Is Retirement Income subject to Income Tax

[OJAS]

2 hours ago, bandito said:

These double tax exemptions are for people working here and not for retirees.

A double taxation agreement between Thailand and a particular country, in fact, covers all nationals of that particular country who are tax-resident in Thailand (i.e. who spend more than 183 days in Thailand in any given tax year), regardless of whether their income is derived in Thailand or their home country. 

Edited July 19, 2018 by OJAS

[JimGant]

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Two Norwegian friends tell me they have elected to pay tax on their income (I think from pensions) in Thailand as there is a considerable saving.

Yep. The Norwegian-Thai tax agreement has Norwegian expats resident in Thailand subject to Thai taxation -- and it's of the "exclusive" variety, meaning if you pay Thai taxes on your Norwegian income, regardless of amount of taxes, you don't have to pay anything to Norway on this same income. Thus, if you can prove to Norwegian tax authorities that you paid taxes to Thailand on X amount of Norwegian income, X amount is excluded from the 15% Norwegian withholding tax. This could result in quite a tax savings, if the Thai tax is considerably less than the 15% Norwegian tax on the same income. But, if you don't have proof of paying Thai taxes, Norway gets the full 15% of taxes. (Contrast this to the tax credit system, where Norway would give you tax relief only for the amount of taxes paid to Thailand. Obviously, the "exclusive" taxation right is beneficial -- unless your Thai taxes exceed 15%.)

 

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It is necessary to apply for an exemption of the advanced withholding tax deduction every year by submitting the Certificate of Residence and the Income Tax Payment Certificate to the Norwegian tax authorities. If a pensioner fails to do so, Norway would have the right under the Thailand-Norway DTC to tax the pension income paid from Norway. If the Income Tax Payment Certificate shows that only a part of the pension income from Norway is submitted for tax in Thailand, Norway would have the right under the Thailand-Norway DTC to tax that part of the pension income that had not been submitted to Thai taxation.

http://download.rd.go.th/fileadmin/download/nation/Norwegian_answer.pdf

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Thailand does not tax retirement income.

Right in some situations, wrong in some other ones.

 

[bandito]

On ‎7‎/‎19‎/‎2018 at 1:35 PM, OJAS said:

A double taxation agreement between Thailand and a particular country, in fact, covers all nationals of that particular country who are tax-resident in Thailand (i.e. who spend more than 183 days in Thailand in any given tax year), regardless of whether their income is derived in Thailand or their home country. 

Before Prime Minister Anand changed the law one had (before leaving the country after 180 days) to go to Sanam Luang Ministry of Finance to get a tax clearance which I always got. I got paid here and was living here but not working here and no one ever told me to pay tax here.

I always got the tax clearance.

Now I'm retired and the Thai IRS told me that as a retiree and tourist I was exempt for Thai tax.

I'm living here for many years on an retirement extension now.

Have Thai bankbook and transfer money here every months by ATM.

Retirement income is exempt for tax,period.

[Get Real]

On 7/11/2018 at 12:06 PM, topt said:

Can you show us the link to that specific reference in the Thai Revenue regs?  Or is this your conclusion because they do not currently do it....... 

If they did not then there would be no need of any mention in the UK DTA?

Seems to me like you do not need a link. As the poster state, Thailand do not tax retirement income. Then you say that they do not currently do???

 

That must then mean they do not tax retirement income at present time, which means they do not tax retirement income, right?
 

Who can ever have the knowledge of what´s going to happen next year or in the future in this country. I guess we have to set for what we know today.

[JAS21]

On 7/10/2018 at 3:05 PM, Derek B said:

My UK banks are always asking where I am Tax resident. I now think it best to declare that to be Thailand. What is the best way to get a Thai Tax ID number?

Go to you local tax office ...take with you your withholding tax certificate plus passport ete etc

[Derek B]

On 7/9/2018 at 4:56 PM, Jingthing said:

NO.

