mrmagyar

Has anyone with an LTR visa (Wealthy Pensioner, Wealthy Citizen or WFT) bothered to get a Thai tax ID?

I understand that there are no Thai tax obligations with these visas but wondered if anyone had got the tax ID and filed proactively, or planned to do so?

On 12/22/2023 at 3:09 AM, YaDongImproved said:

It's not about the capital. It's rare for the Land Department to check a company's capital. I've seen instances where suspicion arose if a 1 million baht company purchased a 10 million baht property. However, legally, a company can borrow funds, so this isn't a hindrance. Between 20 baht and 5 million baht capital registered, there aren’t many difference but according to the law, 25% must be paid up (clause 1105 of the commercial and civil code)

 

The Land Department is wary of foreign involvement in companies. They know foreigners setup company to own properties on their behalf. any reputable law firm should warn you and offer your lease, usufruct, sap ing sith, or other ways. But you decide.
 

Often, it's preferable to initially transfer property to a company wholly owned by Thais, and then change the shareholders and directors later. It's important to note that using nominees is illegal, but this is a common practice. You want less scrutiny so you start with Thai people.

 

For foreigners, the company's structure is crucial. Establishing preferred shares is key, allowing a minority of shares to control a majority of votes. It's simpler to set this up at the start than to modify it later, which might involve adjusting the capital to create new shares and can be time-consuming.

 

I can offer through ThaiLawOnline some services to establish a company with preferred shares, translate primary documents, assist with bank accounts, and register VAT. However, we do not provide nominees. We help clients set up companies as per their wishes. 

 

I recommend that foreigners hold normal shares and Thais have preferred shares, with the latter requiring 10 shares per vote. Normal shares operate on a one-share, one-vote basis. This arrangement gives foreigners more votes with normal shares and doesn't appear as an attempt to circumvent the system.

Thank you @YaDongImproved

Does anyone what the typical capital structure looks like for a Thai company setup for owning land?

Obviously we all know that it's against the law to use nominee shareholders or such a structure solely for the means of allowing a foreigner to own land. However, it remains common.

In such a structure, if one was to setup a Thai company with a couple of friendly Thai shareholders for this purpose is the usual procedure to put in a minimum amount of share capital and then the foreigner would loan the company money to buy land and build?

Obviously it makes a difference what that capital structure looks like in the event that relations soured with the Thai partners and suchlike.

Thanks

2 hours ago, Misty said:

This is from the LTR BOI website, privileges of the LTR visa:  https://ltr.boi.go.th/#pri

Understood on that. But anything that reconfirms this, from the horses mouth, post-tax changes, would be welcome.

19 hours ago, K2938 said:

On this fb thread the BOI now appears to have confirmed that for LTR visa holders foreign earnings regardless of their remittance stay tax-free: 

Question:  "????????????, ???????????? ???????????????? ???????????????????? ???????????????????????????? ???????????????????????? ???????????????????????????? ???????????????? ????????????????????????????????? That is really what is supposed to be taxed based on the new tax law changes, regardless of the time it is brought into Thailand. Please kindly also comment on this for LTR visa holders."

Answer BOI:  "We would like to address that for the LTR tax benefits: the revenue department has already announced a royal decree to exempt the LTR- Wealthy Global/ Wealthy Pension/ Work from Thailand from paying the income tax derived from oversea business/ work and assets." 

So if this is true, then this would be good news.

Could you link to the facebook thread please? Or tell us which page it's on?

1 hour ago, khunPer said:

Your main problem is that a shell company owning a plot of land rented out to a foreigner, without any other activities in the company, is suspicious; actually illegal. You need other activities in the company to make your suggestion work.

 

When you have other activities – with preferable some Thais employed also – you can be shareholder, director (i.e. member of the board), and lease a plot of land owned by the company.

 

There should be some payback included in the mortgage running over an agreed number of years, it should also be at market interest, not to make it look suspicious; a company limited is a business.

Thanks @khunPer, your posts are always very constructive and informative.

5 hours ago, nigelforbes said:

Cool!

 

You have a number of potential hurdles which may or may not be insurmountable. The first is registering the company in such a way as to avoid it's purpose or existence being your ultimate ownership of the land. The second is producing adequate annual returns that support and confirm the stated objective. The third potential obstacle is the Land Office who have far more extensive powers than most might imagine. They will need to be satisfied that the company is not a vehicle for your ownership objectives and having seen them at work in this area, they are not easily satisfied. I would also point out that, with all due respect to you, greater minds have tried to circumvent the land ownership law and failed.

Thanks Nigel. That's a useful and informative post and I'd agree on all 3 obstacles raised. I think these are the same challenges faced by any 'company' model for land ownership.

The only real difference i'm trying to factor in here is the loan from a foreigner/foreign entity to the Thai trading company. The thinking being that the loan removes any real 'value' from the company itself, and therefore any incentive for malpractice on behalf of lawyers or indeed the Thai shareholders. 

13 hours ago, ubonr1971 said:

And how do you think a thai bank is going to lend a company the money? 

