Guavaman

If you're not careful, you could be paying taxes in 3 countries in the same year!

Section 89/1 Any person fails to pay or remit tax within the time prescribed in this Chapter shall be liable to surcharge on 1.5 percent of payable or remittable tax excluding fine per month or fraction thereof;

The requirement to file a return is based upon the thresholds for assessable income: (1) 60,000 and (3) 120,000 include all sources of assessable income, while (2) 120,000 and (4) 220,000 refer to income from employment only under Section 40 (1). Section 40 Assessable income is income of the following categories including any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer. (1) Income derived from employment, whether in the form of salary, wage, per diem, bonus, bounty, gratuity, pension, house rent allowance, monetary value of rent-free residence provided by an employer, payment of debt liability of an employee made by an employer, or any money, property or benefit derived from employment. The filing thresholds for (2) and (4) do not include income under 40 (2)-(8), e.g. interest (4)a, dividends (4)b, rent of property (5)a, etc. The tax filing form for (1) and (3) above is different than the filing form for (2) and (4) above. In both cases there are exemptions, deductions of expenses, and allowances which reduce the assessable income in the computation of the net income subject to taxation. Then, the tax rate on the first 150,000 of net taxable income is 0%.

On 15 September 2023, the Director General of the Revenue Department issued the Revenue Departmental Order No. Por. 161/2566 re: Income Taxation under section 41, paragraph two of the Revenue Code ("New Order"). This New Order will require Thai tax resident individuals who bring offshore-sourced income (i.e., income from work or business carried on outside Thailand or income from property situated outside Thailand) into Thailand from 1 January 2024 onward to be subject to Thai personal income tax, regardless of whether such income is brought into Thailand in the same calendar year of receipt or in subsequent years. 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

A wise man once told me: It looks like the grass is greener on the other side of the fence; but if you go look there, you will see that it is actually brown on both sides.

If the Thai RD adopts the principles of remittance used in the UK for their remittance-based system of income taxation for non-domiciled tax residents with foreign income, similar to what is being discussed for expat tax residents in Thailand: A taxable remittance also occurs where a service is provided in the UK for the benefit of the individual or any other relevant person and the consideration for that service is met using the individual’s foreign income or gains. Services provided in the UK You transfer some of your foreign income from your overseas account to the overseas account of a trader who has provided you with a service in the UK. You transfer some of your foreign income to the overseas account of a friend in exchange for using his cottage in the UK for a week. HMRC Residence, Domicile and Remittance Basis Manual: RDRM33050 - Remittance Basis: Practical Examples of Remittances to the UK

Legal language: The key word here is resident, so if the owner who derives benefits from the annuity resides in a Contracting State (either the US or Thailand), the annuity is taxable only in that State (where s/he is a tax resident).

Lorry, if you liked that one -- try this example from the manual: Family are termed "relevant persons", to whom one may not bestow a gift -- conflict of interest. Example 2 In June 2010 Sam, a remittance basis user, uses £8,000 of her relevant foreign income to make an overseas purchase of an antique clock from a dealer in Denmark. Sam immediately makes a gift of an antique clock to Chris and Jo, who at that time are living in Denmark. The clock is kept at Chris’s family home in Copenhagen. Chris, not being a relevant person, is a gift recipient. Two years later Jo and Chris split up, and in July 2014, Sam and Chris marry. Chris ceases to be a gift recipient at this time. In October 2014 Chris brings the antique clock to the UK to the house that is shared with Sam. As Chris is no longer a gift recipient Condition C is not relevant. However as Chris is now a relevant person there is a taxable remittance chargeable on Sam when Chris imports the clock, under Conditions A and B. This is because property (the clock), has been brought to the UK by a relevant person (Chris), and that property derives from Sam’s foreign income or gains (the £8,000 relevant foreign income), and the property is property of a relevant person (Chris). Beware of gifts of clocks that might morph into taxable income!

Beware of advice from a guy on a bar stool or an anonymous AN poster that confirms what you want to be true = confirmation bias. ATM withdrawals are remittances of funds into Thailand that are assessable income under Thai Tax Law. Whether or not the RD can find and assess the tax resident who remitted those funds is another issue. Most criminals intend to commit a crime based upon the presumption that they will not be caught and punished. The Thai legal system incorporates the principal of reduction of punishment for offenders who exhibit remorse for their intentional criminal action. For Americans, remittances of private pensions and private retirement plans (including IRAs, annuities, etc.) are taxable in Thailand, if you study the treaty and the US Treasury technical explanation. Beware of advice without documented sources.

