Yumthai

11 hours ago, KhunHeineken said:

I have said before, for this policy to have any chance of working, Thai banks will have to be onboard.  If / when Thai banks start recording and reporting in accordance with this tax policy, this is how Thai's "doing nothing" but remitting funds from offshore, will come under notice. 

I don't believe Thailand is willing to reach that level of Chinese/North Korean control over their population, but if they eventually start strictly enforcing rules restraining privacy and freedom I will limit my stay in Thailand at 179 days/year.

7 hours ago, KhunHeineken said:

This is why I have said the policy will involve visas / extension in the future.  It will force foreigners to act, and make foreigners approach the Thai government, rather than the government chasing them. 

 

This is for another thread, at another time, IF it happens, but the Thai government's solution for people choosing to just "do nothing" is easily fixed, as mentioned above.

 

Time will tell. 

So, TRD will coordinate with Immigration to implement a way to control systematically/yearly the tax situation of every single foreigner residing in Thailand meanwhile millions of Thais will continue "doing nothing" remaining unchecked? Unreal.

56 minutes ago, 0ffshore360 said:

I for one am not about to subject myself to the TRD unless summoned.

At this point that's by far the smartest move.

https://www.rd.go.th/43338-1/clear-cut-ภาษีการรับให้-gift-tax-ใครต้องเสียภาษี.html

This is a 2023 Q&A in Thai from TRD related to Gift Tax.

What we learn among other things (Google Translate):

- Receiving tax Or commonly called Gift Tax, is a personal income tax collected from assets given or received to children, spouses, relatives, or other persons before the gifter's death. The gift tax was created to be consistent with the inheritance tax, preventing inheritance tax evasion.

- The giftee is the sole responsible of the income/gift tax payment. No mention of the gifter.

- Parents mean father, mother, grandparents, great-grandparents.

- Descendants mean children (including adopted children/illegitimate children certified by the father), grandchildren, great-grandchildren.

2 hours ago, Mike Teavee said:

As I said it's an outstanding question because, as you say, none of the information out there really covers tax status at time of remittance, it all focuses on Tax status when the income was earned. 

"... it all focuses on Tax status when the income was earned" simply because in the new tax rule announcement it's implied and granted that the only people impacted are Thai tax residents.

Since non tax residents are only taxed on their Thai-sourced income wherever it is earned/paid, remittance event is irrelevant (because you'll have to declare and pay income tax even if this income is not remitted in Thailand).

Hence, non tax residents in Thailand are never impacted by the remittance tax rule.

8 minutes ago, Mike Lister said:

Regardless, whilst the new tax rule is new for Thais also, the subject of Thai income tax is not

Indeed Thai income tax is not a subject for Thais.

1 minute ago, JimGant said:

So, you're saying the act of gifting some how affects the taxability of the money being gifted? Don't think so.

There could be (income) tax on the money and/or the gifting act itself depending on the country tax law where the gift occurs and the tax residence status of the gifter, but imo not in Thailand.

20 minutes ago, JimGant said:

That doesn't square with this:

Quote

Cyril lives in Thailand year round with his lovely wife Nookie. He decides to give Nookie a present so he transfers 1,000 Pounds from his account with HSBC UK, to his wife's account in Thailand and says its a gift. Cyril's account at HSBC contains only savings that he earned a decade ago

 

We can agree to disagree. My view is the location of the gift and the way of transfer does not matter. The act of gifting occurs prior wire transfer/remittance.
 

14 minutes ago, Dogmatix said:

The question was how might it take for Thailand to introduce global taxation?  At least 5 years is a reasonable guess but this is something that would require an act of parliament and would probably need to be part of government policy which it is not at the moment.

That makes me wonder what the real intention of the Thai government is.

If they really want money in, they should better put their efforts on tax law enforcement rather than constantly updating and implementing countless rules.

58 minutes ago, Ben Zioner said:

Yes, but if I were RD I wouldn't tax the donee, but I'd consider that to make such donation someone has remitted these funds to Thailand and hence is taxable, if these funds were earned after Dec 31, 2023.

 

I don't believe one second RD would leave such a gaping hole open.

You go to your home country with your wife, withdraw $5K in cash from your local bank account and gift it to your wife. Then you both fly back to Thailand. Who is remitting $5K into Thailand? Your wife and it's a gift exempted from tax.