 

Is the company in your wife or gf name? 

Did you read the post?

39 minutes ago, nigelforbes said:

A Thai company that is formed solely for the purpose of owning land or a single house, is not legal. The Land Office is not stupid!

The company would operate the property as a commercial endeavour, like a guesthouse/hotel.

9 hours ago, FritsSikkink said:

You would be lending money which is not allowed as it is preserved for financial institutions.

IV.  Foreign Security Interests on Real Property in Thailand

While a foreign person or juristic entity may not normally own land in Thailand, it may enjoy security interests on land as a mortgagee-creditor.  Section 80 of the Land Code read together with Section 16 of the Financial Institutions Act, B.E. 2551 (2008) allows a foreign person or juristic entity to accept a mortgage without prior approval of the Fiscal Policy Office, Ministry of Finance, on the express condition that the Land Department is satisfied that the mortgage does not fall under the definition of credit foncier and associated business activities according to the Financial Institution Business Act, BE 2551 (2008). Similarly, Section 702 of the CCC and the Land Code does not distinguish between domestic or foreign mortgagees – both having equal rights.  Should ownership of real property in Thailand vest with a foreign person or juristic entity, disposal of the property must occur within five years from the date of vesting, which period the Bank of Thailand may extend at its own discretion.

https://www.lexology.com/library/detail.aspx?g=3625e95c-61c3-42a0-a2ea-58d57b3aefce

Getting into the weeds of the foreign land ownership conundrum here:

Does anyone know if the following structure would be legally workable, and indeed if it's ever used in Thailand?

Thai company is formed with the purpose of building and operating residential property for rent (100% Thai)
- Company buys land with an interest only mortgage from a foreigner
- Company leases land to foreigner (profit generating)
- Lease payment covers mortgage interest == no taxable profit

I have heard it said before that in this case, the leasee of the land couldn't also be an owner of the company.

My thinking is that the mortgage itself prevents any potential issues over claims to the company's assets, as it's effectively indebted to the the foreign mortgagee to the full extent of its assets. (It provides an additional layer of security to the foreigner).

In this scenario I would envisage that the company would then operate the property as a rental property (short or long term) and as such, the business is actively trading.

14 hours ago, DjChris28 said:

Key word here is "Derived". When you exercise work in Thailand even if the company pays you from outside Thailand is is located outside Thailand, you are still deriving it inside Thailand.

 

That clause would indicate they would not tax you for work you did if you went home for a couple of months and exercised the work back home and then brought that money to Thailand. That's what i think it means.

 

Also they state "Exemption from foreign source income law". The work you exercise in Thailand is not foreign sourced, it is Thai sourced. However, going back home and exercising work back home in your home country would be considered foreign sourced income to Thailand.

 

For example:

a) You work in Thailand from January to March < -- this is taxed in thailand

b) You work in USA from April to May. <-- this is not taxed in thailand

c) You work in Thailand from June to December <-- this is taxed.

 

Point a, is Thai sourced income, point b is foreign sourced income, pojnt c is thai sourced. What that clause is doing is waiving the 180 day rule so you are not taxed regardless of how many days of the year you are in Thailand for work that you EXCERCISE OUTSIDE of Thailand. Normally before these tax rules, in the above scenario you would also be taxed for point b since you are staying longer than 180 days in Thailand and also bringing the money into Thailand.

This is very well thought out and put together Chris.

I just think it would be misleading in the extreme if the LTR visa holders were expected to pay tax on their earnings here. Given that these questions are simply never asked of the Elite visa holders either, i'm really fairly confident that the intention is that LTR holders are not going to be asked to pay tax.

That said, I agree that sufficient ambiguity has been left to make it uncomfortable. But that is the way here.

I quote another member recently: "In Thailand there is always engineered uncertainty because that introduces more opportunity for tea money."

2 hours ago, DjChris28 said:

But you see, this is what everyone is confused by. Just because you're being paid outside of Thailand but exercising the work in Thailand does NOT make your income foreign sourced. It is actually thai sourced. The source of the income is where you do the work, not where it is paid from. So this 180 day thing is irellevant. You're taxed from day 1 for any work you exercise in Thailand regardless if it' s being paid into a bank account outside Thailand - I've heard this directly from the Thailand revenue department themselves.

I agree that this is the crux of the matter at hand here.

The link that @aublumberg refers to directly contradicts your point. And so it would at this stage seem to be an argument between the authority of this Foreign specialist tax advisory, or the Thai tax office.

I would also tend to side the Sherrings here. It is both my own understanding and corroborates with conversations i've had directly with the BOI team. I would also expect that the tax office are not completely au fait with the LTR visa legislation and are more likely to be relaying 'safety first' advice.

It's good discussion though, and it'd be great to get something conclusive either way.

5 minutes ago, DjChris28 said:

The 17% tax rate is for the highly skilled professionals. All other visa types pay normal thai tax rates.

Yes, you're right there.