The UK has a remittance-based system of income taxation for non-domiciled tax residents with foreign income, similar to what is being discussed for expat tax residents in Thailand. Under the remittance basis of taxation, you will pay tax on UK sources of income and gains, plus any foreign incomes and gains that you remit to (bring into) the UK. In effect, you can exclude foreign incomes and gains from UK taxation – providing that those incomes and gains are kept offshore. So the main issue is -- What is a remittance? There is not much detailed information on this in the Thai RD tax code, but the UK has a manual on remittances, which might provide some ideas that could surprise you. Here is a thought exercise: “substitute ‘Thailand’ for ‘UK’ in the following examples” from HMRC Residence, Domicile and Remittance Basis Manual: RDRM33050 - Remittance Basis: Practical Examples of Remittances to the UK Money transfers to the UK You transfer some of your foreign income from your offshore bank account to your UK bank account. You withdraw some cash from your foreign bank account (that contains your foreign income) whilst overseas and bring the cash with you when you return to the UK. You give some of your foreign income to your spouse or civil partner who brings the money to the UK. You transfer some of your foreign income to the UK account of a registered Charity. You rent out your holiday home abroad and the customer pays the rent directly into your UK bank account. You loan some of your foreign income to a company you control overseas or settle some foreign income in an offshore trust. The company or trustees bring the money to the UK. You inherited money a few years ago that you deposited into a foreign interest bearing bank account and you transfer some of the money from this account to the UK. Although the inheritance is not taxable when remitted, the account will also contain taxable interest that will be treated as remitted before any of the non taxable inheritance. Assets brought to the UK You buy an asset abroad with your foreign income and bring the asset to the UK. You buy a villa overseas using your foreign income which you then sell for a profit. You then transfer the sale proceeds to the UK. This is a remittance of the foreign income used to originally buy the overseas property as well as the foreign chargeable gain. You buy a house in the UK (or any other UK based asset) by making a payment of your foreign income to the seller’s overseas account. You buy shares or bonds in a UK registered plc from a foreign broker with your foreign income. Services provided in the UK You transfer some of your foreign income from your overseas account to the overseas account of a trader who has provided you with a service in the UK. You buy a return air fare from New York to London overseas using your foreign income. You book a holiday with a foreign travel agent to sail from Southampton to New York which you pay for with your foreign income. You transfer some of your foreign income to the overseas account of a friend in exchange for using his cottage in the UK for a week. Use of credit cards You use a credit card issued by a foreign bank in the UK for day to day expenditure and pay the credit card bill offshore using your foreign income. You use a credit card issued by a UK bank while on holiday abroad and pay the credit card bill using your foreign income Offshore loans You take out a mortgage with an offshore bank to buy a house in the UK and make repayments to the bank from your foreign income. You take out a loan from an offshore bank secured against your foreign income held by the bank and use the money to fund your life in the UK. The loan requires you to repay the capital and interest after 15 years. As the loan does not have regular monthly repayments this is a remittance of the foreign income used as security when the loan is taken out. Gifts to others You give some of your foreign income to a business colleague (or any other person) overseas who brings it to the UK and makes it available for your use. You make a gift of some of your foreign income to your adult son or daughter who lives abroad. Three years later your child gives some of these funds to their 16 year old child (your grandchild), who spends the money during a visit to the UK Credit card issued in the UK If a taxpayer who is chargeable on the remittance basis uses a UK credit card to pay for goods or services, either in the UK or overseas and they subsequently settle their credit card bill using foreign income or gains, the payment is a taxable remittance. The remittance does not have to be received in the UK by the taxpayer, it is sufficient that it is received by the credit card company in the UK. Credit card issued by an overseas bank or other financial institution Where an overseas credit card is used in the UK, the cardholder is effectively authorising the credit card company to pay the bill for the goods or service in just the same way as if they had instructed the bank to make a payment directly to the person supplying the goods or services. The use of the individual’s untaxed foreign income or gains to pay the credit card company in respect of the relevant debt will be a taxable remittance. Debit card issued by an overseas bank or other financial institution Payments for goods or services that are made using a debit card (for example a Visa debit card or one issued under the brand name ‘Cirrus’) issued by an overseas financial institution are treated in exactly the same way as a cash transaction. This means that when goods or services are purchased in the UK using a debit card a taxable remittance is made to the extent of the amount of any overseas income or gains in the bank account. Likewise any cash withdrawals from shops or ATM machines in the UK are taxable cash remittances. Payment by cheque drawn on an overseas account or by electronic transfer of any kind are also treated in exactly the same way as cash and are potentially taxable remittances of overseas income and gains. Notes The above list of examples is not exhaustive; there are many other ways in which remittances can occur. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) ------------------------- If and when the Thai RD gets around to fleshing out details of what constitutes a remittance, they might look to the UK manual for examples – but for now, there is little clarity on remittances to Thailand. Meanwhile, residents of Thailand are well aware of the difference between having laws and enforcing them.

