Tax Specialist in Chiang Mai

[krey]

Hi,

Just looking for someone in Chiang Mai that would be a good place to go to ask question about the tax system for personal taxes

might start bringing in some investment money in and I know one is suppose to be taxed on money coming in if over 183 days in Thailand.  I know many

don't bother and such but in the new year I might be bringing in some and would rather do it by the books so looking for a company in Chiang mai that

has a good rep for tax advice, doing personal taxes, has half decent English Skills etc.

Thanks all

[Greenside]

Taxed on investment (or any) money coming into Thailand?  Really?  First I've heard of it.

 

Just as a side note, honest and knowledgeable lawyers, accountants and professional people in general are few and far between in this country.  Get as many references as you can from experienced expats before having dealings with one.

[Dante99]

There are conditions under which you can be liable for taxes on investment profits brought into Thailand but the OP's understanding of those conditions is different than what I got from a Thai lawyer some years ago.  I'd say check it out because it is fairly easy to avoid the tax liability if you understand the rules.

 

Since it is not a common issue, I think a lawyer rather than an accountant would be the place to inquire.

[neilrob]

I think you might have been mislead on the laws regarding taxation. My understanding is that, if you bring in money previously earned or otherwise acquired abroad, then there is no such taxation. Only if you are currently earning money and bring that money in as you earn it, and are living here, then this may be subject to tax. This latter applies only to earned money---pensions are not generally taxable, even if you bring them in each month. I file Thai tax returns and have brought money in on many occasions and my accountant assures me that none of it is taxable, since it comes from investments and pensions.

 

In my experience, the statements in comment 2 above are unjustified---there are many Thai professionals who are reliable and competent. Please send me a PM if you would like a contact number for my accountant.

[Dante99]

7 hours ago, neilrob said:

My understanding is that, if you bring in money previously earned or otherwise acquired abroad, then there is no such taxation. Only if you are currently earning money and bring that money in as you earn it, and are living here, then this may be subject to tax. This latter applies only to earned money-

What is meant by "previously earned"?  Earned yesterday?  Last month? Ten years ago?  What is meant by "bring money in as you earn it"?  Bring it in every day or week or month?  What is "earned money"?  Investment earnings, employment earnings...? Are pensions earned? They must be because they are not just given for free, are they?

 

 

[Dante99]

28 minutes ago, VIBE said:

I believe its one year.  If you are living here and working overseas earning, the money needs to stay out of Thailand for one year, or, you spend more than 180 days outside of Thailand.  I believe in those cases, the funds are exempt.  

So you are talking about earnings from employment or work, right?  Or are you suggesting that it is one year for all sources, like no matter where or how I got it, if I have it for a year before bringing it into Thailand then it is exempt?

 

 

[neilrob]

4 hours ago, Dante99 said:

What is meant by "previously earned"?  Earned yesterday?  Last month? Ten years ago?  What is meant by "bring money in as you earn it"?  Bring it in every day or week or month?  What is "earned money"?  Investment earnings, employment earnings...? Are pensions earned? They must be because they are not just given for free, are they?

 

 

I was giving the overall picture. You seem to be asking for the details of precisely what is meant by Thai tax legislation. For this you need to go to a Thai tax accountant. I doubt that you will find such a person on this forum. However, I believe Vibe is correct about holding earned money outside Thailand for one year, so that it becomes unconnected to present earnings. There is an exemption for pensions, even though they were of course earned at some time in the past.

[Dante99]

How do they know it has been held outside Thailand for one year?  Do you keep in a separate account?  If not, it is comingled with other money and unidentifiable as being from a specific year's earnings, isn't it?

[krey]

these are all questions on why I wanted to get actually clarification on, that is why I made this post.  I have done a lot of research on this and there are

often two sides on what is suppose to be correct.  I had a feeling this post would turn into a discussion but what  Ireally wanted was to get in touch with someone in Chiang Mai that had stronger knowledge of the system, credible tax lawyer, accountant etc.