30 minutes ago, Mike Teavee said:

Surely in the case where somebody sends the money directly from an overseas account, the money became a Gift before it was remitted so any tax on it would only be due in the source country unless it's value exceeded the thresholds. 

That is the only point to discuss: what happens first? Gift or Remittance?

I agree with you, imo gift rules prevail over remittance rules i.e. gift event occurs first then remittance event if any.

For instance, a Thai tax resident has $1K cash in his home country that he gifts his Thai tax resident wife on 01/05/2024. He can state it in a nice letter/email as proof. From 01/05/2024 gift is acted and this money belongs to his wife wherever it is.

There are many ways her $1K cash gift can be repatriated to Thailand (she could fly to pick it up, ask a third-party to bring it back, use online transfer, ...) but in any case the remittance event (tax exempted as it's a gift) will always occur for the giftee (wife) not the gifter.

That's my view.

2 minutes ago, JBChiangRai said:

What do you mean by "in the third scenario?"

It comes from @Mike Lister original post, I think it should be omitted with the new structure.

5 hours ago, Mike Lister said:

11 hours ago, Yumthai said:

All this literature on Gift rules is mixing official statements with interpretations/assumptions.

I think it's important to be able to distinguish, for any newbie looking for relevant Gift Tax information, what is coming straight from Thai books and what is assumed, maybe using a code color?

 

Can you tell me where you think it's mixed and not clear? I've re-read it several times and it appears to me to be mixed but it's clear that it is and is delineated by section. The first three para's are I believe a factual overview of remittances. Para's 66-69 are the rules, 70-71 are interpretations whilst 72 is clearly the rules. It's probable that I am too close to what is written to not see the overlaps that you see so please be specific.

2 hours ago, Mike Lister said:

Thinking about this issue some more.....I recognised some weeks/months ago that the entire document needs to be rewritten/reformatted and structured differently, it has grown because new pieces have been added/inserted piecemeal, to the point where it is now clumsy and confused reading. What I had wanted to do was to provide two parts to each topic, "what the rules say" and "what we think". I haven't had the time to do that recently, mostly because tax thread management has taken up so much of my time......(you know who you are!). If you or anyone else has thoughts about this, I'll be interested to hear them. Similarly, if there's anyone out there who is interested in participating in this rewrite, please contact me.

In my opinion,

First and foremost, our confidence levels that we understand all the Gift Tax rules is not high.

What the rules say:

The TRD does not consider what the purpose is of remitted funds, only whether they are assessable or not. If a foreigner remits non-assessable funds and then gifts them in Thailand, that is the end of the matter for the gifter.

If however the foreigner remits assessable funds to Thailand and then gifts them inside Thailand, those funds must be reported as assessable income on the foreigners tax return, no matter that they are later gifted.  

66) "PIT is levied on gifts given by persons who are still alive. The tax is collected on the assets or the amount given to parents, ascendants, descendants, spouse, or others based on the value of the gift that exceeds a prescribed threshold, which depends on the type of gift and donor. Assets or amounts given that do not exceed the threshold are exempt from tax.

67) The following gifts are exempt from PIT:

a) Income derived by a parent from the transfer of ownership or possessory right in an immovable property without any consideration to a legitimate child, excluding an adopted child, in the amount not exceeding THB 20 million throughout a tax year in respect of each child.

b) Maintenance income or gifts from ascendants, descendants, or spouse, in the amount not exceeding THB 20 million throughout a tax year.

c) Maintenance income derived under a moral obligation or gifts made in a ceremony or on occasions in accordance with established custom from persons who are not ascendants, descendants, or spouse, in the amount not exceeding THB 10 million throughout a tax year.

d) Income from gifts in the case where the person who receives the gifts will use them for religious, educational, or public benefit purposes according to the intention of the donors under the criteria and conditions referred to in the Ministerial Regulations.

68) Gifts in excess of the above thresholds will be subject to PIT at the rate of 5% and will not need to be included together with other income when computing the annual PIT liability.

69) For ascendants/descendants the threshold is THB 20 mill, nor non-ascendants and descendants, it's THB 10 mill".

