to the Thai economy by discouraging taxpayers from bringing their money to Thailand due to the tax and general uncertainty caused by a suddenly hostile tax regime for investors. He also urges them to consider Thailand's competitiveness vs Singapore and Hong Kong that don't tax any foreign source income. He also said that wealthy Thais would avoid repatriating funds but would still be able invest in Thailand through back to back loans with offshore entities. He concludes that, in his opinion, the proposed reinterpretation of the law will be a net negative for the Thai economy and recommends ditching the idea. Prof Kittipong on foreign source income taxation Sep 2023.pdf