 

I have also read about 180 days thing.  Say I made 50 000 on rental properties in my country and I brought 20 000 of that money into Thailand such as transferring it to a Thai bank or withdrawing it from a foreign credit card, from my understanding that if you do this the same tax year you earned it you need to be taxed on that 20 000 dollars.  However, the other 30 000 if you carry that over to the next year that is not taxed.  And yes that brings up the question on can't you just live on the money you have made in past years, but how do you actually prove that?  Not like I can call my bank and say hey can only send me the money I made in 2015 this year.. should i open another account, or just having proof of a half decent amount in your bank is enough.

 

I have also seen in my research that for foreigners that only money made inside of Thailand is taxed, and the money outside is not.. I get two sides of every story from researching on the internet that is why I wanted to find someone who can explain how it works so I can make educated decisions on how to approach it in the future.

[Dante99]

5 minutes ago, krey said:

from my understanding that if you do this the same tax year you earned it you need to be taxed on that 20 000 dollars.  However, the other 30 000 if you carry that over to the next year that is not taxed.  And yes that brings up the question on can't you just live on the money you have made in past years, but how do you actually prove that? 

I think you have the rule on investment income correct.  How do you prove it? The US tax code requires tracability of funds in some cases and the CPA advice for it is to set up separate accounts.  So you could have a separate account for current year income (which would be taxed if you brought it in), then January 1 each year empty that account into your other account(s) since there is no longer any need for tracability on it and it is no longer current year income.  And yes, you can just live on money made in past years outside of Thailand and avoid Thai taxation.  Thais too do this.

 

I am unable to find the name of the Bkk based expert who provided me the explanation some years ago but you will probably not get the best advice from an accountant who deals primarily with domestic accounting, you will be best served by someone who has a lot of experience with tax accounting involving foreign source funds.

[cheeryble]

Of course you can live on previously earned money, and pensions are regarded as repayment of contributions. (not that I have one!)

I pay income tax here I'd give you the company but you've already been offered one and I can't remember the details of the company as my wife now does it the lady at the tax office helps her with any enquiries and actually helps us pay as little as possible.

You can learn a lot from something like this online should be an up to date one maybe you can save paying the accountant it's quite simple.

 

Edited October 27, 2017 by cheeryble

[JimGant]

Quote

Say I made 50 000 on rental properties in my country and I brought 20 000 of that money into Thailand such as transferring it to a Thai bank or withdrawing it from a foreign credit card, from my understanding that if you do this the same tax year you earned it you need to be taxed on that 20 000 dollars

What country are your from? The tax treaty with Thailand will dictate which country gets 'first dibs' on taxation (with, then, a tax credit to the second country, to avoid double taxation). If you're from the US, Article 6 of the US-Thai treaty covers rental income, with the US having 'first dibs' on rental income from US sources, if you're subject to US taxes, but also a resident of Thailand. As such, you're not subject to file this rental income with Thai tax authorities -- not that they'd ever know you had such income.

Quote

And yes that brings up the question on can't you just live on the money you have made in past years, but how do you actually prove that?

You'll never ever have to prove it. Thai tax authorities don't have the resources to hunt down every source of funds wired into Thailand to determine whether or not these funds were 'last year's earnings.' Instead, they rightfully assume most funds coming in are from accounts that existed last year, and thus the funds are fungible. Only if you had current income direct deposited to Thailand (and such income was 'first dibs' by Thailand) would you possibly (but most likely not) be subject to Thai tax authority scrutiny. In such cases, obviously avoid direct deposit to Thailand.

 

Ethically, if the tax treaty allows you to avoid taxation in your home country, giving Thailand 'first dibs", you still can avoid taxation in Thailand -- with the "don't bring it in in the same year earned." Completely legal, due to the hamfisted Thai law. But that's their problem, not yours.

[oldwelshman]

It is tax on money earned this year but how the hell would they know which money you drew out if you had the required balance in your account for visa? Will they really check the cash you bring in or draw from ATM? How would they know if the cash coming out was from last year r this? :-)

 

[simoh1490]

The rules are that technically, money earned in the current year and imported into Thailand in the year it was earned, is liable to Thai tax...technically! The fact is the Thai tax authorities are not interested in this and there is no system set up to monitor possible collection. State pensions from several countries, however, may not be taxed by Thai tax authorities.  Where earned income in the home country is intermingled with savings from previous years, a system of first in first out, last in first out etc can be used as long as it is recorded somewhere. A pensioner however who receives private pension income in Thailand, deposited directly into a Thai bank on the day it was paid, is I suspect vulnerable to future enforcement of existing tax laws.

