Dogmatix

You are right but Srettha is after quick wins. The idea of taxing foreigners to pay for digital wallets sounds good on the evening news. No one follows up two years later to see it raised little incremental tax and choked off investment. Srettha will be gone by then anyway, 10% VAT is the only way to raise substantial revenue and is surely coming but they will make it look like they tried everything else first.

Sounds like total hot air. Thai market is way below where it was nearly 10 years ago and Thai GDP growth now less than developed economies. All they can come up with is soft power.

If you have an offshore company with an overseas bank account, could it make a gift to you tax free up to 10 mil. Probably not but it might be able to make a loan. Would the RD check to see that you are paying interest with tax being withheld on the interest and repaying the principle? And would they assess it as income, if it is not repaid within a certain time period. I have made a number of offshore company loans to myself of relatively large amounts to buy property, so as to have the ability to remit out again, if necessary, without triggering any enquiries from the RD but under the old rules, they had no reason to take an interest.

There probably are some future rules for inheritance tax because Srettha told the RD to propose ways of raking in more tax from it and from the Land and Buildings tax. Inheritance tax was reintroduced by the junta government, saying it was a symbolic gesture not intended to raise much revenue but was clearly the thin end of the wedge. Gift tax usually goes together, so they will certainly review that at the same time. . I might have to walk back what I said about gift tax not being a fruitful line of enquiry, at least under existing rules. The exemptions do seem to apply to gifts between spouses and I can't see anything about the exemptions not applying to gifts from overseas. You can give 20 mil a year to your spouse for maintenance purposes and the same to your child. But RD officials visit to see, if it looks like that much is being spent on maintenance in a poor Isaan village for example? There seems very little written about gift tax and I can't even find the law in English or Thai. I thought it was included in the Inheritance tax law but it is not. So perhaps you can make tax free gifts from offshore to your Thai spouse up to 20 mil a year tax free. It probably has to stay with her thought. If they see it was transferred to your account, they might it was not a gift but could she transfer it back to you as a gift some time later? If she has an overseas account, the initial gifting could be done there and gifted back to you in Thailand.

Does the Thai concept of common spousal property "sin somrot" allow for gifts between spouses? Maybe because there is a special rate for intra-family gifts. I haven't looked much at the gifting rules. Thai inheritance tax applies to overseas assets, so gift tax could too.

You raise a good point. The English version of Royal Decree 743 translates it as "in the previous tax year", presumably to match the translation of Section 41 of the Revenue Code. The Thai is ในปีภาษีที่ล่วงมาแล้ว which is indeed exactly the same wording as the Thai version of Section 41. Literally it means "in tax year that passed already" which is a bit vague but, since Thai has no definite articles and the drafters would have been more specific, had they really meant "in any past tax years" it is obvious that parliament intended "in the previous tax year", as per the translated versions. I don't know if the RD has to issue another order saying its reinterpretation of ในปีภาษีที่ล่วงมาแล้ว also applies to Royal Decree 743 or whether that will be left to LTRs' and RD inspectors' imaginations. But I think I now have to walk back my interpretation that the Royal Decree doesn't exempt past years, even though that was clearly the intent of the drafter who had no idea the RD would start taxing past years anyway. It would be hard even for the RD to apply two opposing interpretations to the same phrase in two related pieces of legislation just to collect more tax, although mental gymnastics of that type are not out of the question for Thai bureaucrats.

Yes. The Thaksin marketing, PR consultants organise his schedule and spin the trivial events like greeting Chinese tourists at the airport up into major headlines for consumption by Thai TV networks to be forgotten the next day. Just like when T was PM.

Drug dealers, junta family members etc.

Re the LTR visas. These are pretty good way for those can afford them to come to Thailand and the tax exemption looks pretty good, even if it is only for prior year income. However, nothing is set in stone in Thailand, particularly regarding foreigners. A government that decides to tax poor foreigners but exempt rich foreigners in the interests of fairness and equality is vulnerable to attack by opposition politicians. The terms of various editions of the Elite card have changed many times. The original card was only a million, I seem to recall, and provided the right to own land which was axed within a few months before anyone had attempted to exercise it. The LTR visas are valid for 10 years but since the Immigration Act only allows a maximum of a 2 year visa, the BOI has to use roll overs to camouflage this reality, since amending the Immigration Act is not something any government seems to ever want to do, as they can just issue a patch work of ever changing National Police Orders to fill in the details instead without undergoing parliamentary scrutiny. I guess no government will try any funny business in the first 10 years but after that no one can guarantee what renewal terms will look like, specially if some LTR visa holders are accused of money laundering and other crimes.

The condo developers have been surprisingly silent. As you say the Chinese money laundering crowd were the main game for developers pre-COVID but are slow to return. Expats who live in Thailand are a more steady market for condos and retirees tend to buy in resort areas where there are few Thai buyers. They are effectively shut out of the market from 1 Jan. People who move to Thailand, buy immediately and stay over 180 days in their first tax year will get nailed too, in many cases without realising it until a deputation of RD people show up at their nice new condo. Very easy for RD to track since foreign buyers need in most cases need to show they have remitted the entire purchase price to Thailand. Who will accept remitted 20 mil to buy their dream retirement condo in Phuket and finding that after accruing for tax, they have only 13.6m left to pay for the condo? Another aspect is expat retirees who already have funds in Thailand earning the paltry 0.5% interest to live on for many years or will remit them before 1 Jan. I was talking to a friend in this situation who accumulated savings from many years working in the Kingdom before retiring. He was looking at buying piece of land in Chiang Mai and building his dream house there. However, he wants to keep his options open to return to his home country for healthcare reasons and doesn't want to import his entire savings pot to Thailand to earn 0.5% interest and maybe have difficulties sending it out again in future. So he has shelved his plan to buy property in Thailand permanently because it would have eaten into the pot of money he already has in Thailand and could make him have to remit cash from overseas and pay tax earlier. I guess many expats are having similar thoughts about shelving plans to buy property in Thailand, even if they are in a position to get the money in before Jan or already have the funds in Thailand. One never knows what they might come up with next and the idea of RD staff coming and knocking on foreigners doors is not appealing.

