"Working" without work permit - new regulation?

[jackdd]

1 minute ago, AGareth2 said:

the problem these days is the continuous TV

Of course, but that working online isn't considered work in Thailand is also relevant to people who are here on other types of visas.

[LivinLOS]

3 hours ago, Enki said:

Then I wonder why your statement is wrong. If I live 200 days in Germany and work 160 days in Switzerland: then I get my tax deduced from my wages/income in Switzerland. But as I'm a tax resident in Germany, I have to file my income tax in Germany. As Germany ind Switzerland have a double taxation agreement, I get al the income tax back that I already have payed in Switzerland, and pay my income tax in Germany. The physical presence of where you work has in most jurisdictions absolutely nothing to do with the question where you pay your taxes.

Europe operates a 183 day rule for tax residency on earned income.. Thailand operates a day 1 policy on earned income. Pay income taxes to the thais and try to claim it back under the same process and see what happens !! 

This exact reason is why Thailand differentiates between savings or passive income.. And worked / earned income. 
 

[LivinLOS]

On 12/21/2018 at 7:19 AM, Misty said:

It is income and it is taxable in the country where you earned the income, not where the income is paid.  Just because the income is paid in another country does not make it "foreign sourced income."  It is actually Thai sourced income because it was earned by someone living in Thailand.  If you are not yet a tax resident in Thailand, income tax may be withheld from day 1, but this is not a final tax and you can claim it back.  If you are a tax resident (180 days from RD website) then tax is due on the earned income.  The "only taxable if you remit it to Thailand in the year it was earned" applies to passive income such as dividends or interest only, not to earned income.  Thailand gets first crack at collecting tax on the income, not the country where the income was collected. You may be able to use the Thai tax paid as a credit against tax in another country, however.

Perfectly accurate answer. 

This exact topic, cross border taxation is what I do day in and day out.. 

[ExpatDraco]

Europe operates a 183 day rule for tax residency on earned income.. Thailand operates a day 1 policy on earned income. Pay income taxes to the thais and try to claim it back under the same process and see what happens !! 

This exact reason is why Thailand differentiates between savings or passive income.. And worked / earned income. 
 

Hmm? I'm pretty sure Belgium will tax you from day 1 if you perform work inside Belgium... Not after 183 days...

[elviajero]

On 12/21/2018 at 11:20 AM, Misty said:

On 12/21/2018 at 10:35 AM, elviajero said:

None of my comments refer to anyone generating income paid in Thailand. I am referring to online work by so-called "Digital Nomads" that are "non-resident".

• If a foreigner on holiday/living in Thailand -- less than 180 days ("non-resident") -- is working online and generates an income that is paid in another country Thailand has no claim on any potential tax on that income.
• Should that/a foreigner stay in Thailand longer than 180 days ("resident") there is only a potential tax liability on income remitted to Thailand. 

The Revenue Department: http://www.rd.go.th/publish/6045.0.html

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. A non-resident is, however, subject to tax only on income from sources in Thailand. 

The second bullet point is not correct.  You're misunderstanding the term "foreign sources".  Someone working in Thailand is earning Thai sourced income, no matter where that income is paid.  Foreign sourced income would be dividends or interest from investments in another country, not salary paid on work done while in Thailand.

I'm not misunderstanding anything.

 

Thai sourced income is income generated from Thai sources such as employment, sales, services and investments in Thailand. A foreigner holidaying/visiting ("non-resident") Thailand that goes online and, for example, makes a sale to a foreign source thats paid to their foreign business has no tax liability in Thailand. 

[ExpatDraco]

I'm not misunderstanding anything.
 
Thai sourced income is income generated from Thai sources such as employment, sales, services and investments in Thailand. A foreigner holidaying/visiting ("non-resident") Thailand that goes online and, for example, makes a sale to a foreign source thats paid to their foreign business has no tax liability in Thailand. 

But most digital nomads aren't employed and don't get paid by Thai companies... So is their income Thai sourced?