The UK has a remittance-based system of income taxation for non-domiciled tax residents with foreign income, similar to what is being discussed for expat tax residents in Thailand. Under the remittance basis of taxation, you will pay tax on UK sources of income and gains, plus any foreign incomes and gains that you remit to (bring into) the UK. In effect, you can exclude foreign incomes and gains from UK taxation – providing that those incomes and gains are kept offshore. On this thread, many work-arounds have been floated to bring funds into Thailand without being characterized as remittance of assessable income for tax purposes. So the main issue is -- What is a remittance? There is not much detailed information on this in the Thai RD tax code, but the UK has a manual on remittances, which might provide some ideas that could surprise you. Here is a thought exercise: “substitute ‘Thailand’ for ‘UK’ in the following examples” from HMRC Residence, Domicile and Remittance Basis Manual: RDRM33050 - Remittance Basis: Practical Examples of Remittances to the UK Money transfers to the UK You transfer some of your foreign income from your offshore bank account to your UK bank account. You withdraw some cash from your foreign bank account (that contains your foreign income) whilst overseas and bring the cash with you when you return to the UK. You give some of your foreign income to your spouse or civil partner who brings the money to the UK. You transfer some of your foreign income to the UK account of a registered Charity. You rent out your holiday home abroad and the customer pays the rent directly into your UK bank account. You loan some of your foreign income to a company you control overseas or settle some foreign income in an offshore trust. The company or trustees bring the money to the UK. You inherited money a few years ago that you deposited into a foreign interest bearing bank account and you transfer some of the money from this account to the UK. Although the inheritance is not taxable when remitted, the account will also contain taxable interest that will be treated as remitted before any of the non taxable inheritance. Assets brought to the UK You buy an asset abroad with your foreign income and bring the asset to the UK. You buy a villa overseas using your foreign income which you then sell for a profit. You then transfer the sale proceeds to the UK. This is a remittance of the foreign income used to originally buy the overseas property as well as the foreign chargeable gain. You buy a house in the UK (or any other UK based asset) by making a payment of your foreign income to the seller’s overseas account. You buy shares or bonds in a UK registered plc from a foreign broker with your foreign income. Services provided in the UK You transfer some of your foreign income from your overseas account to the overseas account of a trader who has provided you with a service in the UK. You buy a return air fare from New York to London overseas using your foreign income. You book a holiday with a foreign travel agent to sail from Southampton to New York which you pay for with your foreign income. You transfer some of your foreign income to the overseas account of a friend in exchange for using his cottage in the UK for a week. Use of credit cards You use a credit card issued by a foreign bank in the UK for day to day expenditure and pay the credit card bill offshore using your foreign income. You use a credit card issued by a UK bank while on holiday abroad and pay the credit card bill using your foreign income Offshore loans You take out a mortgage with an offshore bank to buy a house in the UK and make repayments to the bank from your foreign income. You take out a loan from an offshore bank secured against your foreign income held by the bank and use the money to fund your life in the UK. The loan requires you to repay the capital and interest after 15 years. As the loan does not have regular monthly repayments this is a remittance of the foreign income used as security when the loan is taken out. Gifts to others You give some of your foreign income to a business colleague (or any other person) overseas who brings it to the UK and makes it available for your use. You make a gift of some of your foreign income to your adult son or daughter who lives abroad. Three years later your child gives some of these funds to their 16 year old child (your grandchild), who spends the money during a visit to the UK Credit card issued in the UK If a taxpayer who is chargeable on the remittance basis uses a UK credit card to pay for goods or services, either in the UK or overseas and they subsequently settle their credit card bill using foreign income or gains, the payment is a taxable remittance. The remittance does not have to be received in the UK by the taxpayer, it is sufficient that it is received by the credit card company in the UK. Credit card issued by an overseas bank or other financial institution Where an overseas credit card is used in the UK, the cardholder is effectively authorising the credit card company to pay the bill for the goods or service in just the same way as if they had instructed the bank to make a payment directly to the person supplying the goods or services. The use of the individual’s untaxed foreign income or gains to pay the credit card company in respect of the relevant debt will be a taxable remittance. Debit card issued by an overseas bank or other financial institution Payments for goods or services that are made using a debit card (for example a Visa debit card or one issued under the brand name ‘Cirrus’) issued by an overseas financial institution are treated in exactly the same way as a cash transaction. This means that when goods or services are purchased in the UK using a debit card a taxable remittance is made to the extent of the amount of any overseas income or gains in the bank account. Likewise any cash withdrawals from shops or ATM machines in the UK are taxable cash remittances. Payment by cheque drawn on an overseas account or by electronic transfer of any kind are also treated in exactly the same way as cash and are potentially taxable remittances of overseas income and gains. Notes The above list of examples is not exhaustive; there are many other ways in which remittances can occur. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) ------------------------- If and when the Thai RD gets around to fleshing out details of what constitutes a remittance, they might look to the UK manual for examples – but for now, there is little clarity on remittances to Thailand. Meanwhile, residents of Thailand are well aware of the difference between having laws and enforcing them.

