Thai Tax Residency - Lodging a Tax Return

[roderick17]

Greetings 

 

 I am in the process of applying for a retirement visa for Thailand, where I plan to live for many years. Last year, I bought an apartment in Pattaya ( which will become my primary residence ) and  mid-way through this year changed my residential address  on a Bank account I operate in Singapore to show my new address in Pattaya. As I mentioned , I have not yet collected my retirement visa. My bank in Singapore has now  asked me to produce proof that my income is subject to  tax in the place of my tax residency - ie  Thailand .

 

I do not have a problem in declaring my overseas income to Thai authorities, because my understanding is my overseas income is not subject to  local income tax anyway

 

I thought one solution may be to ask a local accounting firm to prepare  a set of tax returns for me and submit them to both the Thai  tax authorities and to my Singaporean bank - to confirm I am complying with my tax obligations.

 

I'd be interested to hear any thoughts on this option.

 

Also. does anyone know of a local accounting firm - preferably  in Pattaya - that would have the nouse in preparing  tax returns for a  falang !!

[Naam]

1 hour ago, roderick17 said:

I thought one solution may be to ask a local accounting firm to prepare  a set of tax returns for me and submit them to both the Thai  tax authorities and to my Singaporean bank - to confirm I am complying with my tax obligations.

i pity you for your ignorance and you will thank me for the advice NOT filing any tax return. get some information about your tax liabilities before you act. you can get a TIN (Tax Identification Number) without filing any return. use the Thaivisa search function on taxes and TINs!

[roderick17]

5 minutes ago, Naam said:

i pity you for your ignorance and you will thank me for the advice NOT filing any tax return. get some information about your tax liabilities before you act. you can get a TIN (Tax Identification Number) without filing any return. use the Thaivisa search function on taxes and TINs!

HI Naam

 

I agree filing a tax return is fraught with danger -  nevertheless my understanding is that overseas sourced income earned by  a Thai resident was not subject to local tax . Is this correct ??

 

I was also told that income tax was only applied when moneys  are transferred  from  an overseas  bank to a bank account  in the Kingdom. Can you confirm this ??

[roderick17]

HI Naaam 

 

Sorry , one more question.  What is the point of getting a TIN, unless you  are registering with the tax authorities and lodging tax returns? 

 

 

 

 

 

 

[Naam]

10 hours ago, roderick17 said:

HI Naaam 

 

Sorry , one more question.  What is the point of getting a TIN, unless you  are registering with the tax authorities and lodging tax returns? 

 

the point is that many banks (especially Singaporean) have started demanding TINs from their clients as proof for an established tax residence.

[Naam]

10 hours ago, roderick17 said:

I was also told that income tax was only applied when moneys  are transferred  from  an overseas  bank to a bank account  in the Kingdom. Can you confirm this ??

this seems to be twisted barstool wisdom Roderick. Thai tax law states that all income brought into Thailand is taxable. however, the practice is different although not explicitly mentioned, id est all income brought into Thailand earned in the same year is taxable.

[Tanoshi]

Tell your Singapore bank you are retired.

Your income is generated overseas and is subject to tax in that Country only.

2 hours ago, Naam said:

Thai tax law states that all income brought into Thailand is taxable. however, the practice is different although not explicitly mentioned, id est all income brought into Thailand earned in the same year is taxable.

This only applies to income from Countries who do not have reciprocal tax agreements with Thailand..

[Tanoshi]

13 hours ago, roderick17 said:

HI Naaam 

 

Sorry , one more question.  What is the point of getting a TIN, unless you  are registering with the tax authorities and lodging tax returns? 

 

None, but because of the recent HSBC money laundering scandal, anyone with an offshore account or a Thai address is being asked for a Thai TIN from their overseas bankers.

[Naam]

49 minutes ago, Tanoshi said:

Tell your Singapore bank you are retired.

Your income is generated overseas and is subject to tax in that Country only.

This only applies to income from Countries who do not have reciprocal tax agreements with Thailand..

sorry Tanoshi but both your comments are incorrect.

 

Singapore banks know very well that foreign retirees are (presently) not liable to pay any income tax. but the fact is that most of them have started to ask for TINs.

