Eudaimonia

This could be an interesting option for Americans who are in any case sheltered by the IRS to some extent. Being a tax resident nowhere used to be a popular theory, but times they are a-changin'. Financial institutions are increasingly reluctant to accommodate customers without a precise, proveable address and TIN from somewhere. I would hate to wake up and learn that the country of my citizenship (or someone else) has decided to be the 'last resort' provider of tax residency for me for the previous ten years because I did not have one anywhere else. Luckily, many jurisdictions also offer an actual tax residency on favorable terms.

The more I research this, the more I believe it will be an unmitigated disaster. Foreigners will be fighting for the last helicopter out when Bangkok falls. I fund my retirement with investments I manage myself: I get dividends and do some trading. I'm happy to pay income tax for the funds remitted to Thailand if I can deduct withholding taxes already paid. However: As always, some trades are profitable, while some are not. In a normal country, one might invest $100,000 in five stocks each, four of which fail miserably (-75%) while one is a big hit (+400%). The calculation is simple: $400,000 minus 4 x $75,000 equals a net profit of $100,000. One then pays a capital gains tax of around 25% ($25,000). In Thailand, an individual taxpayer cannot offset capital losses against capital gains. That's incredible. So, all the losses will be ignored, and tax will be payable on the $400,000 profit. At a nearly 35% progressive rate, it comes to around $140,000. So, $140,000 in tax is payable for a net income of $100,000. That's a 140% tax rate. Have I understood this wrong? It's a pretty steep price for the public services around here. Add to this the archaic documentation requirements. In Western countries, the taxman normally accepts a simple list of trades and looks at the bottom line. In Thailand, they will probably require documents signed and stamped by Jerome Powell and the board of Deutsche Bank, notarized, translated, certified, apostilled, and what have you.

I believe they will proceed with this change. Most countries tax worldwide income. With CRS, Thai authorities already get reports from foreign financial institutions and can see how much they are supposedly missing out on when they only tax remitted income. How successful this will be is a whole other story. I personally think it's fair that remitted funds are subject to income taxation (as double tax agreements permit). But I have no intention of paying 35% Thai income tax on my worldwide income when I receive practically nothing in return and cannot even vote here. Sorry. However, I always follow laws, so if this proposal eventually becomes law, there needs to be a legal solution. Short of moving out, I might simply sell most income-generating assets, such as dividend stocks, and replace them with accumulating ETFs that grow in value but do not generate any taxable income. Sometime in the future, it would be possible to move to a more favorable jurisdiction to be a tax resident there and cash out. There are many choices. For example, under specific conditions, Cyprus offers tax residency to people staying only 60 days and does not tax capital gains or dividends. Sadly, in my case, these well-meaning tax initiatives seem to lead to a declining contribution to the Thai economy, not the other way around.

Foreign-sourced dividends are taxed progressively using the same personal income tax rates as salary. A salary is probably not foreign-sourced income, unless the wife travels abroad monthly to perform her duties. If she stays in Thailand and draws a monthly salary, it has been local, taxable, reportable income even before 2024.

Great initiative. "Note that if you are generating income by working while staying in Thailand, it is (and has always been) irrelevant where that money is paid and whether you bring the money into the country or keep it offshore."

Yes, it should be "after Jan 1, 2024."

Even before September 2023 and the current debacle, the best Thai tax experts advised that even the ubiquitous interpretation of a previous year's offshore income being tax-free has no actual and clear base in law. That may not have been something widely discussed, but HNWIs were advised that they need to be careful with their remittances and filings. Check out this quote: "In my view the new interpretation is consistent with what the law has always said," said Jonathan Stuart-Smith, a tax partner at Mazars of Thailand, a tax consultancy. "It’s just that Thailand’s always had a lucky break, and there’s been this narrow interpretation on the table for a long time." https://www.businesstimes.com.sg/international/asean/thailands-tweak-tax-regulation-foreign-income-sparks-confusion-worries Being a tax resident of Thailand has been, and can still be, quite advantageous thanks to many characteristics of Thai tax laws. People with considerable offshore income might end up with a <1% global tax rate even in 2024 if most earnings are kept offshore and not remitted. However, taking advantage of Thai hospitality by being a tax resident necessitates that all taxes are being filed correctly and everything is above board.

I came across a good summary article, especially for Australians. Apologies if it has already been shared here. https://www.expattaxes.com.au/update-thailand-clarifies-tax-on-foreign-income/ The only thing that puzzles me about this article is the mention: "There’s ambiguity over whether foreign-sourced income will attract a specific rate of tax in Thailand or whether it will be subject to Thailand’s ordinary tax rates." I am not aware of any ambiguity, isn't it the same progressive rates as for other incomes? Of course that might change later, but not much time to change it for 2024 now.

Yes. The ambitions are much higher. For global taxation to work, lots of new laws are needed. People who do not want too much taxable income typically set up holding companies and so forth. Of course, the OECD countries provide great examples, so leapfrogging is possible.

To be honest, I think the big money is either moving soon or being taken care of by lawyers and bankers who know how to prove these things later. Grandfathering pre-2024 income was not part of the original Order or plan. It was announced later when they understood how complicated everything would otherwise become. Perhaps some influential people also mentioned that they will need at least one more year to repatriate their funds. If you have the money and want to buy a condo, I would not wait until 2028.

All income earned before 2024. If you want to transfer some in 2040, keep it in a ring-fenced account with no incoming transfers and 0% interest until then. Otherwise, it will indeed become difficult or impossible to show what is from pre-2024.