[elviajero]

On 12/21/2018 at 12:19 AM, Misty said:

It is income and it is taxable in the country where you earned the income, not where the income is paid.  Just because the income is paid in another country does not make it "foreign sourced income."  It is actually Thai sourced income because it was earned by someone living in Thailand.  If you are not yet a tax resident in Thailand, income tax may be withheld from day 1, but this is not a final tax and you can claim it back.  If you are a tax resident (180 days from RD website) then tax is due on the earned income.  The "only taxable if you remit it to Thailand in the year it was earned" applies to passive income such as dividends or interest only, not to earned income.  Thailand gets first crack at collecting tax on the income, not the country where the income was collected. You may be able to use the Thai tax paid as a credit against tax in another country, however.

None of that applies to a non-resident tourist -- so-called Digital Nomad -- that is working (illegally) online whilst holidaying/visiting Thailand.

[elviajero]

7 hours ago, jackdd said:

7 hours ago, Enki said:

Rofl, on which law? Hu?

http://www.mfa.go.th/main/en/services/4908/15388-Non-Immigrant-Visa-"B"-(for-Business-and.html 

 

Again:  online work (for foreigners) without work permit is illegal (in Thailand), regardless where the money comes from and where it goes to.

If you are of different oppinon show the relevant law.

There is no specific law regarding this matter so it's a grey area, but in general working online (business, clients, money abroad) is not considered working in Thailand by Thai authorities, even if you are physically in Thailand.

We have never seen even one prosecution of somebody who was "working online", even when caught in an immigration police raid. There are a few news of such raids, and the people who were "caught" working online on a tourist visa were not charged / prosecuted for it.

If it were considered illegal we would probably see raids on coworking spaces in the news now and then, followed by arrests, because people working online on tourist visas are easy to be found there.

So even if there is no law which specifically allows it, the actions of Thai authorities make it quite clear that currently it's considered legal.

 

Other than that when i called the Department of Employment and asked them regarding this matter they also told me that i don't need a work permit and can do it on a tourist visa.

There is a very specific law that makes it crystal clear that anyone cannot carry out the occupation or be employed in Thailand without permission. 

Section 37 : An alien having received a temporary entry permit into the Kingdom must comply with the following :

1. Shall not engage in the occupation or temporary or employment unless authorized by the Director General. or competent official deputized by the Director General . If , in any case , there is a law concerning alien employment provided hereafter , the granting of work privileges must comply with the law concerned.

 

The authorities do not as a rule go after or prosecute online work, which makes people believe what they are doing is legal. It's not, it's tolerated by the authorities for several reasons. The main reason is because many visitors to Thailand "work" whilst they are on holiday, and they would have to start locking up any tourist that sent a work email, or made a phone call to a customer.

 

"Thai authorities make it quite clear that currently it's considered legal."

That is completely entry. The authorities have never publicly stated that a foreigner working online at their foreign business is considered legal!

 

[elviajero]

6 hours ago, jackdd said:

Of course, but that working online isn't considered work in Thailand is also relevant to people who are here on other types of visas.

If it's your occupation, it's considered work.

 

I can sit at home and write code for an application for my own use, but if I create the same app for a customer it would be considered work.

 

The only visa status that has ever been mentioned as having a free pass to work online is tourist. Anyone working online at their occupation on a non-immigrant visa/permit is on very dodgy ground.

[elviajero]

25 minutes ago, ExpatDraco said:

53 minutes ago, elviajero said:

I'm not misunderstanding anything.
 
Thai sourced income is income generated from Thai sources such as employment, sales, services and investments in Thailand. A foreigner holidaying/visiting ("non-resident") Thailand that goes online and, for example, makes a sale to a foreign source thats paid to their foreign business has no tax liability in Thailand. 

But most digital nomads aren't employed and don't get paid by Thai companies... So is their income Thai sourced?

No it's not. It is foreign sourced income.

[ExpatDraco]

No it's not. It is foreign sourced income.

Ok, what about this scenario: DN gets a WP from let's say Iglu or another (umbrella) company. He fullfills the minimum requirements for Iglu but he als invoices foreign clients with a foreign company and receives a salary on an account abroad from this company. Is that salary considered foreign income?

[elviajero]

4 minutes ago, ExpatDraco said:

27 minutes ago, elviajero said:

No it's not. It is foreign sourced income.