There might be some communication issues about "labelling" that could cause confusion. When you transfer funds out of Thailand through a Thai bank, they are required to ask you the purpose of the transfer of funds -- to enter into a form to report to the Bank of Thailand. So this way of labelling answers the question: What will the funds be used for? For example: living expenses, education expenses, purchase condominium, etc. When we do our own transfers to remit fund into Thailand, we can usually add notes to the wire transfer with SWIFT. So we could label according to the purpose of using the funds, or we could specify the source, such as: pension, annuity, etc. When documenting remittances, we need to be clear whether labelling by purpose or source of funds transferred.

As previously mentioned, the allowance for health insurance premium paid (per actual expenditure) as documented by receipts from a health insurance company doing business in Thailand is 25k each per year. This amount is deductible from the amount of pension income remitted. But you can't short-cut the process by presenting payment for health insurance instead of pension income -- that is a false declaration = perjury. You remit assessable income from pension, then you pay for health insurance with those funds, which are then deduct from the amount of the income remitted. If you directly remit funds to pay your health insurance premiums to a company doing business in Thailand, it could be characterized as income by the RD, if they interpret the remittance as the UK does under its' remittance-based taxation system.

With all best wishes for you and your family, I offer this thought: Problems that never arose in the past -- might arise in the future, even under the same conditions as previously existed. "The times they are a' changing."

Sending amounts of that magnitude activate red flags in the US and Thai banking systems -- and CRS.

The whole point here is that PIT collection does NOT "depend on taxpayers faithful and full declaration", the banks have already decided that those direct deposits are income by default and they are reporting them to the RD as such, I don't have to do anything! If they are not income, I will have to complete a tax return to confirm this. The "banks" do not "decide" anything: Their information systems only report credits and debits to your account -- deposits and withdrawals from your account.

With all due respect for your experience that you have shared with us for our benefit: The banks only report remittances. The comments that are attached to remittances are up to the remitters as to what they optionally provide in terms of the details of the remittance.

"In the income tax game -- it only takes one click to break the law.'

Please reconsider and change your behavior for you own good. Labelling your remittances as "medical expenses" is not only not advantageous regarding Thai income tax law, but could expose you to charges of tax evasion under Thai tax law. Every time that you authorize a remittance for "medical expenses", you are exposing yourself to a potential challenge by an RD Assessor to provide notarized evidence of the mythical "medical expenses" including receipts to the satisfaction of the Assessor. In other words, every time that you remit using an intentional false justification, you are committing perjury, while providing evidence of your crime. You are digging a hole, into which you may fall. There is no exemption, deduction, or allowance for "medical expenses" under Thai tax law. One can claim a deduction for the premium of health insurance up to 25k. A proof of a valid Thailand health insurance policy is needed in order to claim the deduction. The insurance policy needs to be paid during the tax year for the deductible to be effective for the same year. For tax return purposes, the insurance payment date will be taken into account, not the policy start date. If you face an assessment of your tax liability, you are exposing yourself to intentional misrepresentation of the facts as evidenced in your remittance documentation. You have hung yourself. Section 37 Any person who: (1) intentionally notifies false statement or gives false statement or answers with a false statement or shows false evidence in order to evade taxes or request for tax refund under this Title, or (2) by fault, fraud, scheme or any other method of similar nature, evades or attempts to evade tax or request for tax refund under this Title, shall be subject to an imprisonment from 3 months to 7 years and a fine from 2,000 Baht to 200,000 Baht. Section 37 Bis Any person intentionally fails to file tax returns prescribed under this Title in order to evade or in an attempt to evade tax, shall be subject to a fine not exceeding 200,000 Baht or an imprisonment for a term not exceeding 1 year or both.