What we some posters think:

In the third scenario, the foreigner gifts offshore assessable income direct to a Thai resident, the foreigner must report that income as if they themselves had received it directly.

 70) The following summary points compiled by a member may help guide readers in the use of Gift Tax:

a) Gifts must be traditional gifts based around a fixed date or occasion.

b) Traditional gifts include supporting the spouse or other persons, mainly family, based on a moral obligation.

c) Gifts to non-family members are more likely not to meet the moral obligation criterion.

d) A ceremonial act may be required, in particular for non-spouses.

e) Gifts must not be returned to the donor and used as a way to avoid income taxes, except under very specific Gift Tax rules which are likely to void the earlier tax advantage.

f) Moral obligation is subject to interpretation, there is no single definition.

g) TRD may apply additional criteria.

h) TRD assessment may differ from self-assessment which risk must be evaluated in each case individually.

71) Note: Because Gift Tax is predominantly a domain of the wealthy and depends to a large extent on local practice, there is a shortage of confirmed information on this subject. One field of thought is that Gift Tax cannot be used to escape Thai tax by Gifting untaxed money from overseas. On the other hand, many Western countries, including the UK, do not tax gifts from overseas. Members wishing to exercise this option should seek qualified advice before using this option to Gift untaxed funds.

72) Two additional points on this subject are: 1) Funds that are gifted, must be for the use of the person to whom they are gifted. 2) Gifts can be revoked later and reclaimed, under specific circumstances, such as if the receiver of the gift defames the Gifter or fails to take care of their serious medical needs. Issues arise here when the receiver is the spouse of the Gifter and under marital law, the gift is regarded as conjugal property. Until this becomes more clear, it is critical that anyone wishing to use Gift Tax, seeks professional advice.

38 minutes ago, Mike Lister said:

The section on Gift Tax is shown below:

 

The TRD does not consider what the purpose is of remitted funds, only whether they are assessable or not. If a foreigner remits non-assessable funds and then gifts them in Thailand, that is the end of the matter for the gifter.

 

If however the foreigner remits assessable funds to Thailand and then gifts them inside Thailand, those funds must be reported as assessable income on the foreigners tax return, no matter that they are later gifted.  

 

In the third scenario, the foreigner gifts assessable income direct to a Thai resident, the foreigner must report that income as if they themselves had received it directly.

 

GIFT TAX 

 

66) "PIT is levied on gifts given by persons who are still alive. The tax is collected on the assets or the amount given to parents, ascendants, descendants, spouse, or others based on the value of the gift that exceeds a prescribed threshold, which depends on the type of gift and donor. Assets or amounts given that do not exceed the threshold are exempt from tax. Our confidence levels that we understand all the Gift Tax rules is not high.

 

67) The following gifts are exempt from PIT:

 

a) Income derived by a parent from the transfer of ownership or possessory right in an immovable property without any consideration to a legitimate child, excluding an adopted child, in the amount not exceeding THB 20 million throughout a tax year in respect of each child.

 

b) Maintenance income or gifts from ascendants, descendants, or spouse, in the amount not exceeding THB 20 million throughout a tax year.

 

c) Maintenance income derived under a moral obligation or gifts made in a ceremony or on occasions in accordance with established custom from persons who are not ascendants, descendants, or spouse, in the amount not exceeding THB 10 million throughout a tax year.

 

d) Income from gifts in the case where the person who receives the gifts will use them for religious, educational, or public benefit purposes according to the intention of the donors under the criteria and conditions referred to in the Ministerial Regulations.

 

68) Gifts in excess of the above thresholds will be subject to PIT at the rate of 5% and will not need to be included together with other income when computing the annual PIT liability.

 

69) For ascendants/dependants the threshold is THB 20 mill, nor non-ascendants and dependants, it's THB 10 mill".

 

https://taxsummaries.pwc.com/thailand/individual/income-determination

 

Gift Tax Parameters

 

70) The following summary points compiled by a member may help guide readers in the use of Gift Tax:

 

a) Gifts must be traditional gifts based around a fixed date or occasion.

b) Traditional gifts include supporting the spouse or other persons, mainly family, based on a moral obligation.

c) Gifts to non-family members are more likely not to meet the moral obligation criterion.

d) A ceremonial act may be required, in particular for non-spouses.

e) Gifts must not be returned to the donor and used as a way to avoid income taxes, except under very specific Gift Tax rules which are likely to void the earlier tax advantage.

f) Moral obligation is subject to interpretation, there is no single defintion.

g) TRD may apply additional criteria.

h) TRD assessment may differ from self-assessment which risk must be evaluated in each case individually.