No worries. You can file in January as well. Of course, if you did not stay 180+ days in Thailand in 2023, you're not even a tax resident, so you do not need to file anything. Overall, it looks like it's just me and maybe ten other foreigners in the country who have bothered to hire tax lawyers and auditors to structure their affairs and follow tax laws here and in every other country we have interests in. For 99% of expats in Thailand, it seems to be a big surprise that their foreign source income and remittances may have been taxable all along because they did not even follow the current rule and wait until the next calendar year to remit it. I would not expect the Revenue Department to start investigating old remittances, but they do have the 2023 CRS data, so who knows.

It's your 2023 offshore rental income, so you can remit now and file a tax return in March showing it as assessable 2023 income remitted in the same year it was earned. Or you can wait until January and get it tax free.

There is a useful futures contract trading on the Singapore Exchange – SGXTU, or Thai Baht in US Dollar Futures. I've used it to hedge my January 2024 transfers, in case people start remitting a lot.

No capital gains tax for the sale of US stocks. 15% withholding tax on dividends for Thailand tax residents. Portfolio interest (debt instruments like bonds and some preferred stocks) is tax-free.

Again, if you had income in 2023 and remit that money now (in the same tax year), it's taxable. If you send it on 1 January 2024, it will not be taxable. (You can send it later as well, but then it might be more difficult to prove it is pre-2024 income.) All new earnings from 1 January 2024 onwards will be taxable regardless of when remitted.

If you had income in 2023 and remit that money now (in the same tax year), it's taxable. If you send on 1 January 2024, it will not be taxable. The choice seems pretty obvious.

The point is this: Your calculation shows an 8 million deposit in Bangkok Bank, which is then spent gradually. The last 500,000 in savings, to be used in early 2028, will have enjoyed over four years of holiday in Bangkok Bank. If kept offshore and invested, this money could (in my humble opinion) have been working offshore and earning much more during that time. I think your principle makes a lot of sense. I will also bring in a lump sum of tax-free money on 1.1.2024 and then remit something taxable every year in the future. However, it is rather difficult to optimize the ratio. Small tax savings seem to lead to big lost profits. By the way, I don't think a 6-8% yield is unrealistic. Even US Treasuries that I bought recently have a yield on cost of over 5% until 2040. The average annualized return of the S&P 500 since 1928 is 9.81%.

That's a lot of money in the bank. And the spreadsheet shows 0% interest earnings. Isn't there quite a high opportunity cost for this plan? Time deposits in Thailand yield around 1.7% p.a., considerably less than many investments abroad. One might pay 25% tax for a 6-8% yield and still be better off than remitting all that money to Thailand, where it earns much less. It almost looks like you might achieve a <5% income tax rate but end up with a 5% wealth tax. [Edit: I probably misunderstood what "Bangkok UBS" means – is it funds that are not in Bangkok?]

Guys, I have finally solved the problem caused by Order Paw 161/2566 (ป.161/2566) using Google's AI. Hopefully, this answers all your remaining questions. Google it yourself if you don't believe me.

I'm thinking about buying a condo in early 2024. Owning instead of renting would lessen the need to bring in money later. The purchase window seems to be closing now: the requirement to bring in all funds from abroad combined with progressive taxation of those funds means that the Thai real estate market is dead to me from 2025 onwards.

I'm not yet 50 but that's a great benefit if it stays like that!

Yes, I forgot to mention that I am not a US citizen, I just like to invest there. As a nonresident alien, I have never filed anything with the IRS. The broker withholds 15% of my US dividends, and that's the final amount. It's shown on Form 1042-S, which I get every year.

Here's my action plan. Maybe this is helpful to someone, or someone can point out mistakes. I am not in retirement age yet but live off investments abroad, so this change certainly affects me. I have a portfolio of stocks from different countries. I now set up a new broker account and moved all my US stocks and ETFs there. Selling and buying back shares that have appreciated realised all capital gains so they will not be taxed later. The main reason to have two accounts is that dividends from various countries have different withholding taxes. For example, the UK and Singapore are 0%. Those would be taxed when remitted to Thailand after 1.1.2024. That is why it is best to have separate accounts. The US withholding tax for Thailand tax residents is 15%. I already have a Thai tax ID, which I have sent to my broker, so they apply the double tax agreement and withhold 15% tax from my US dividends. Calculating Thai personal income rates using the progressive levels (5-35%), I see that the overall tax rate rises to roughly 15% at around 1.4 million baht. I plan to remit up to 1.4 million per year and use a withholding certificate from my broker to prove that I have already paid 15%. I expect to attach proof of the withholding tax paid and be able to claim it as a credit (The Revenue Department has promised they will amend the tax forms for this). That means there should be little or no Thai tax to pay. What if 1.4 million baht is not enough in the future? Maybe I need to buy something expensive. Luckily, according to the latest order No. 162/2566, the new rules will not apply to income earned before 1.1.2024. Before the end of this year, I will transfer some funds to a new offshore bank account that is ring-fenced for remittance purposes. In January, I will send some of that money to my Thai bank account, and as pre-2024 earnings it will not be taxed. So, I have some savings as a buffer. It is possible to remit that pre-2024 money later as well, but if the offshore account accrues any interest, that interest part would be taxable in Thailand. We do not yet know how such mixed funds will be treated. (If I sent more money to my Thai account now, in December, it would be assessable income because I have earned it this year. That has always been the case, according to the old law. So I have to wait until 2024.) My other broker account, with non-US stocks, will never be used to send anything to Thailand. I can use those funds when staying abroad. At this point, they will not be assessable income in Thailand. However, even that might change in the future. Therefore, it is best to sell (and buy back) those shares now as well to realise the capital gains before 2024. Does this sound like a feasible plan? Have I missed anything?