JimGant

7 hours ago, chiang mai said:

My question is, what is the tax status of these payments when they are made to recipients who are not American or Thai citizens? 

Makes no difference, from the Thai taxation perspective. US Social Security payments made to anybody are exclusively taxable only by the US-- regardless of citizenship or residency. Thailand need not know about any such payments, to include payments to their resident citizens, since they have no taxation authority over them, at least per DTA:

Quote

......since social security benefits are taxable exclusively by the source country and so are government pensions. The result will differ only when the payment is made to a citizen and resident of the other Contracting State, who is not also a citizen of the paying State. In such a case, social security benefits continue to be taxable at source while government pensions become taxable only in the residence country.

This quote, from the technical explanation, points out that govt pensions paid for govt service -- are exclusively taxable ONLY by the US -- UNLESS the recipient is a Thai citizen residing in Thailand. BUT, Social Security payments don't fall under this exception -- and remain the exclusive domain of US regardless of citizenship and resident of payee.

This is handy news for those of us married to dual US-Thai citizens -- as neither my wife's Social Security, nor her Air Force survivor pension, will be taxable by Thailand.

And, for you as a Brit, receiving a US SS payment, even if remitted to Thailand -- is not required to be listed as assessable income on your Thai tax return.

BUT ,BUT, BUT -- this is, of course, only one man's opinion. Horror, if considered tax advice.

6 hours ago, 4myr said:

I spoke to the local tax office before. They disputed my DTA tax exemptions.

That's curious. Could you elaborate? Thanx.

30 minutes ago, oldcpu said:

My current interpretation (which could be wrong) is it means assessable income brought into Thailand for those LTR visa holders will be tax exempt. But it does NOT state the foreign income is not assessable (but it is tax exempt).  For me that suggests that a Thai Tax return may be required (even thou no tax due) if I bring income (earned from after 1-Jan-2024) into Thailand. 

It means you don't owe any taxes per the LTR decree. I'm in the same boat. The "file a return, even if no tax owed, if your assessable income exceeds 60000 baht" is a peculiar anomaly in Thai tax law. It's been mentioned that there's a 2000 baht fine for ignoring this rule (big deal). Fact: No reported incidents of this. And someone on this forum scaremongered that you might be subject to a back 10 year audit; ludicrous, because such long term audits are only for folks who, up front, didn't file with the INTENT TO TAX EVADE. That ain't you. So, relax.

And, for Christ's sake, don't go to your local TRD office for advice on LTR visas. Very few there are knowledgeable on LTR visa related info -- and for sure, probably none on the assessable/exempt tax question. I had to hire an agent to do my one-year LTR report, as they'd never heard of it. So, relax. No reason to call you in for an audit, unless you're remitting millions of baht. And even if they did, you're clean.

28 minutes ago, The Cyclist said:

Article 7 of the UK - Thai DTA,. Income from Immovable Property.

 

Primarily taxed in the UK for individuals.

The exact wording:

Quote

(1) Income from immovable property may be taxed in the Contracting State in which
such property is situated

The OECD Model Tax treaty shorthand language, as I pointed out in a previous posting, has may be taxed to mean: Contracting country in question has primary taxation rights -- but the other country has secondary taxation rights (may ONLY be taxed gives exclusive taxation rights, thus no secondary taxation rights -- not the situation here). Thus, the UK like the US DTA, gives the UK primary taxation authority on rents, meaning, they get to keep the whole enchilada of tax collection. Thailand, however, can also tax rental income -- if remitted. However, it has to absorb a tax credit equal to the taxes paid on this rental income to the UK. So, on the back of an envelope, if you see UK tax amount (the credit) trumping the Thai taxation amount  -- forget even including it on the Thai tax return (which, for now, has no place for that UK tax credit anyway).

We seem to be on a circle jerk, separated by a common language. Take the following, explaining two methods of avoiding double taxation:

Quote

(1)   Exemption method

The country of residence does not tax the income which according to the DTA is taxed in the source country. [where the source country has exclusive taxation authority]

(2)   Credit method

The resident country retains the right to tax the income which was already taxed in the source country. It calculates its tax on the basis of the taxpayer's total income including income from the other country which according to the DTA is taxed in that other country. However, it allows a deduction from its own tax for the tax paid in the other country.