 

I have several investments via my bank in Thailand and some of them have tax implications. LTF charges, for example, can be deducted from taxed if you file an annual tax return. But if you don't take the deduction the tax people don't want to know.

 

 

 

 

[oldwelshman]

6 minutes ago, simoh1490 said:

The rules are that technically, money earned in the current year and imported into Thailand in the year it was earned, is liable to Thai tax...technically! The fact is the Thai tax authorities are not interested in this and there is no system set up to monitor possible collection. State pensions from several countries, however, may not be taxed by Thai tax authorities.  Where earned income in the home country is intermingled with savings from previous years, a system of first in first out, last in first out etc can be used as long as it is recorded somewhere. A pensioner however who receives private pension income in Thailand, deposited directly into a Thai bank on the day it was paid, is I suspect vulnerable to future enforcement of existing tax laws.

 

I have several investments via my bank in Thailand and some of them have tax implications. LTF charges, for example, can be deducted from taxed if you file an annual tax return. But if you don't take the deduction the tax people don't want to know.

 

 

 

 

Are state pensions not typically taxed in home country? I plan on taking my 25% tax free and placing in Thai bank and fund house build and visa compliance. Then I work in ASIA but am non dom so no tax in UK, and no tax in other countries as not there long enough to pay so I will get most back from my company. As long as I don't transfer too much each year to Thai bank, or spend it lol will be ok. When I am retired, I will not transfer more than my tax free allowance each year until I reach 67. Don't think anything I can do to avoid tax on state pension?

[oldwelshman]

11 minutes ago, simoh1490 said:

The rules are that technically, money earned in the current year and imported into Thailand in the year it was earned, is liable to Thai tax...technically! The fact is the Thai tax authorities are not interested in this and there is no system set up to monitor possible collection. State pensions from several countries, however, may not be taxed by Thai tax authorities.  Where earned income in the home country is intermingled with savings from previous years, a system of first in first out, last in first out etc can be used as long as it is recorded somewhere. A pensioner however who receives private pension income in Thailand, deposited directly into a Thai bank on the day it was paid, is I suspect vulnerable to future enforcement of existing tax laws.

 

I have several investments via my bank in Thailand and some of them have tax implications. LTF charges, for example, can be deducted from taxed if you file an annual tax return. But if you don't take the deduction the tax people don't want to know.

 

 

 

 

Any reputable investment advisors on here ? :-)

[simoh1490]

Just now, oldwelshman said:

Are state pensions not typically taxed in home country? I plan on taking my 25% tax free and placing in Thai bank and fund house build and visa compliance. Then I work in ASIA but am non dom so no tax in UK, and no tax in other countries as not there long enough to pay so I will get most back from my company. As long as I don't transfer too much each year to Thai bank, or spend it lol will be ok. When I am retired, I will not transfer more than my tax free allowance each year until I reach 67. Don't think anything I can do to avoid tax on state pension?

It all depends on the personal allowance and as a non-resident expat in the future, it is likely that you (and I) won't have one since the chances of it being withdrawn at some point are high. But in the meantime: if your income that arises in the UK is within the personal allowance amount, you will not be taxed on it. Although you have said your a non-dom hence you don't have a personal allowance, did you really mean to say that?

[simoh1490]

3 minutes ago, oldwelshman said:

Any reputable investment advisors on here ? :-)

Once you leave the UK you lose access to the IFA  network, with a residence address of Thailand not one IFA will touch your business, trust me on this point. So best get your UK IFA relationship established before you leave and don't tell them you are leaving the UK. I cannot, under any circumstances, recommend you use an IFA outside of the protection of the UK, especially not one you meet in Thailand.

[oldwelshman]

3 minutes ago, simoh1490 said:

It all depends on the personal allowance and as a non-resident expat in the future, it is likely that you (and I) won't have one since the chances of it being withdrawn at some point are high. But in the meantime: if your income that arises in the UK is within the personal allowance amount, you will not be taxed on it. Although you have said your a non-dom hence you don't have a personal allowance, did you really mean to say that?