It is an important question though.

I've been looking at other nations as retirement destinations and many of them DO tax on worldwide income and some of them even tax on global assets!

Another big advantage for Thailand. 

Please elaborate - which nations do what? Thanks.

[JimGant]

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I've been looking at other nations as retirement destinations and many of them DO tax on worldwide income and some of them even tax on global assets! 

Another big advantage for Thailand. 

As a US citizen, with its "saving" clause included on all tax treaties, you'll end up paying a total tax bill equivalent to your US tax bill -- or maybe more, if the country of residence has 'first dibs' on taxation of certain income under the tax treaty -- and their tax rate is higher than that of the US. This applies to "retirees" (or jobless beach bums), as you *could* pay less overall tax if you're working in your country of residence -- and that country has no or little income tax. In that situation, the US Foreign Earned Income Exclusion could make your overall tax bill less. 

 

That Thailand apparently doesn't concern itself with income brought into country in a year later than the year earned seemingly allows retirees to avoid taxation in Thailand. But recent rewording in their tax code language has left out the "in year not earned" exclusion, although the big accounting firms in Thailand still imply that the exclusion remains in effect  So, for now at least, it appears you're safe from Thai taxation if you're not too obvious about source and timing of income brought in.

 

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LATEST TAX CODE WORDING:

A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part.

 

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FROM KPMG:

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

Interest, dividend, and rental income [and, from previous paragraphs, also salaries and capital gains] 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.

 

And, recently, some US folks have fallen for the sales pitch from a tax preparation firm in Bangkok that stated that IRA and 401k proceeds brought into Thailand somehow escape the US "saving" clause and are thus exempt from taxation, including taxation in Thailand, if brought in in a later year. However, this firm is wrong, as these proceeds do NOT qualify as one of the few exemptions from the US saving clause. But, the chance of the average taxpayer getting audited these days is virtually nil, so some are taking the chance.

 

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Another big advantage for Thailand.

Not for the US citizen. There's no legal free lunch for us: Either pay Thailand or pay the US -- and paying Thailand, unlike for Norwegians, doesn't exempt you from filing and paying US taxes (albeit with a credit for Thai taxes paid). And, of course, don't file and pay Thai taxes -- pay full freight without tax credits to Uncle Sam. Living in Thailand, as elsewhere in the world, doesn't reduce the US citizen's tax burden.

Edited July 23, 2018 by JimGant
clarification

[OJAS]

On 7/21/2018 at 6:46 PM, JAS21 said:

your withholding tax certificate

How do we obtain one of these?

[Derek B]

On 7/11/2018 at 9:35 AM, OJAS said:

In the case of private sector occupational pensions and the State Pension, it is, in theory, possible to be taxed in Thailand. However, the jolly old taxman in HMRC would, I gather, still be entitled to go after you tax-wise for the difference between the UK (20%) and Thailand (7%??) standard rates.

 

 

I believe this is the case.

[Derek B]

On 7/10/2018 at 9:35 AM, NanLaew said:

I know that getting a Thai tax ID isn't too difficult and also know it doesn't mean that you are obligated to pay or even file a Thai tax return.

I heard otherwise and will now have to check again...I hope your right.

[Derek B]

On 7/10/2018 at 9:12 AM, arithai12 said:

-if your pension is not taxed at the origin, but rather you have declared that you are subject to Thai taxation, then:

a) if you transfer the money in the same year in which you earn it, then you are subject to pay tax in Thailand

b) otherwise, tax free in Thailand

Some countries of origin will require not just your word for it, but some proof such as e.g. a Thai Tax number, whether you use it or not.

Now, in case a) above, it is your choice and initiative to go and declare your pension income and pay tax on it. 

For b) to work I would have to have a deposit account somewhere to first receive the pension funds into and then maintain a balance equivalent to one full years pension payments year in year out.