If you want to use the strategy of declaring your assessable income with the remittances, one way to do this would be to label them as: "Assessable income remitted" or for Social Security benefits: "Assessable income from US Social Security exempt from taxation in Thailand under DTA". By labelling the remittances upfront: 1) this amount is taxable, or 2) this amount is "assessable but exempt from taxation under Thai-US DTA", you create an audit trail for your claims when filing your tax return.

Regarding gifts on occasions: One reason given by the Thai court for not accepting the argument that Potjaman gave the money as a wedding gift, was that she made the gift more than a year after his wedding. So bear that in mind.

In that case, the annual total should not exceed 10m Baht. Section 42 The assessable income of the following categories shall be exempt for the purpose of income tax calculation: (27) Income derived from maintenance and support or gifts from ascendants, descendants or spouse, but only for the portion not exceeding twenty million Baht throughout the tax year. (28) Income derived from maintenances and support under moral purposes or gifts received in a ceremony or on occasions in accordance with custom and tradition from persons who are not ascendants, descendants or spouse, but only for the portion not exceeding ten million baht throughout the tax year. The issue of remittance and evidence of the gift remains. If you receive the gift offshore, and then remit to Thailand, then you have remitted assessable income that is exempt under 42 (27) or (28), so it would not be reported on the tax filing form unless the amount exceeds 10m or 20m. If the RD assessor looks at your bank book remittances, you need to be prepared to document the gift to their satisfaction. Maybe a signed note from the giver of the gift stating that it was a birthday present?, for example. It is up to the taxpayer to convince the assessor, somehow.

It is advisable for expat tax residents to know the consequences of intentional actions to evade taxes in Thailand: Section 37 Any person who: (1) intentionally notifies false statement or gives false statement or answers with a false statement or shows false evidence in order to evade taxes or request for tax refund under this Title, or (2) by fault, fraud, scheme or any other method of similar nature, evades or attempts to evade tax or request for tax refund under this Title, shall be subject to an imprisonment from 3 months to 7 years and a fine from 2,000 Baht to 200,000 Baht. Section 37 Bis Any person intentionally fails to file tax returns prescribed under this Title in order to evade or in an attempt to evade tax, shall be subject to a fine not exceeding 200,000 Baht or an imprisonment for a term not exceeding 1 year or both.

Investigators say the share transfers were liable for capital-gains tax and that the family misrepresented them as a gift. Tax Break Article_November 2008 Gifts May be Taxed under a Catch All Provision The defense argument that shares were tax free as they were transferred as a wedding gift did not work as the Court deemed that gifts are assessable. This is despite section 42(1) of the Revenue Code which states that “maintenance income derived under moral obligation, corpus of a legacy or inheritance, or gifts made in a ceremony or on occasions in accordance with established custom” are exempt from tax. Invocation of Previously Unused Section of the Revenue Code Section 37 is particularly onerous and decrees that as a result of knowingly making false statements or producing false evidence with a view to evading tax, there is a punishment of between 3 months to 7 years and / or a fine of Bt 200,000. ----- Note: These cases took place prior to the Revenue Code Amendment Act (No. 40) B.E. 2015 on gift tax. A failed attempt to claim exemption of tax on a "gift" by the recipient.

Mr Bhanapot made the purchase using $15m that his sister gave him, ostensibly as a wedding gift, and bought the shares from a family maid. At the time officials judged the share transfer a gift to mark a special occasion and thus not taxable. But after the coup, authorities called it a handout and liable for tax. The court said there was insufficient evidence against Potjaman Na Pombejra and her secretary, who along with her brother were found guilty in August 2008 of evading 546 million baht ($18 million) in taxes. The court upheld Bannapot's guilty verdict for not paying tax on his earnings from the share acquisition. But it reduced his sentence from three years in jail to two years' suspended.