Yes, I work in ASIA so the only income from UK is flat rental so my personal allowance is based on non resident home owner so that is tax free as it does not go over allowance. I think we will be ok for state pension. I already have enough paid years in it. Its not huge, pocket money lol

[simoh1490]

1 minute ago, oldwelshman said:

Yes, I work in ASIA so the only income from UK is flat rental so my personal allowance is based on non resident home owner so that is tax free as it does not go over allowance. I think we will be ok for state pension. I already have enough paid years in it. Its not huge, pocket money lol

OK understand, just for info., domicile and residency are two very different things, you can easily become non-resident but non-domiciled is way way harder, often impossible for many people.

[oldwelshman]

2 minutes ago, simoh1490 said:

Once you leave the UK you lose access to the IFA  network, with a residence address of Thailand not one IFA will touch your business, trust me on this point. So best get your UK IFA relationship established before you leave and don't tell them you are leaving the UK. I cannot, under any circumstances, recommend you use an IFA outside of the protection of the UK, especially not one you meet in Thailand.

I used Hargreaves for my pensioand advice and plan to meet with them to discuss investments, they also do retirement plans, I will do this over next 2 years before I retire. My residential address is Thailand, not UK, and not where I work. I will motly be travelling and staying several weeks each country and couple of weeks in between, in Thailand. For a break, although I am sure I will read emails in Thailand  ;-)

[simoh1490]

Just now, oldwelshman said:

I used Hargreaves for my pensioand advice and plan to meet with them to discuss investments, they also do retirement plans, I will do this over next 2 years before I retire. My residential address is Thailand, not UK, and not where I work. I will motly be travelling and staying several weeks each country and couple of weeks in between, in Thailand. For a break, although I am sure I will read emails in Thailand  ;-)

I've been formally resident in Thailand for over fifteen years and the UK tax people, my UK banks etc all know this. My pension (I'm 68) is on the Transact platform in London and I can't change it, I wanted to move to H & L but they wouldn't accept my business because I live in Thailand. In fact, I'm at risk of being kicked off the Transact platform because I live in Thailand and because I don't have a UK based IFA, I'm currently being charged more than double  by Transact because I'm an execution only client and I don't have an IFA. I don't have an IFA because there isn't one in the UK who will take my business, because I live in Thailand. You get the idea....don't tell H&L where you're going to live or they will close your account, money laundering and international tax law are to blame.

[oldwelshman]

6 hours ago, simoh1490 said:

I've been formally resident in Thailand for over fifteen years and the UK tax people, my UK banks etc all know this. My pension (I'm 68) is on the Transact platform in London and I can't change it, I wanted to move to H & L but they wouldn't accept my business because I live in Thailand. In fact, I'm at risk of being kicked off the Transact platform because I live in Thailand and because I don't have a UK based IFA, I'm currently being charged more than double  by Transact because I'm an execution only client and I don't have an IFA. I don't have an IFA because there isn't one in the UK who will take my business, because I live in Thailand. You get the idea....don't tell H&L where you're going to live or they will close your account, money laundering and international tax law are to blame.

They already know and are  happy with this. I am using them for the final salary advice which is legal requirement before moving it. There are also advisors in UK who specialise in international investments for expats. I haven't looked at these yet though.

[NancyL]

11 hours ago, simoh1490 said:

Once you leave the UK you lose access to the IFA  network, with a residence address of Thailand not one IFA will touch your business, trust me on this point. So best get your UK IFA relationship established before you leave and don't tell them you are leaving the UK. I cannot, under any circumstances, recommend you use an IFA outside of the protection of the UK, especially not one you meet in Thailand.

This is good advice for Americans, too.  But, it's not a good idea to misrepresent yourself to your IFA.  We worked around this with our U.S. IFA of longstanding by setting up a Power-of-Attorney with our U.S. attorney (also someone we'd worked with for a long time), so technically, all communication flows thru the POA holder.  In reality, the arrangement works with emails and phone calls directly between Hubby and me and the IFA with the attorney kept in the communication loop.  The only "hiccup" was when we first set up this arrangement and all postal mailings were going to the attorney who just trashed them, rather than forwarding them along to us.  He thought he was being "copied" and didn't realize he was receiving the ONLY copy of the written communication.

