Eudaimonia

They are working on other tax issues. It was just announced yesterday that Thai nationals returning from abroad can pay a lowered 17% personal income tax for five years. So, Thais pay up to 17%, and we pay up to 35%. 🙄

Wise has not asked me too much yet (as my transactions are so simple), but many banks certainly have. Financial institutions are required to know their customers and constantly evaluate the risks related to all transactions. Sending money to Thailand is already a red flag: it's evaluated as a relatively risky country for money laundering and terrorist financing (Score 5.82 on the Basel AML index). https://index.baselgovernance.org/ranking Compliance departments want to understand where money is coming from, where it's going, and, in extreme cases, whether the customer has accumulated their entire wealth legally. They're eager to close down accounts if they do not get all this information. The most detailed reply I have sent was over 60 pages. It was a comprehensive request regarding the Source of Funds for specific transfers and the Sources of Wealth on a global scale. There is no privacy in banking anymore.

That is very good to know, thanks. The official LTR website only mentions filed tax returns as accepted proof. I always tend to take everything too literally. For people over 50, that is indeed so. For "Global Citizens," apparently not...

I am both relieved and perplexed by the headline of an article published by Asian Private Banker today: "The uncertainty has lowered": Global private banks on Thai wealth tax https://asianprivatebanker.com/private-wealth/private-banking/the-uncertainty-has-lowered-global-private-banks-on-thai-wealth-tax/ Unfortunately, the article is behind a paywall. First, has there been a proposal for a wealth tax, too? This is a specialist publication for wealth managers, so surely they must know what a wealth tax means. It's not an income tax like what we are discussing here, but a yearly levy on the total value of someone's assets. (The one tax that is still missing...) Second, I am very eager to learn how uncertainty has lowered. To me, it looks like things are just getting increasingly uncertain, but apparently, some people know better. Which is great. Now, does anyone have a private banker to explain? ☺️

That's what the Western governments think, but I would not have expected the Thai government to make this moral judgement. Maybe they heard this from the OECD? Actually it looks like LTR pensioners need the same tax documents, so being 50 doesn't change much.

The LTR visa does not seem to be an option for people under 50 who are already living in Thailand and have income only from abroad. They need an "official personal income tax return as filed to state authorities such as P.N.D. 90/91, BIR60, Form 1040, Form W-2, SA100, T1 General etc. showing income of no less than 80,000 USD per year in the past 2 years." A Thai tax resident is unlikely to have declared 80,000 USD foreign source income in their Thai tax return before all these changes. Yes, well I wrote "remain", not "move in".

Here's what I fear might happen: Honest people with lots of income and assets move out. Dishonest people with lots of income and assets remain but use fake addresses abroad, illegal nominees, other people's bank accounts and ATM cards, agents, bribes, and so on to avoid detection and taxation. Low-income pensioners will not be initially targeted or questioned, as taxing them would often be unprofitable and unreasonable. Still, they will live their golden years technically in violation of unclear laws and fear impending visa changes and crackdowns, which affects their mental health. Good guys out, bad guys in; everyone stay stressed.

I would think shares are pre-2024 "savings" worth their purchase value. Usually, capital gains are taxed when assets are sold, and the profit is calculated from the original purchase price. TRD is not planning to tax unrealized capital gains; they follow the standard system. Establishing an artificial valuation point on 1 January 2024 just to allow tax-free capital gains would be strange. Even on this forum, it was advised that people should consider selling and repurchasing their investments before the end of December 2023 to establish a new cost basis for their holdings.

The Help section of Jitta Wealth, a Thai wealth management company, contains a very interesting tax calculation example. The company suggests that when repatriating funds, principal comes first and profit last. I hope someone with a better command of the Thai language can read this and try to find supporting evidence. This is for Thai investors transferring money out and back in, but the principle may be the same. Here's a Google translation of section 2.3: Original: https://help.jittawealth.com/hc/th/articles/16856829739801-ภาษีสำหรับการลงทุนต-างประเทศมีอะไรบ-าง

This is purely speculation, but one possibility is that you would be expected to use FIFO (First In First Out) method and calculate the profit for the shares you purchased first. $500 or more of that $1,000 might be profit depending on the acquisition prices. However, when realizing such capital gains, you might need to use the original purchase prices (for example, in 2021 or 2022), not the situation at the end of 2023. Again, this is just pure speculation and merely how I, as a layman, would expect it to be. Official guidelines will hopefully be published at some point. We are all waiting.

There is a free seminar on Friday in Hua Hin for those interested in income tax changes. Even in 2024, people apparently still gather in a physical space donning "business attire" to listen to speakers. This may be useful for someone. https://www.huahintoday.com/local-news/free-event-in-hua-hin-to-address-major-changes-in-thai-tax-legislation/

Surely, we must agree that population size is irrelevant, as a big country also has more news outlets. I'm not asking this to be prime-time news on Thai TV. But I see a lot of stories about other tax issues that nobody really cares about, even in English.

I continue to be amazed by how the media operates. Thailand is about to be destroyed as a retirement destination, and many of the country's wealthiest residents are likely to move out if this goes through. Still, reporters have yet to ask for clarifications from the Finance Minister or Prime Minister. Is the Thai language media even reporting this?

I know this was not the main point of your comment, but the first quarter of 2024 was, in a way, the "last chance" to buy with pre-2024 funds after the enacted tax change. Singapore successfully killed the real estate market for foreign buyers in 2023 with an additional stamp duty. A total of one (1) foreigner purchased luxury homes in Singapore during Q1 2024. The difference is that Singapore wants to intentionally cool down the overheated property market, whereas whatever happens in Thailand now might not be as carefully planned.

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.