 

pertaining to taxes it depends on the individual double tax agreements between Thailand and another countries. even if a DTA exists there might be a tax liability in both countries. 

[tlock]

In what country is the OP a citizen?

[Naam]

24 minutes ago, tlock said:

In what country is the OP a citizen?

doesn't matter as long as he is not a citizen of the U.S. of A. or Eritrea.

[Tanoshi]

7 hours ago, Naam said:

sorry Tanoshi but both your comments are incorrect.

 

Singapore banks know very well that foreign retirees are (presently) not liable to pay any income tax. but the fact is that most of them have started to ask for TINs.

 

pertaining to taxes it depends on the individual double tax agreements between Thailand and another countries. even if a DTA exists there might be a tax liability in both countries. 

Singapore banks don't know if your working and paying taxes in Thailand, hence the request for a TIN.

Read my post 8.

 

Research the recent HSCB money laundering scandal then you'll understand why the CRS are requesting Thai foreign residents with offshore accounts, or with a Thai address to complete these forms.

The Common Reporting Standard (CRS) is an information standard for the automatic exchange of tax and financial information on a global level, which the Organisation for Economic Co-operation and Development (OECD) developed in 2014. Its purpose is to combat tax evasion.

 

Thailand isn't treaty to the CRS at present.

Thai tax offices usually won't issue a TIN unless you have reason to pay or reclaim tax.

A lot of the banks are threatening 'sanctions' on accounts if the forms aren't answered to their satisfaction.

[Naam]

1 hour ago, Tanoshi said:

Read my post 8

i am a member of a group of investors which banks in Singapore since 16 years with three different multinational banks. that's why i prefer not to read your posts from now on.

 

 

[roderick17]

On 03/12/2017 at 9:45 AM, Naam said:

this seems to be twisted barstool wisdom Roderick. Thai tax law states that all income brought into Thailand is taxable. however, the practice is different although not explicitly mentioned, id est all income brought into Thailand earned in the same year is taxable.

Hi Naam 

 

Thank you so much for your comments , they are very helpful. I'm slowly coming to grips with Thai tax law !! 

  

If  I understand you correctly, then income earned overseas in a particular year is only taxable if it is bought into Thailand in the the same year as it was earned. This seems straight forward enough, however there is a slight complication. If I have an overseas  bank account with an exiting balance sitting in it of say 100,000 USD ( which has been there for many years)  and earn 50,000 USD in the current year, I will end up with a bank balance of 150,000 USD . If I then transfer 25,000 USD  to Thailand before December 31st,  can I then say that this transfer has come from my exiting balance ( my 100,000 USD capital ) rather than from the income earned in the current year ?

 

It seems to me that trying to differentiate whether a particular transfer was  made from my  capital or earnings could get very complicated. Has the tax office issued a ruling on this ?

 

 

[BritTim]

1 hour ago, roderick17 said:

It seems to me that trying to differentiate whether a particular transfer was  made from my  capital or earnings could get very complicated. Has the tax office issued a ruling on this ?

As you point out, cash is fungible, which means you cannot separate recently earned money from previous deposits within the same account.

 

As a practical matter, the Thai tax authorities do seem to understand how difficult the enforcement of the "earned in the same year" provision is, and rarely seem to try. To survive a possible future audit, I would suggest keeping an account for current year earnings separate from your savings. You can then demonstrate that your remittances to Thailand all came from an account with no recent deposits.

 

 

[Naam]

1 hour ago, roderick17 said:

It seems to me that trying to differentiate whether a particular transfer was  made from my  capital or earnings could get very complicated. Has the tax office issued a ruling on this ?

relax Roderick! the practice is that nobody is asking you to differentiate and there is no ruling on this subject it's just the done thing as it was done back in the last millennium.

 

to be on the safe side i transfer since years all the cash i need for the current year in the first week of january.

[roderick17]

On 04/12/2017 at 2:15 PM, Naam said:

relax Roderick! the practice is that nobody is asking you to differentiate and there is no ruling on this subject it's just the done thing as it was done back in the last millennium.

 

to be on the safe side i transfer since years all the cash i need for the current year in the first week of january.