 

Interestingly, our attorney doesn't charge for this arrangement, except for the odd time every year or two when he has to go to the IFA's office to sign something.  And even then, I have to email his secretary to remind her to bill us.  He says his sister lives in the same building as the IFA's office, so he doesn't mind, gives him an excuse to have lunch with his sister!

[NancyL]

I suspect the OP is from the U.K. and not the U.S., but U.S. citizens reading this thread might find it interesting to look at the Thai-U.S. tax treaty, found on the IRS website:  https://www.irs.gov/businesses/international-businesses/thailand-tax-treaty-documents

 

Both the tax treaty itself and the "technical explanation", which is actually a paragraph-by-paragraph explanation in plain English.  

 

Of special note is Article 4 which defines your country of "tax residency" and of particular interest to Hubby and me, Article 20 "Pensions and Social Security Payments"   We attended a seminar conducted in Chiang Mai by Thomas Carden, an IRS-enrolled agent who is a partner in American International Tax Advisers in Bangkok in August and learned that, according Article 20, Para. 1 of this treaty, private pension income is taxed in the country of residency, i.e. Thailand in our case.  As NeilRob pointed out in Post No. 4 of this thread, pension income isn't taxed in Thailand and we're clearly residents of Thailand for tax purposes.    I'd been using TurboTax to file our income tax returns and it doesn't have a provision for considering U.S. tax treaties, so we'd been paying federal income taxes on our private pension income (withdrawals from IRA/401K and pensions from previous employer) ever since moving here in 2008.  Fortunately, you can file amended returns for three years previous and we've done this.

 

The U.S. has tax treaties with nearly 80 countries, but Malaysia isn't one of them.  This tax treaty and the implications on taxation of pension income is the reason we've decided not to relocate to Malaysia, but rather to remain here in Chiang Mai. 

[Bill97]

 
The U.S. has tax treaties with nearly 80 countries, but Malaysia isn't one of them.  This tax treaty and the implications on taxation of pension income is the reason we've decided not to relocate to Malaysia, but rather to remain here in Chiang Mai. 

Oh my, after all those compelling arguments for Malaysia and your strongly negative views on the police here. Shocking and just for money!!!


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[JimGant]

Quote

I'd been using TurboTax to file our income tax returns and it doesn't have a provision for considering U.S. tax treaties, so we'd been paying federal income taxes on our private pension income (withdrawals from IRA/401K and pensions from previous employer) ever since moving here in 2008.  Fortunately, you can file amended returns for three years previous and we've done this.

Are you saying, since Thailand had "exclusive tax rights" on your private pension income, per tax treaty, then you had no tax obligation to the US? Wrong. Re-read the treaty technical article you referenced, and they carefully spell out the "savings clause," which effectively says the US can tax your private pension 'as if there were no tax treaty.'

Quote

Thus, a U.S. citizen who is resident in the other Contracting State, and receives either a pension, annuity or alimony payment from the United States, may be subject to U.S. tax on the payment, notwithstanding the rules in those three paragraphs that give the State of residence of the recipient the exclusive taxing right.

 

 

So, yes, you had to declare this income in your US tax returns -- so it will be interesting to see the IRS answer to your amended filings....

 

What the treaty implies, however, is that Thailand has "first dibs" on taxing your private pension, and then when you file your US return, you take a tax credit for these Thai taxes. Of course, if you haven't filed with the Thai tax authority, then no credit. And most of us haven't filed, mainly because rumor on the street is they're just not interested in foreign pensions -- and that pensions brought into Thailand after the year earned are exempt from taxation. Unfortunately, nobody can seem to find this in the Thai tax code:

Actually, the tax treaty isn't even needed to avoid double taxation, as you can take a credit for Thai taxes on your US return, even without a treaty. Which you could do for Malaysian taxes -- except they don't tax foreigners' income, if brought in from abroad, and if you're on a MM2H visa:

Quote

Malaysia is a tax friendly country, especially where expats are concerned. With your MM2H visa—the most popular visa in Malaysia for expats—you can open an account anywhere in Malaysia and bring in as much money as you like, tax-free.