33 minutes ago, DjChris28 said:

This article from a tax accountant is golden in all the tax implications of this visa (This told me everything and then I confirmed it next with the Thailand revenue department itself):

 

https://www.austchamthailand.com/tax-implications-of-remote-working-in-thailand/#:~:text=With few exceptions%2C a foreign,individual is a Thai resident.

 

Have a look under sections "Taxation of a work-from-Thailand professional visa holder"

and also "Double tax agreements (DTA)"

Just to add a couple of points here, RE the link. (And hoping to not come across as a douche about it).

The article states - "With few exceptions, foreigners will require a work permit to work in Thailand." That's explicitly not the case for Work from Thailand Professionals.

The article also states income tax rates but fails to mention the fixed/flat 17% rate that applies to WFTP.

I'm not sure just how well informed/researched the author is, based on the above.

11 minutes ago, DjChris28 said:

This article from a tax accountant is golden in all the tax implications of this visa (This told me everything and then I confirmed it next with the Thailand revenue department itself):

 

https://www.austchamthailand.com/tax-implications-of-remote-working-in-thailand/#:~:text=With few exceptions%2C a foreign,individual is a Thai resident.

 

Have a look under sections "Taxation of a work-from-Thailand professional visa holder"

and also "Double tax agreements (DTA)"

Ah yes ok.

I always forget that I'm working under the assumption that any income would not be remitted to Thailand in the year in which it was earned.

Under that assumption, I understand that there is no tax liability.

35 minutes ago, User3847385 said:

“Fees won’t be collected from foreigners with work permits” 

 

So I guess that means that us who are on a work-from-Thailand-professional visa will need to help pay for uninsured peoples accidents even though we ourselves are required to hold an insurance, seeing as apparently we are not allowed to receive a work permit (even though we are supposedly allowed to work here)


 

https://www.bangkokpost.com/thailand/general/2480200/b300-tourist-fee-to-take-effect-in-june?fbclid=IwAR3MG8r-C-j-Abhe3EAcB28eo4x0Ikw4rQ4ITgrYw949lVOc7BzbkBAxnDw#lcrega0cs5d1f9646ic

It's 300B. Surely there's bigger fish to fry.

Thaivisacentre were offering them until yesterday. Apparently there's now a big unknown as to when/whether they'll be offering them again in future.

Not cheap, mind.

4 minutes ago, edwardandtubs said:

Thanks. I was actually asking you about the two visa exempt entries you've done since September 2022. Did you fly out and fly back in the same day or did you spend a few days or a few weeks outside of Thailand?

 

If you're planning to go from Vientiane to Udon then you may want to consider taking the bus:

 

The only problem is you then have to get a taxi from Udon bus station to the airport, which can be overpriced but it's still my preferred way of doing it.

Ah. I flew out to Vietnam for 2 nights.

Wasn't expecting any issues. Didn't get any.

3 hours ago, edwardandtubs said:

How long were you out of Thailand for your two visa exempt air arrivals?

 

In terms of same day bouncing, no problem at all at Vientiane but I don't know about the border crossing you mentioned.

I was in Thailand for over 2 years on Tourist Visa -> Exempt -> Covid Extensions -> Volunteer -> Covid Extension until March 2022. Then left for 5 months. Back in Sept 2022.

Flying to Vientiane looks a better bet, then stop the night and overland back to Udon Thani the next day. I was hoping to go up to Chiang Mai and make my own way to Chiang Khong but it's going to end up a massive project.

11 minutes ago, mockingbird said:

Just an fyi, with your fresh passport you could obtain a tourist visa in the Laos consulates. (Save the 2 land border hops for later)

I assume you flew into BKK twice on visa exemption. Risky I would of thought with your history. Did you get any hassle?

No hassle at all. No questions asked.

I had been away for 5 months though, prior to returning in September.

Cheers for the visa heads up.

6 minutes ago, Caldera said:

I couldn't agree more. Trying to "do the right thing" and/or being proactive tends to get you nowhere at best and into trouble at worst. Those who just waited were definitely better off.

Yep. I try to be philosophical about it. This system of loopholes and ambiguity that often works in our favour has this time worked against us.

That same system means that there's almost always still a way (LTR, ED, Biz + WP)

What's most frustrating is that there's nobody willing to listen to the rationale and understand it, in this instance. But hey ho.

1 minute ago, mockingbird said:

There's nothing new in any of this. You've always had to have had squeaky clean immigration history to obtain an elite visa.

I know someone who was denied before Covid because he had gone to an agent and got a dodgy 2 month visa extension on medical grounds a few years earlier.

 

Even a couple of short overstays will rule you out.

I hadn't heard about the medical visa issues prior to covid, but they certainly always seemed very strict on the overstay.

Ironically, that's why many of us have this f***ing volunteer visa in the first place. 

Everyone who willingly overstayed after this warning (https://www.bangkokpost.com/learning/easy/1989023/tourists-face-arrest-jail-for-overstaying) was relieved when the amnesty was retrospectively extended a few days later.

Those of us who tried to get whatever visa they could in order to prevent an overstay that would prevent us later getting Elite Visas....