chiang mai

An interesting piece below on the implications for Australia's economy as a result of Chinese policy changes. The bottom line is that exports to China have peaked and are in decline, this will manifest itself in the exchange rate, unless Australia can find new markets for its commodities, which seems improbable, given its remote location. "For Australia, it does not take Albert Einstein to work out the implications. China is already using less coal, gas and iron ore. Even less is ahead. Steel and iron have been falling for years already and they are not even halfway down yet. This affects the economy in three ways over time. First, budget receipts are hit, spending is cut, or taxes rise. Second, falling prices force miners to curtail investment. Third, equity prices fall, which has begun but has far still to run. These three impacts comprise a giant national income shock that wipes out wage growth and inflation. The Reserve Bank of Australia will be forced to cut the cash rate much deeper than anybody expects through the next few years". https://au.finance.yahoo.com/news/chinas-interest-rate-move-leaves-australia-exposed-future-is-grim-200035137.html

In case you are unaware, the quote mentioned in the earlier post was from the most expensive hospital in Thailand, not exactly representative or typical costs.

Thank you for providing the Mazars information, I agree that we cannot go much further with this, without external input. I view the WHT as being for services and not labour, "a deduction from payments made to suppliers who provide a service". The difference between the two categories are highly contentious in many economies, mostly from a tax perspective. In the UK, contractors who supply a service are regarded as a businesses but if labour is deemed to be supplied, they are employees. I shall continue to dig into this and post anything I think might be helpful.

I know almost nothing about the DTV, other than it needs employment. If as you say, it is possible to be self employed under DTV rules, for sure that's the way to go because of the tax benefits.

Decide, and then satisfy two governments that your decision was right, good luck with that.

Oh wait, we some how made a giant leap from withholding income tax from employees to the deduction of WHT from suppliers......not the same thing, we need to leap back again.

So if you pay your telephone bill you must withhold WHT! I don't think so.

That can't be right. What that says is that any time a business pays somebody for a service they must withhold tax and forward it to the TRD.

It's very sad but, goodbye.

This is exactly why I don't believe that anyone should be consulting with Thai tax accountants just yet, not even Big 4 accountants, not until the TRD has provided some clarity. Thai's are not known for their propensity to say, "I don't know", it's more likely that you'll get a guess or a fudged answer. Let's face it, TRD cannot leave these issues open, not if they really want people to file tax returns. All of this may mean a bit of a scramble in January or February but there doesn't seem to be a different sp;ution that's good.

Issues like these appear from time to time and not just in DTA's. They need trained lawyers to interpret the rules, perhaps that can't be easily done and need to go back to the diplomatic channel. The fact that you and I can't come up with a simple obvious answer, doesn't mean that much really.

You should read the entire thread before commenting!

I don't think so. If I understand things correctly, the DTV requires an employer that is acceptable to the IMMI and I doubt that self employed would meet that need.

Good question....dunno! In theory there's no hiring involved, it's more of a prime contract/sub contractor relationship perhaps but definitely not an employee. My wife is self employed and she hires workers and pays them by the hour, all paid daily....that expense is never seen by TRD because it's inside the standard deduction. She' s not a legal entity but she is registered as self employed and files returns.

"I don't get it. You mean there is no requirement to disclose wages paid to other employees?" If a self employed person uses another self employed person for a specific job, they are not an employee. Even if the self employed person who does the hiring, contracts with another self employed person, that is a contractual relationship and not an employment contract of employer and employee. The cost of that....let's call it sub-contracting,....are all hidden within the 60% standard deduction and there is no requirement to declare them or with hold tax.

That raises more questions than it answers! 1) A sole proprietor and a self employed person are not the same things. "A self-employed individual simply means the person works for him or herself. It's just a business term. A sole proprietor refers to someone who owns a business by themselves". https://www.hellobonsai.com/blog/sole-proprietorship-vs-self-employed#:~:text=Since a sole proprietor operates,owns a business by themselves. 2) "when paying income types that the law specifies should have taxes withheld at source, must follow these procedures". If the individuals TEDA are more than the wages? And what are those income types? 3) If the entity must withhold tax and forward them to the TRD, how do they do that as a self employed person (which is not a legal entity) and therefore ineligible to obtain a TRD employers account? EDIT TO ADD: An excellent find however!