The highlighted text is the bone of contention -- because when presented by itself, and not in the context of "credit method," it is incorrect. But, in context, yes, certain income can be taxed by both countries. In this situation, one country is the primary taxation authority, while the other country is the secondary.

A good example is rental income. The following is from the technical explanation of the US-Thai DTA (I couldn't find an equivalent for the UK-Thai DTA):

Quote

The first paragraph of Article 6 states the general rule that income of a resident of a
Contracting State derived from real property situated in the other Contracting State may be taxed in the Contracting State in which the property is situated....This Article does not grant an exclusive taxing right to the situs State; the situs State is merely given the primary right to tax.

The highlighted "may be taxed" is OECD Model taxation speak for country in question has primary taxation authority; the other country, secondary. Now, if the language had said: " may ONLY be taxed" -- then, country in question has exclusive taxation authority. But, per the DTA technical explanation, rental income can be taxed by both the US and by Thailand.

So, my rental income on a house in the US, which I remit to Thailand, is taxed by the US, which, as primary taxation authority, gets to keep all the collected taxes -- Thailand and credits don't enter into the equation. Now, Thailand can also tax this rental income; but it has to absorb a credit for the US taxes paid. And, as such, I may owe no taxes to Thailand on this rental income, after the credit. But, if the Thai tax exceeds the credit, I owe the difference -- and I now have a higher total tax bill than if the US had exclusive taxation authority, and thus the only country I had to pay taxes to.

1 hour ago, sometimewoodworker said:

I have zero interest in the USA / Thai DTA, what you are claiming could be true or it could be a misplaced fabricated.

 

I have no interest in UK-Thai DTA either. My retort was to your "The resident country retains the right to tax the income which was already taxed in the source country". Which, the US-Thai DTA says is BS. So, too, I believe most, if not all DTAs, don't give blanket taxation rights to resident countries on certain, specific incomes defined in the DTAs.

On 11/13/2024 at 12:14 PM, sometimewoodworker said:

“The resident country retains the right to tax the income which was already taxed in the source country‘

Bunk. If DTA says certain income, like govt pensions, are "exclusively taxable" by source country -- that's it. Thailand has no authority to tax same.

But, using the US-Thai DTA: Thailand has "exclusive taxation" on US source private pensions. But -- because of the "savings clause" integral to the DTA -- the US also can tax these private pensions, although their taxation authority becomes secondary to Thailand's. And, as such, the US has to absorb a tax credit for the Thai taxes paid. Thus, Thailand gets to keep all taxes paid, and the US collects none -- if credit exceeds US tax bill. Or, collects the difference between US tax bill and the Thai tax credit. Result: You, the taxpayer, end up paying a tax bill equivalent to tax bill of the higher taxing country.

Now, Thailand could, in the above example, decide to abrogate their "exclusive taxation" privilege of private pensions. This is a so-called "override," and is frowned against by the OECD, but is allowed if it doesn't violate the spirit of the DTA, mainly, avoiding double taxation.

https://repository.law.umich.edu/book_chapters/330/

But, Thailand would be daft to override this "exclusive taxation" privilege -- and forego taxes needed for its coffers. Thus, their best avenue is to say nothing about excusing taxation, if taxes are paid in home country. As such -- in my case -- if I remitted my private pension income into Thailand -- and it amounted to "taxable income," because it exceeded TEDA and the freebie bracket -- I'd file a Thai tax return (if it didn't, I wouldn't -- with no chance of any repercussions of note). Thus, Thailand would collect taxes from me, they otherwise wouldn't had they put out a dictate of "no need to file Thai tax return for income taxes, if paid in home country." The final result: My total tax bill for the year wouldn't be any different if I only had to pay taxes to the US: Because the US has to "eat," via credit, the taxes I paid to Thailand (if any). And, if I had no Thai "taxable income" after subtracting out TEDA -- then no additional effort needed to get a TIN and file a Thai tax return. [But, if I owed Thai taxes, and had to file -- I could easily do this by mail, and not wasting time, gas, and parking by going to TRD. No big deal.]