With regards to para a) generally speaking pensions are regarded as taxable income however the rate of tax applied maybe zero % for retirees (as it is in Portugal for the first 10 years) whereas earnings from employment, capital gains & rentals are a different scenario.

So my question now is if you bring your monthly or quarterly non-UK based pension income into Thailand as soon as it becomes payable will you be subject to Thai tax at 7% or perhaps 0% if you obtain a Thai tax ID number?

[JAS21]

5 hours ago, OJAS said:

How do we obtain one of these?

You will only get one if you have a savings account that pays interest that is taxed. Tax on savings is called withholding tax and is re-claimable by poor persons such as myself ..

Edited July 23, 2018 by JAS21

[OJAS]

12 hours ago, JAS21 said:

You will only get one if you have a savings account that pays interest that is taxed. Tax on savings is called withholding tax and is re-claimable by poor persons such as myself ..

In that case I would presumably, in theory, be eligible for such a certificate in respect of the interest pittances which are credited to my Bangkok Bank savings account every 6 months (the most recent net credit amounting to around 400 THB).

 

So, reverting to my original question, who would issue me with the necessary certificate? Bangkok Bank or the Revenue Department?

 

That said, in view of the trifling amounts involved, I would see little point in practice of my obtaining this certificate. But would the Revenue Department still be prepared to issue me with a tax identification number without one in these circumstances?

[ubonjoe]

8 minutes ago, OJAS said:

So, reverting to my original question, who would issue me with the necessary certificate?

A certificate showing you have had taxes deducted from the interest earned on a saving account is not required. Unless you have a enough interest earned no taxes are deducted.

Required documents to get a TIN is here. http://www.rd.go.th/publish/21987.0.html

If you happen to have a yellow house book the ID number will be the same as the one you already have.

[4MyEgo]

On 7/10/2018 at 6:05 PM, Derek B said:

My UK banks are always asking where I am Tax resident. I now think it best to declare that to be Thailand. What is the best way to get a Thai Tax ID number?

I would imagine the reason for that is so that they know what rate of tax to apply to any interest you earn, so that they can send it off to the taxation department every year.

 

In Australia where I have an account, I declared that I was a non resident for tax purposes, they withhold 10% of all interest held and send that off to the taxation department annually.

 

If I was a resident of Australia, I would have to provide them with my tax file number to record and I would let the taxation department know what interest I earned and they would add that to my annual income if any and tax me accordingly, now if I didn't provide the bank with my tax file number the bank would withhold 48.5c in every $ and send it to the tax man.

[Naam]

On 7/19/2018 at 10:54 AM, bandito said:

On 7/11/2018 at 5:06 PM, topt said:

Can you show us the link to that specific reference in the Thai Revenue regs?  Or is this your conclusion because they do not currently do it....... 

If they did not then there would be no need of any mention in the UK DTA?

 

It's in the Thai tax law.

You have to Google to find it.

incorrect information. there's no mentioning in any Thai tax laws. correct is that based on current practice no tax is levied.

[userabcd]

21 hours ago, Derek B said:

Please elaborate - which nations do what? Thanks.

I think South Africa is one such country, citizens/residents are taxed on their worldwide assets and income.

[uncleeagle]

On 7/9/2018 at 5:56 PM, Jingthing said:

NO.

It is an important question though.

I've been looking at other nations as retirement destinations and many of them DO tax on worldwide income and some of them even tax on global assets!

Another big advantage for Thailand. 

 

jingthing....i can only think of france...they have a wealth tax...and the US which taxes worldwide income for citizens or residents....which other countries have you come across that are taxing assets?

Edited July 25, 2018 by uncleeagle

[Jingthing]

 

jingthing....i can only think of france...they have a wealth tax...and the US which taxes worldwide income for citizens or residents....which other countries have you come across that are taxing assets?