You see the problem, as long as TRD allows all self employed to group all their expenses in the standard deduction, there is no requirement to disclose wages paid to others.

We don't agree in that case. I know first hand of businesses not only here in Thailand but also in the UK that turn over millions but are operated by self employed people. My UK management company turns over 3.5 million Pounds per year but the business is run by the self employed owner. Here in Thailand, my wife worked for four years for a major tourist attraction that had over 15 staff, each was hired as an hourly worker but everyone worked 40 hours per week. The business was run by a husband and wife team, both of whom are self employed.....my wife was responsible for her own taxes, because of the hourly worker status.

I'm pretty sure this rule only holds true for legal entities such as limited companies or larger, it's certainly not true of all employers. An employer has to register with TRD to get an account number before they can withhold tax and I don't believe that will be granted to a self employed person.,

BOT operates a managed floating rate under IMF rules. That allows them to intervene in markets to smooth out the peaks and valleys in the exchange rate. Plus BOT is required under ASEAN rules to keep its currency in line with the currencies of other ASEAN states. But currency manipulation is not done using exchange rates, it's done via trade, by exporting more to USD based economies than it imports from them. That's what the Fed's real concern is, they want Thailand to import more goods from them, ditto, Germany, Switzerland and Vietnam who are also supposed currency manipulators according to the Fed.. https://www.cfr.org/article/tracking-currency-manipulation

"as is common practice in many countries:. It's a tactic to help prevent speculation by foreign buyers who drive up the prices and make them unaffordable for many locals. Is it good or bad? If the motive is to protect Thai nationals, it's hard to disagree with.

I've been trying to understand how and when employers must deduct tax from employees but I couldn't find any answer. I was trying to better understand how and why so few Thai people file tax returns. I eventually concluded that the system is partially to blame. Self employment is the cheapest and easiest method of doing business in Thailand, it doesn't require an accountant, a legal company name and the tax breaks are excellent. Over 50% of people work using this method which legally requires the individual to file a tax return, and pay taxes, twice a year. The TRD Standard Deduction doesn't require receipts and allows the tax payer to deduct 60% of the cost of sales as input costs. That means they can hire people and pay them, without having to deduct tax. It also means the people who are hired can work in the same way. This system means the TRD never knows that the worker has hired people and paid them hence they don't know that tax is due. And since the self employed person never has to disclose details about their employees (because of the standard deduction), none of those payments are ever seen in a tax audit. Most people don't bother to register with TRD as self employed because they know the generous tax deductions (60% cost of sales as input) mean that most will not have to pay tax and apparently the TRD doesn't want null returns. A self employed worker in Thailand can easily turn over 700k baht per year and have taxable earnings under their TEDA level yet still take home 30k or more per month. "Self-employed workers make up over half (roughly 53 per cent) of all workers in Thailand. As figure 1 shows, own-account work is the most common form of self- employment, comprising roughly 34 per cent of all employment, followed by contributing family workers (17 per cent) and employers (2 per cent)". https://www.wiego.org/sites/default/files/publications/file/wiego-policy-brief-n31-bangkok.pdf

I think the answer has to do with IMF rules and the way the respective currencies are managed. The BOT operates a managed floating exchange rate, aka the Dirty Float, whereas Vietnam operates a crawling peg. That means that the THB/USD exchange rate was allowed to strengthen because there was no intervention by the BOT, whereas the VND/USD rate was only allowed to move within a very tight range. https://www.investopedia.com/terms/c/crawlingpeg.asp https://www.investopedia.com/terms/d/dirtyfloat.asp

Two point: The Baht cannot be traded FOR DELIVERY, outside of Thailand because it remains a restricted currency that is not freely convertible. Any trading that is done offshore has no impact on THB value. THB has an inverse relationship to USD because USD is the main reserve currency that sits at the top of the FOREX tree. When USD weakens, every thing else in that tree, THAT HAS A DIRECT RELATIONSHIP WITH USD, strengthens.

Vietnamese paint and repair shop on the moat, VN Auto Body