3 minutes ago, chiang mai said:

in what country that you've lived in is tax enforcement not a significant risk and why do you think that Thailand should be any different!

You're right. In the US, if you owe taxes, but don't pay, or under pay, you're subject to fines. If, however, you've overwithheld on your income, or over paid estimated taxes -- and thus don't owe any taxes -- you're free not to file a tax return (unless some of your income is from self-employment). This is why I've got it set up, that when I die, the withholding on the income going to my wife will have a sufficient overwithholding pad to mean she owes no taxes. Thus, dear, you don't need to file anything. And that lost $400 in overwithholding is about what you'd have to pay to hire a US tax guy here in Thailand -- a nice wash, with no effort. The IRS will know, by her 1099s, what was withheld, and what was thus not owed. And the pad I've built in will cover any interest earned here in Thailand, which, of course, wouldn't have a 1099.

For Thai taxes? Right now, her retirement income would be assessable, if remitted. But it's not remitted -- it's reinvested in the US. But, if we go to worldwide taxation, it would become taxable by Thailand -- and it exceeds 60,000 (the magic number for supposedly needing to file). But, after TEDA, it would be 400,000 short of being taxable income, i.e., no taxes owed, no tax evasion occurring. So, dear -- don't worry about filing a Thai tax return either.

So, yeah, "tax enforcement is a significant risk" -- if you OWE taxes. If not, don't bother to file, unless you want the overwithholding refunded. Another case of "common sense." But, just to be safe -- I'll have my ashes scattered on the TRD parking lot.

But, flippancy aside -- I really believe my tax plan for my wife -- who would be completely lost, even in gathering forms to give to a tax accountant -- is sound -- because if you don't owe any taxes, you haven't evaded taxation. Thus, no law infringement. And -- at least in the US -- there are absolutely no penalties for not filing, if no taxes owed (except self-employed). Thailand? Maybe an unlikely 2000 baht fine. Ho hum. 

23 minutes ago, OJAS said:

And I personally would not be prepared to accept the word of a minion at my local tax office if they told me that I didn't need to file.

Why not? Get it in writing. Is there a need of some kind to have a filed Thai tax return in your possession? Yes, Norwegians need such to get a Norwegian tax exemption. But, what about you? Just curious, as there maybe really is a need to have a return in your possession....

19 minutes ago, samtam said:

I've long thought that, and wondered why no one else has done that, or if they have, why they haven't, (to my knowledge) shared that experience on this magnum opus hopeless.

'Cause it makes no sense. What reasonable person would take an armful of ATM slips to TRD and ask: "Do I have to file a return based on these?' Come on, folks. Let's use a little common sense in this discussion. Ok, if you have a bunch of other assessable income entries, besides ATM slips, to ask questions about -- then, ok, unload the 36 atm slips on the clerk's desk -- if they may be a tie breaker for filing , or not. Otherwise, no isolated ATM slip presentation to TRD -- as you'll get funny looks.

18 minutes ago, The Cyclist said:

So, if it was me.

 

I would rock up at RD Office, complete with ATM withdrawal slips and ask the RD " Do I need to file  a tax return and how do I do it "

How do you say in Thai: "Get the hook, Charlie."

19 hours ago, samtam said:

If I want to file a tax return, where do I write in my ATM withdrawals and foreign Credit Card payments on the form? (Is there a new tax form for the new tax filing.)

 

I know previously some suggested filing for ATM and CC monies was not required, but some said it was. What is the position, and if it's a "yes", where do I put it on the form?