If you refer to the Thai text of Section 41 of the Revenue Code, you will see that it uses the expression มีเงินได้ which means literally receive money. That is a much broader definition that "earn" and could complicate this approach.

My initial thought was also that the BOI was prescient in providing the exemption from tax on foreign sourced income and could have had an inking that something like this might happen. But when you look at the wording of the Royal Decree it seems that this may not have really been the case. They seem to have intended to carve out an exemption from the original interpretation only in that they gave exemption from tax on prior year foreign source income remitted to Thailand only, which was all that is taxable under the current interpretation. Had they had full prescience they would have provided exemption for foreign source income earned in any year in the past and remitted to Thailand. The Royal Decree potentially exposes LTRs to random visits from RD officials with outstretched hands examining bank remittances and making the owner prove it was income earned only in the prior tax year and not in years earlier than that which are assessable under the Royal Decree combined with the reinterpretation.

I feel that looking at gifts is a dead end, if the money doesn't come from already taxed income in Thailand. Anyway the limit is 20 mil for family members and 10 mil for others, not 100 mil, which is inheritance tax.

An RD order should not be able to cancel a royal decree but the RD DG is effectively using his order to modify the Revenue Code which is an Act of Parliament which can only be amended by parliament. It would to be overreach of authority in either case. The BOI reports to the PM Office BTW. The loophole in the royal decree is that it only exempts prior year income, ie the year covered in a tax return. It doesn’t cover years before that which the RD says will not be taxable. For example, if you have an LTR visa and you remit $20k last year which you can show you earned last year, no problem. But, if you remitted $1m last year to buy property and can only you earned $20k of that last year, you could be made to 35.% tax on the whole million bar 20k. The RD could assume the power to issue an order clarifying this point too, will this happen? Probably not? But who would have guessed the RD would amend an Act of Parliament with a lowly RD order? Nothing is sure in this environment where government departments feel free to break their own laws and constitution with support from the PM and finance minister.

“According to the MP of Surin, Paetongtarn is not only viewed as a daughter of the de facto party boss but as politically-versed, proactive and charismatic.” what a joke. How long would she survive in politics without her father? I wonder how long Thaksin plans for Srettha to be in the PM job.

Under most tax treaties TH has a right to tax pensions other than government service pensions and US social security, Even the UK state pension is not protected. TH can demand the tax and tell you you claim a refund of tax paid to your home country. The UK’s HMRC has s very complicated form for this.

As Baker McKenzie pointed out, this a major tax change that should be done through amending the Revenue Code in parliament which would give time for all to share views but Srettha might be defeated. Just reinterpreting an existing law that has stood for decades is a a dishonest sleight of hand tactic. https://insightplus.bakermckenzie.com/bm/tax/thailand-offshore-sourced-income-brought-into-thailand-from-1-january-2024-onward-will-be-subject-to-thai-personal-income-tax/

His way of addressing inequality is to aid and abet tax avoidance by billionaire families that sell him land. The hundreds of millions in tax avoided in that one deal is more than than the tax he will collect from all the exist pensioners.

Another one the following year.

Same smoke and mirrors act used for the rice pledging scam the debt of which has not yet been paid off. It effects ordinary people because the government will have to issue a lot of bonds to fund GSB which will tighten credit conditions, causing companies to cut back on expansion and investment which hits jobs.

I don't think it could impact a Royal Decree signed by the PM. It is an RD order signed by the DG of the RD. So it can only cancel other orders and regulations that are RD orders or equivalent under the DG. You can't have a director general ordering decrees that have the force of law But the wording of the Royal Decree is now defective because it doesn't exempt from tax foreign sourced earnings prior to the previous tax year. So their situation would be the reverse of the current situation, if enforced literally,

The wording of the Royal Decree does indeed give exemption from tax for foreign sourced income derived in the previous year. It was presumably worded like that because the Revenue Code only makes foreign sourced income only from the previous year assessable when remitted to Thailand. But now the director general has said that clause no longer means what it says and any prior year income remitted to Thailand is taxable. So foreign sourced income earned by LTR visa holders in years prior to the previous tax year are technically assessable when remitted to Thailand.

Saw an old friend today who said he had been harassed by the RD a few years ago. He was based in TH for years but worked offshore and had no Thai sourced income. Then after he retired in Bkk he was employed for a couple of years by the Bkk office of an international firm as an advisor which landed him in the Thai tax net for the first time. After his contract expired he stopped filing income tax returns as his only income was a European pension already taxed at source. So he assumed no assessable income, no more tax returns. Suddenly one day a delegation from the RD shows up unannounced at his house demanding that he file tax returns again and pay tax on his foreign sourced income. His Thai daughter dealt with them and they ended up agreeing that his pension was not assessable because it was already taxed at source in a DTA country. The next year they showed up again with the same demands. My friend is very irascible and was visibly upset with the RD officers since his his assessable tax situation was still the same as the previous year. Eventually his daughter gave the boss man 1,000 baht to go away and not come back. So far they haven't.

Get used to receiving 0.5% interest in TH, vs 5.5% in USD offshore.

That is inheritance tax. The gift tax kicks in at 20 million for gifts from direct family and 10 million from others. I am not sure how frequently you can receive gifts from the same donor.