Ok, what about this scenario: DN gets a WP from let's say Iglu or another (umbrella) company. He fullfills the minimum requirements for Iglu but he als invoices foreign clients with a foreign company and receives a salary on an account abroad from this company. Is that salary considered foreign income?

I can't comment on Iglu. I know very little about their set up except they charge an extortionate amount in service charge/commission.

 

If this person had a separate business unconnected to Iglu that created an income abroad and was tax resident in Thailand, and income was remitted to Thailand in the same tax year it was earned, there could potentially be a tax liability.

[LivinLOS]

19 hours ago, ExpatDraco said:

19 hours ago, LivinLOS said:

Europe operates a 183 day rule for tax residency on earned income.. Thailand operates a day 1 policy on earned income. Pay income taxes to the thais and try to claim it back under the same process and see what happens !! 

This exact reason is why Thailand differentiates between savings or passive income.. And worked / earned income. 
 

Hmm? I'm pretty sure Belgium will tax you from day 1 if you perform work inside Belgium... Not after 183 days...

Depends on multiple factors.. 

Belgian sourced income ?? Country of usual residence ?? Etc.. I actually have 8 guys working on 2 locations in Belgium now, with another 6 to start in the new year, who do not pay thier taxes in Belgium and can do so for up to 24 months. I do however have to get specific documents from thier residence EU country to prove thier residence basis prior to engagement (A1 documents). 

This is why Europeans especially seem confused by day 1 enforcement, where americans would be a lot less confused. Europeans are used to free movement of labour and the ability to go places while working for a home country operation and not incurring day 1 taxation based on the physical presence test. Try that in Dubai or other middle eastern countries and you wont do well !! 

[LivinLOS]

14 hours ago, ExpatDraco said:

14 hours ago, elviajero said:

No it's not. It is foreign sourced income.

Ok, what about this scenario: DN gets a WP from let's say Iglu or another (umbrella) company. He fullfills the minimum requirements for Iglu but he als invoices foreign clients with a foreign company and receives a salary on an account abroad from this company. Is that salary considered foreign income?

Thats why one of iglus conditions is that you put your whole order flow / invoicing system through them. Specifically so they dont enable 'part declaration'. 
 

[Arkady]

The 2008 Working of Aliens Act made it clear that any type of work performed in Thailand required a work permit which, in turn, requires tax deduction. The junta’s Section 44 decree that replaced the working of aliens law decriminalized actions such as visiting clients or attending meetings on short trips to the Kingdom, although the wording is characteristically vague. Naturally in short business trips, you are also permitted to reply to emails and perform other necessary business tasks online.

 

I think that any type of work that extends beyond these parameters is likely to be considered work that needs a work permit and tax deduction. For example a computer programmer who is required by his overseas employer to travelled to Thailand for a week for a conference and completes some tasks online from his hotel room would clearly be fine. On the other hand a free lance programmer who can work from anywhere and chooses spend several months a year working from Thailand would probably be classified as illegally working without a WP or tax deductions, if it were discovered. However, discovery is unlikely, if he works from a residential space.

 

if we look at the reverse scenario where a foreign entity is performing work for a Thai company from overseas, it is mandatory for the Thai company to deduct 15% withholding tax. But, if the foreign entity has a physical presence in Thailand, the income is taxed in full under the permanent establishment rule.

 

Given the Revenue Dept’s propensity to regard any type of income connected with Thailand as taxable, it  seems likely they would want to tax any income arising from work actually performed in Thailand, unless it is work done by someone in a short business trip to Thailand, who is clearly based and taxed in another country. 

 

Bear in mind that laws and regulations in Thailand are deliberately drafted in vague terms and left open to often conflicting interpretations. Laws are also intended to be fleshed our later by ministerial regulations and, in the case of the Immigration Act, National Police Orders. Often laws are left without proper substance in key aspects until the ministerial regulations are written. A good example would be the 2008 Working of Alien Act which mandated that the categories of work prohibited to aliens would be added as an annex via a ministerial regulation not later than the end of 2019. By the time the law was repealed and replaced with the junta’s decree, the ministry had still not gotten around to issuing the regulation, which is why the antiquated list from the 1972 Royal Decree is still in force today. Also, but to a lesser degree than in common law jurisdictions, court rulings, specially those of the Supreme Court, has s place in interpreting Thai law. The current decree is still very new and some of pursuant regulations have only recently been issued or may still be in process.