 

71) Note: Because Gift Tax is predominantly a domain of the wealthy and depends to a large extent on local practise, there is a shortage of confirmed information on this subject. One field of thought is that Gift Tax cannot be used to escape Thai tax by Gifting untaxed money from overseas. On the other hand, many Western countries, including the UK, do not tax gifts from overseas. Members wishing to exercise this option should seek qualified advice before using this option to Gift untaxed funds.

 

72) Two additional points on this subject are: 1) Funds that are gifted, must be for the use of the person to whom they are gifted. 2) Gifts can be revoked later and reclaimed, under specific circumstances, such as if the receiver of the gift defames the Gifter or fails to take care of their serious medical needs. Issues arise here when the receiver is the spouse of the Gifter and under marital law, the gift is regarded as conjugal property. Until this becomes more clear, it is critical that anyone wishing to use Gift Tax, seeks professional advice.

All this literature on Gift rules is mixing official statements with interpretations/assumptions.

I think it's important to be able to distinguish, for any newbie looking for relevant Gift Tax information, what is coming straight from Thai books and what is assumed, maybe using a code color?

4 hours ago, KhunHeineken said:

As many suspect may be the case, it's possible that foreigners may have to produce a Tax Clearance Certificate at extension time.  No chasing at all.  It makes the foreigner contact the RD.

I think, as many others, that implementing a Tax Clearance Certificate at extension time will cause more financial damage from people fleeing Thailand than the extra money the Thai economy will get from both the law abiding foreigners and the agents providing "easy" certificates.       

9 minutes ago, Neeranam said:

How do the frogs know that the money from yearly income was not savings from before 2024?

The frogs may ask for supporting documents. 

For those who think a gift remitted from overseas between spouses could be assessable income just use the gift rules as being the giftee when possible: A non Thai tax resident parent or child can send to the Thai tax resident child/parent giftee up to THB20M/year tax-free.

3 minutes ago, Mike Lister said:

I suppose that there's always a chance that Thailand doesn't regard that as Tax Evasion, unlike every other country in the world so yes, I suppose you are right, it's merely my opinion. Perhaps they say, go ahead and Gift whatever you want to somebody else and later, when we 're not watching, they can give it back to you. That way you want have to pay us tax and we wont say anything....cool.

Well I stop believing long time ago that Thailand is and behaves like every other country in the world.

Reading some posters here, I often wonder if we live in the same country.

2 minutes ago, Mike Lister said:

Up to you what you believe, gift away with impunity I say, if you don't care!

Yes it's my opinion.

3 minutes ago, Mike Lister said:

For everyone else, it's tax evasion.

And this is your opinion too.

1 minute ago, Mike Teavee said:

NB Section 521. A gift is a contract whereby a person, called the donor, transfers gratuitously a property of his own to another person, called the donee, and the donee accepts such property
 

If somebody were to Guft their wife 20Million THB & have no income coming in to support themselves then clearly there is an expectation she would be supporting him & so the Gift wasn’t give gratuitously.

I read "gratuitously" as: donee does not give something predetermined in the gift contract back in return to the gift.

That does not mean donee cannot do what he/she wants in the future after gift is acted.

Besides you can read further:

Section 535. The following gifts are not revocable for ingratitude:

1. Gifts purely remuneratory
2. Gifts encumbered with a charge
3. Gifts made in compliance with a moral duty
4. Gifts made in consideration of marriage

If a gift can be remuneratory then by definition there is something in return to the gift so not gratis.

Again, Thai rules inconsistency or mistranslations ...

7 minutes ago, Mike Lister said:

I'm sure that's the case. But we're talking in this example of a married couple who maintain a certain spending pattern and lifestyle, then suddenly, he gifts her 1 mill and his bank account spending pattern changes to almost zilch, even worse is that change takes place just as new tax regs are introduced. That can be seen.

We disagree on gifting in Thailand. IMO once gift is acted I believe that giftee can do whatever he/she wants with it.