Money sucked out of your bank account by an ATM transaction in Thailand -- is identical to a Wise transfer from this same bank account to Thailand. If that bank account had $50,000 in it on Dec 31, 2023 -- then that's the source of your ATM and Wise transfers -- until it runs out (FIFO applies here, as the non identity of specific monies allows FIFO, confirmed by a 2012 Bangkok Post article). After it runs out, however, you need to go to relativity -- if 78% of your post 2023 direct deposits to this home country bank account are govt pensions (which are non assessable); 18% private pensions; and 4% reinvested interest -- then any subsequent Wise or ATM remittance activity consists of 22% assessable income. And, this amount would go on the assessable foreign income line - or whatever it's called -- on the Thai tax return. Of course, you could just say you remitted from the "govt pension pile." Not too sure that would stand up under cross examination at TRD..... But, it might be an interesting conversation....

As for credit card purchases -- this is certainly not the same as Wise or ATM remittances. In fact, it's a non remittance, as it's a loan from your bank -- and the subsequent payback of that loan doesn't make it a remittance. Anyway, this point has been discussed ad nauseum; but until a more definitive guidance comes forward, I'd just say: Don't declare CC purchases, but remember the loan angle, in case you're called in for a chat by TRD (but why would they -- they'll have no knowledge of those purchases...). No, always use a grey area to your advantage.

17 hours ago, oldcpu said:

I believe if we wish to see the 2024 calendar year tax forms in English language we need to wait a bit longer

And what difference do you expect to see? There will still be the lines for your remitted assessable income, divided up by category (pensions, rents, cap gains, etc). And lines for TEDA subtractions. Highly unlikely there will be lines for remitted NON assessable income -- to what realistic meaningful point? Possibly a line for foreign tax credits, which would be needed for remitted rental income (most DTAs), where, since Thailand is secondary taxation authority, they have to absorb a tax credit for the taxes paid to the primary taxation country, i.e., situs country. BUT, rental income is the only example I can come up with -- other remittances to Thailand fall in the categories of "exclusive or primary"  taxation authority. No credit lines needed for these.

Anyway, hard for me to see what changes might occur in any new, modified Thai tax forms. Anybody see something I don't? (I'm sure there's something.)

7 hours ago, chiang mai said:

It is said that 24% of the workforce (36 million) file tax returns whilst only 11% pay taxes

CM, you never gave me a reference for that -- only a Bangkok Post article that didn't say anything about 24% of workforce. Please clarify. Thanx.

1 hour ago, The Cyclist said:

you may have to pay in tax. If that income exceeds

 

* 120,000 Baht for a single person

 

* 220,000 Baht for a couple who file jointly.

 

You're confused. Taxation begins when your assessable income exceeds all your allowances, deductions, and the 150k freebie -- so called TEDA. The 120 and 220 figures for assesable income were arbitrary numbers picked by some bureaucrat to establish when you're supposed to file a tax return. Absolutely no bearing on what your taxable income is -- if any -- and thus what income taxes you might owe.

2 hours ago, The Cyclist said:

Is the very reason that I suggest people should should go their RD Office, armed with relevant paperwork and let the RD direct you as to whether you need to file a tax return

Somchai at TRD isn't going to be conversant in 61 DTAs, specifically yours. That's why you have to self-assess based on your knowledge of your country's DTA; and whether or not any income remitted -- and not exempt per DTA -- was from pre- 2024 sources. Again, you should be able to do this -- but if nervous, go see an agent. Bottom line: You either arrive at the conclusion you owe taxes, and thus file a tax return. Or not. Somchai's involvement would be an unnecessary distraction.

55 minutes ago, chiang mai said:

If you are registered as self employed, my wife confirms the TRD is quite strict about reminding you to file when needed.

So all the self-employed in Thailand are supposed to register with TRD? And many do? All those street vendors? I guess I'll just have to take your word for it, 'cause I only have a two-sample situation -- the rice farmer husbands of my domestic workers. And they've never heard of TRD. And, as far as the domestic workers -- they've never filed a tax return, tho' their assessable income exceeds the markers. And, maybe I have some obligation, as their employer, to file/withhold.... However, I don't think so, as I don't employ the minimum number required.

Anyway, this numbers game is suspect -- to include numbers of expats who file. But, obviously, our opinions differ. And you have a newspaper article to back you up -- I only have my logic -- which says, once again, the press is way off. Oh well.