 

So in conclusion, I would say that it does not look as if it was intended to allow foreign free lance IT workers to work in Thailand without work permits but it is too early to say definitively what the precise implications are without some test cases. Unless you wish to be those test cases, it is advisable to keep a low profile.

[JackThompson]

2 hours ago, Arkady said:

On the other hand a free lance programmer who can work from anywhere and chooses spend several months a year working from Thailand would probably be classified as illegally working without a WP or tax deductions, if it were discovered. However, discovery is unlikely, if he works from a residential space.

Thus far, those caught red-handed in co-working spaces doing exactly this have not been prosecuted, once it was discovered they were paying the company that owned the space - not "being paid" by the company that owned the space.  Granted, that could change - but seems rather unlikely.

 

Taxation is another issue, though.

 

2 hours ago, Arkady said:

So in conclusion, I would say that it does not look as if it was intended to allow foreign free lance IT workers to work in Thailand without work permits but it is too early to say definitively what the precise implications are without some test cases. Unless you wish to be those test cases, it is advisable to keep a low profile.

I agree with this - though many don't, and are not bothered.  

 

But, in general, it seems a bit crazy to be require a "work permit" for people "transmitting" work done in their head via international telecommunications systems - when this could be done anywhere, including on a plane flying across international boundaries - when there is no business/company-interaction occurring in the country.

[Misty]

On 12/23/2018 at 6:44 PM, ExpatDraco said:

On 12/23/2018 at 6:16 PM, elviajero said:

I'm not misunderstanding anything.
 
Thai sourced income is income generated from Thai sources such as employment, sales, services and investments in Thailand. A foreigner holidaying/visiting ("non-resident") Thailand that goes online and, for example, makes a sale to a foreign source thats paid to their foreign business has no tax liability in Thailand. 

But most digital nomads aren't employed and don't get paid by Thai companies... So is their income Thai sourced?

Yes, it is Thai sourced if they performed the work in Thailand.  Doesn't matter who pays or where the income is paid into.

[Misty]

On 12/23/2018 at 6:16 PM, elviajero said:

I'm not misunderstanding anything.

 

Thai sourced income is income generated from Thai sources such as employment, sales, services and investments in Thailand. A foreigner holidaying/visiting ("non-resident") Thailand that goes online and, for example, makes a sale to a foreign source thats paid to their foreign business has no tax liability in Thailand. 

Correct, as long as they are not "holidaying" in Thailand for more than 180 days while making sales or performing other work online.

[Arkady]

50 minutes ago, JackThompson said:

Thus far, those caught red-handed in co-working spaces doing exactly this have not been prosecuted, once it was discovered they were paying the company that owned the space - not "being paid" by the company that owned the space.  Granted, that could change - but seems rather unlikely.

 

Taxation is another issue, though.

 

I agree with this - though many don't, and are not bothered.  

 

But, in general, it seems a bit crazy to be require a "work permit" for people "transmitting" work done in their head via international telecommunications systems - when this could be done anywhere, including on a plane flying across international boundaries - when there is no business/company-interaction occurring in the country.

 

If people were not prosecuted for working in rented office space, I guess whoever caught them decided to treat the cases like someone renting a quiet space to use a computer in, since they lacked evidence of work. If they were more aggressive, they might have wanted to go through their laptops looking for evidence of work but they might have found enough low hanging fruit that day. 

 

There is not much consistency in the way these types of cases are pursued in Thailand by different authorities. Another old chestnut is the case of foreign musicians getting arrested for jamming in bars. Many foreign musos were arrested over the years and most chose to plead guilty and pay fines. However one guy in Chiang Mai took his chances and plead not guilty. He was acquitted by the judge who said jamming in a bar was no different from singing in a karaoke parlor and didn’t require a work permit. The legal precedent didn’t stop police from harassing foreign jammers in bars even in Chiang Mai. Since most are willing to plead guilty and pay fines, it seems they are justified.