Hi Naam 

 

Transferring money at the beginning of each year sounds like a good idea to me !!

 

Having said that there may probably be a tax trap for the unwary. If you place money in an overseas bank account, pay-in foreign sourced income and then make cash withdrawals through an ATM in Thailand, would each ATM payout represent a cash transfer and by inference make the transaction taxable? 

 

I know this is unlikely ever to be investigated,  but it would be good to know the correct  tax liability if it ever did !!

 

Regards

 

James  

 

 

 

[roderick17]

On 04/12/2017 at 2:09 PM, BritTim said:

As you point out, cash is fungible, which means you cannot separate recently earned money from previous deposits within the same account.

 

As a practical matter, the Thai tax authorities do seem to understand how difficult the enforcement of the "earned in the same year" provision is, and rarely seem to try. To survive a possible future audit, I would suggest keeping an account for current year earnings separate from your savings. You can then demonstrate that your remittances to Thailand all came from an account with no recent deposits.

 

 

Hi Brit 

 

I haven't heard the word "fungible" for years. Its very apt though, you cannot separate cash once  its deposited into a single account. You make a good point - thanks again !  

[BritTim]

3 hours ago, roderick17 said:

If you place money in an overseas bank account, pay-in foreign sourced income and then make cash withdrawals through an ATM in Thailand, would each ATM payout represent a cash transfer and by inference make the transaction taxable? 

Each ATM withdrawal definitely is a cash transfer. If it could be shown to originate (directly or indirectly) from an account that received current year income, there would be a case that the sums involved are taxable. If you want to be absolutely safe against any theoretical liability, plan ahead, and have current year income completely isolated from any account used to fund your stay in Thailand.

[Naam]

7 hours ago, roderick17 said:

I know this is unlikely ever to be investigated,  but it would be good to know the correct  tax liability if it ever did !!

only Buddha can answer that question

[roderick17]

2 hours ago, Naam said:

only Buddha can answer that question

Give me his number and I'll give him  call!!

[JimGant]

KPMG, no slouch, still believes "not taxable if not brought in in year received."

 

Quote

Interest, dividend, and rental income derived from sources outside Thailand by resident of Thailand are taxable in Thailand to the extent such income is paid or remitted into Thailand within the same calendar year it is received......Any capital gain or investment income from sources outside Thailand is not subject to taxation unless a resident taxpayer remitted the process into Thailand within the same calendar year it is received

https://home.kpmg.com/xx/en/home/insights/2011/12/thailand-income-tax.html

Quote

All income tax information is summarized by KPMG Phoomchai Tax Ltd., a Thai limited company and a member firm of KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Thai Revenue Code, Revenue Department of Thailand.

That sounds like sufficient reference for me  -- if I ever started to worry about it. As long as I never do direct deposits, can't imagine having to explain matters to the Thai revenuers.

[roderick17]

7 hours ago, JimGant said:

KPMG, no slouch, still believes "not taxable if not brought in in year received."

 

That sounds like sufficient reference for me  -- if I ever started to worry about it. As long as I never do direct deposits, can't imagine having to explain matters to the Thai revenuers.

Hi Jim 

 

 While the categories of overseas income you mention are exempt,what about other forms of personal exertion type income such as salary and wages or consulting  fees earned while working offshore, are they also exempt  under Thai Tax law?? 

[Naam]

53 minutes ago, roderick17 said:

Hi Jim 

 

 While the categories of overseas income you mention are exempt,what about other forms of personal exertion type income such as salary and wages or consulting  fees earned while working offshore, are they also exempt  under Thai Tax law?? 

yes they are my son!

[JimGant]

Quote

While the categories of overseas income you mention are exempt,what about other forms of personal exertion type income such as salary and wages or consulting  fees earned while working offshore, are they also exempt  under Thai Tax law?? 

Yes, if not brought into Thailand in the year received. Again, from the KPMG link:

 

Quote

Is salary earned from working abroad taxed in Thailand? If so, how?

Salaries receive from employment exercises outside of Thailand are exempt from Thai tax, if not paid in or remitted into Thailand within the same calendar year it is received and provided the cost is not recharged into Thailand.