 

[NancyL]

Yes, JimGant, the U.S. private pension income and IRA distributions are declared on the amended tax returns and then listed as being non-taxable.  Also included with the amended returns is IRS form 8833 "Treaty-Based Return Position Disclosures Under Section 6114 or 7701(b)", the key form that the canned tax software like Turbo Tax apparently doesn't have.  On the form, the tax accountant wrote an explanation of the provisions of the tax treaty that apply in our case and the reason why our private pension and IRA distributions are not taxable.  It's "boilerplate" language that he uses on similar filings, based on what we've seen with other amended returns he filed for friends.

 

Can you please provide the Article and Paragraph number of the "savings" clause you are quoting"  I can't seem to locate it.  Only language about how parties can't use the treaty to "shop around" for a tax locale where they clearly don't have a domicile, and that language looks to be aimed at businesses, not individuals.

 

And yes, we've been taking credit for Thai taxes on our U.S. tax return, to the extend we've been paying taxes in Thailand already.  

 

Your language about Malaysia being "friendly" for foreigners doing their banking is a hoot!  Hubby went to Kota Kinabalu to apply for our MM2H visa a week after we went to the tax seminar conducted by the U.S. tax accountant.  We'd spend a long time pulling together all the documents needed to apply for the MM2H and since we don't know for sure how this amended filing with the IRS is going to work out, he went ahead with the MM2H application process.  He found the immigration official to be a dream to work with, especially compared with what we find here in Chiang Mai.

 

However, the next step after acceptance in the MM2H program is to open a bank account and make a deposit for funds that must be held permanently, only to be withdrawn with permission from immigration.  What he found is that no bank wanted to open an account for an American, even for their MM2H account.  Even big banks like HSBC and Maybank.  The story changed, however, once he explained we were currently living in Thailand and had Thai bank accounts.  Oh, well then, no problem!  Simply keep a Thai bank account open and route the funds through Thailand.  As far as the bank is concerned the money would be coming from Thailand, not the U.S.  

 

 

 

 

[neilrob]

Very interesting point from Nancy in post #26. However, having read the documents cited by Nancy, I most regretfully agree with Jim Gant in post #28. The "savings clause" is Article 1, paragraph 2 of the treaty. Paraphrasing this, it states that, notwithstanding anything in the treaty, the US can tax its citizens on their income no matter where they live. And even if you renounce citizenship, you are still included for the next 10 years. Sort of makes the treaty rather moot!

 

However, the acid test is how the IRS treats the issue. I would be most interested, Nancy, in hearing whether they accept your amended returns.

[JimGant]

Quote

Can you please provide the Article and Paragraph number of the "savings" clause you are quoting"  I can't seem to locate it.

Savings clause is found in Article 1, para 2. My quote re savings clause was from the last paragraph in Article 20 of the technical report you referenced -- where it specifically says that private pensions, et al ARE subject to the savings clause. And the savings clause is found in every US tax treaty, and is the daddy rabbit of why all US citizens have all their worldwide income subject to US taxation (with minor exceptions, which are spelled out in the individual tax treaties). And your private pension and IRA are not exceptions.

 

Quote

On the form, the tax accountant wrote an explanation of the provisions of the tax treaty that apply in our case and the reason why our private pension and IRA distributions are not taxable. 

Good luck with that. Form 8833 will need to spell out the "exception to the savings clause" that applies. And, in your case, there is none. Sounds like you have a very imaginative accountant -- and maybe he sees a gimmick..

 

Quote

And yes, we've been taking credit for Thai taxes on our U.S. tax return, to the extend we've been paying taxes in Thailand already. 

Presumably, you haven't paid Thai taxes on your US private pensions or IRAs(?). What's your long term game plan -- not to pay the US and Thailand any taxes? Presumably, you could do this, if the IRS  clerk handling your amendments is retarded. And using the "earned in previous year" on funds brought into Thailand.  Good luck.