 

in the case at hand, I think a judge would only convict, if there was evidence that someone was operating a full blown free lance business from Thailand, rather than just keeping in touch with business during short holidays. However, this is very subjective and, even if you eventually get acquitted, you will have suffered a great deal of agro from police up until that point.

[balo]

On 12/23/2018 at 11:11 AM, Enki said:

Again:  online work (for foreigners) without work permit is illegal (in Thailand)

Complete nonsense. 

 

Remote work in your home country , where you pay your taxes , where you earn your money , where your bank account is , got nothing to do with Thailand.  

 

Right now there must be 50000 people working remotely from their laptops in Thailand , on holiday here or on another valid visa.  

 

It got nothing to do with Thailand , as long as the business is not located inside Thailand. 

All you need is a valid visa to stay here . 

 

But do not try to rent a office here , do not try to involve Thais. Sit in your local coffee shop or at home a few hours each day and do your stuff. 

 

 

Edited December 24, 2018 by balo

[jackdd]

1 hour ago, Arkady said:

There is not much consistency in the way these types of cases are pursued in Thailand by different authorities.

Actually regarding "online workers" surprisingly they are very consistent, it seems there has not been a single prosecution

[arithai12]

3 hours ago, balo said:

Complete nonsense. 

 

Remote work in your home country , where you pay your taxes , where you earn your money , where your bank account is , got nothing to do with Thailand.  

 

Right now there must be 50000 people working remotely from their laptops in Thailand , on holiday here or on another valid visa.  

 

It got nothing to do with Thailand , as long as the business is not located inside Thailand. 

All you need is a valid visa to stay here . 

 

But do not try to rent a office here , do not try to involve Thais. Sit in your local coffee shop or at home a few hours each day and do your stuff. 

 

 

This is just your wishful thinking. If you are working while in Thailand then the income you earn (even if generated e.g. on computers located in another country and paid to accounts in another country) is taxable in Thailand - if you are based in Thailand for more than 180 days/fiscal year. If you pay tax for that income in another country, it might be possible to claim refund or apply a dual tax treaty but actually Thai tax is so low that in most cases it would be logical to do the reverse.

 

This said, I agree that in your scenario (sitting alone at home for a few hours, connecting to your business via your personal laptop, even better if behind a VPN) there is nothing to worry about.

[JackThompson]

11 hours ago, Arkady said:

If people were not prosecuted for working in rented office space, I guess whoever caught them decided to treat the cases like someone renting a quiet space to use a computer in, since they lacked evidence of work. If they were more aggressive, they might have wanted to go through their laptops looking for evidence of work but they might have found enough low hanging fruit that day. 

There have been different cases in different areas of the country - all with the same result:  Any overstayers are busted, and recently, the "no TM-30" cases resulted in fines, also.  No charges or referrals for prosecutions that were work-related. 

 

11 hours ago, Arkady said:

There is not much consistency in the way these types of cases are pursued in Thailand by different authorities.  Another old chestnut is the case of foreign musicians getting arrested for jamming in bars. Many foreign musos were arrested over the years and most chose to plead guilty and pay fines. However one guy in Chiang Mai took his chances and plead not guilty. He was acquitted by the judge who said jamming in a bar was no different from singing in a karaoke parlor and didn’t require a work permit. The legal precedent didn’t stop police from harassing foreign jammers in bars even in Chiang Mai. Since most are willing to plead guilty and pay fines, it seems they are justified.

 

in the case at hand, I think a judge would only convict, if there was evidence that someone was operating a full blown free lance business from Thailand, rather than just keeping in touch with business during short holidays. However, this is very subjective and, even if you eventually get acquitted, you will have suffered a great deal of agro from police up until that point.

This is why I would not recommend using public work-spaces.  You never know.  But FB groups openly discuss doing this - for years.  They probably figure there is no point / logical-reason in anyone going after them, which is true.  But, what they don't understand, is it could happen anyway.

 

Sad on the music cases - stops the voluntary exchange of musical-ideas.  If getting paid, or pushing Thai musicians out of gigs, that would be another story.