Definitely some South American nations tax global wealth some income but sorry I'm too lazy now to search the specific ones. Generally the income part can be dealt with by claiming US taxes paid on it but to comply you would need to register with their system and file there. A pain. It was of interest to me as I've considered moving to some of those nations.

 

Sent from my Lenovo A7020a48 using Thailand Forum - Thaivisa mobile app

 

 

 

[bandito]

On ‎7‎/‎24‎/‎2018 at 9:00 AM, Naam said:

incorrect information. there's no mentioning in any Thai tax laws. correct is that based on current practice no tax is levied.

Or go to the Thai IRS where they will tell you all about it.

[Naam]

8 hours ago, bandito said:

On 7/24/2018 at 9:00 AM, Naam said:

incorrect information. there's no mentioning in any Thai tax laws. correct is that based on current practice no tax is levied.

Or go to the Thai IRS where they will tell you all about it.

before i settled in Thailand i have visited Thai Tax Department to make sure that the practice of not levying income tax (information provided by KMPG and Deloitte) is current although it's not in line with Thai tax laws.

 

read and weep!

 

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Taxpayers are classified into “resident” and “non-resident”. “Resident” means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand.

http://www.rd.go.th/publish/6045.0.html

 

Edited July 31, 2018 by Naam

[bandito]

On ‎7‎/‎31‎/‎2018 at 5:25 PM, Naam said:

before i settled in Thailand i have visited Thai Tax Department to make sure that the practice of not levying income tax (information provided by KMPG and Deloitte) is current although it's not in line with Thai tax laws.

 

read and weep!

 

 

Well, I'm living here for over 40 yrs from the time that one had to go to the Ministry of Finance at Sanam Luang BKK to get a Tax Exempt form which one had to show the Immigration at the airport before leaving the country.

No tax form no leaving, you were flight missing they did'nt care go get a tax exempt form or pay a bribe.

I was living here and working outside of Thailand.

I got paid my salary in a Thai bank account exchanged in Thai Baht.

Not ever did I have to pay tax to or in Thailand and I always got my Tax Exempt form.

I am retired now for many years and when asking the Thai IRS I got told I was not tax eligible as I was and always had been a, wait for it, TOURIST.

I maintain that in Thailand retirement income is not taxable.

Anyway thailand has no income tax on income.

[Naam]

3 hours ago, bandito said:

I maintain that in Thailand retirement income is not taxable.

now you have changed the goal posts and switched to retirement income which is tax free based on the double tax agreements Thailand ratified with many countries.

 

on foreign income in general we should perhaps agree that it is taxable but not taxed and we just love it.

 

peace brother!

[JimGant]

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now you have changed the goal posts and switched to retirement income which is tax free based on the double tax agreements Thailand ratified with many countries.

Unless you're Norwegian:

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1. Pensions (including Government pensions and payments under a social security system) and annuities paid to a resident of a Contracting State shall be taxable only in that State.” The article gives the state of residence the sole taxing right to the pension income. Therefore a Norwegian who received pension income from Norway and is a resident of Thailand, either under the Article 4 paragraph 1 or paragraph 2 of the Thailand-Norway DTC, shall be taxable only in Thailand.

So, even Norwegian gov't pensions - an unusual situation - can be taxed by Thailand. And as has been reported, some Norwegians are more than happy to file a Thai tax return on their Norwegian pensions 'cause Thai taxes could be little or none -- but by showing the Norwegian authorities a filed Thai tax return, their pensions are thereby excluded from the 15% withholding at source Norwegian tax.

[Felt 35]

http://sherrings.com/personal-tax-assessable-income-thailand.html

[bandito]

On ‎8‎/‎2‎/‎2018 at 12:30 PM, Naam said:

now you have changed the goal posts and switched to retirement income which is tax free based on the double tax agreements Thailand ratified with many countries.

 

on foreign income in general we should perhaps agree that it is taxable but not taxed and we just love it.

 

peace brother!

 

Allright, Allright, Allright.