Thai Elite visa tax issues

[alexanderhu]

Hi there, I know that Thailand has a territorial tax system and foreign sourced income not brought into Thailand in the same tax year is not taxable but the situation in practice is more complicated and nobody seems to be able to address my concerns. According to the law an individual is a tax resident in the country if he or she spends more than 180 days in Thailand. In my understanding this means that such individual should be able to obtain a tax id and should be able to use the DTTs (double tax treaties) that Thailand signed with other jurisdictions. However, in practice this is not really possible. I talked with numerous tax advisors and accountants and the answer was that a Thai Elite member cannot become a tax resident and is not able to obtain a tax id because he or she cannot be employed in the country, cannot open and manage a business and so on. I decided to contact the tax authorities directly and guess what, they can't say for sure that either. Basically in order to be able to obtain a tax id, one must have taxable income and must have a visa that allows that person to obtain taxable income in the country. In my situation however and I believe I'm not the only one in Thailand with this issue, however I may be one of the few who wants legal certainty and clarity, it is not sure if I should pay taxes on my income or not. I'm a day trader and I'm trading on various markets on a daily basis. These are not investments but ultra-short term speculative positions. Consequently this type of income is usually deemed to be locally sourced (i.e. Singapore, Hong Kong all taxes day traders even if their bank and brokerage accounts are located overseas because they are placing the trades from the country) and therefore it is usually fully taxable like any other locally sourced income. When I asked this from the Thai tax authority they simply couldn't give me an answer.

 

So, it's not just not clear if a day trader should pay taxes on his or her income, but it's also not clear how he or she could obtain a tax id and consequently if one such person moves to Thailand to live there full time and to trade on his or her laptop then he or she may not be able to open or maintain bank accounts even in foreign countries because thanks to the automatic exchange or information by the OECD, now banks are increasingly asking for tax id and other documents to be able to report the account holders' balance to the appropriate jurisdiction. This seems to be a real mess to me and I feel like this visa best serves those long term retired tourists, who just want to spend the winter on Phuket and not those sometimes young, sometimes not so young entrepreneurs who work remotely on their laptops and have completely cut all their ties with their country of citizenship and moved to Thailand for 5, 10 or 20 years.

 

Also, don't forget those entrepreneurs who decided to live in Thailand full time and has a company in a foreign jurisdiction. Their company if controlled and managed by the only director who lives in Thailand would be unquestionably a Thai resident company and at the very least would have to register permanent establishment but these things are not simple to say the least and may not even be possible. Such person then would be subject to the Thai labor laws and minimum wage requirements, reporting requirements, accounting requirements and so on. In other words if a Thai Elite member who lives full time in Thailand has an LLC in the US and he or she sells physical or digital products in the US is likely braking the laws in Thailand if he or she failed to obtain a Thai tax id and pay corporate tax with his or her company and such person should pay personal income tax as well on the money he or she receives in various ways from the now Thai tax resident company. However obtaining a tax id is not that easy (or in some cases impossible unless you have rental income) as a Thai Elite member.

Edited January 7, 2019 by alexanderhu
additional crucial information

[fforest1]

If your from the USA your already paying taxes on your trades if your making above a certain amount in taxable gains....I never heard of Thailand trying to tax any one for making trades on exchanges in other countries using their own personal account.....If you traded on the Thai exchanges that might be different....

[alexanderhu]

I'm not from the US. Whether it's taxable or not is one question but whether is a Thai Elite member who is living in the country full time is a tax resident or not is another one. If yes then he or she should be able to obtain a tax id. If such person can't obtain a tax id then he or she must maintain a home elsewhere where you can obtain a tax id otherwise it's impossible to open and maintain bank accounts since all banks wants to know the customer's tax residency.

[Bang Bang]

20 minutes ago, alexanderhu said:

otherwise it's impossible to open and maintain bank accounts since all banks wants to know the customer's tax residency.

Hmm, i doubt this. When I opened bank accounts in the US - I am a citizen - if I remember correctly all they wanted was ID/address proof. When I moved to Thailand, I simply filled out a change of address form. Where/whether I pay taxes is not the bank's business.

 

Ditto in Thailand, where I live now and have opened more than one bank account. What they wanted to see were passport/work permit. That's it. No tax questions were asked. 

 

If you are worried about the legality of something and can't get a good answer on verbal inquiry, then what I would do is ask in writing with a copy marked received. You say you went to the the Thai tax people. Was there a written exchange? If not, I would instigate one. That way you are covered even if you don't get a response.

 

And from other threads I understand that the Elite staff will help you open a bank account so that's not an issue.

 

Incidentally, you must have been or are paying taxes in some country, presumably that of which you are a citizen. So just continue paying taxes there but declare your tax home to be Thailand. E.g., I declare my tax home to be Thailand in my return to the IRS because I qualify under their 180-day rule. As far as I  understand they give a rat's if I actually pay taxes here. Might be the same for your home country.

[alexanderhu]

We're not talking about US here. That's a whole different story. OECD AEOI/CRS doesn't apply to you. It applies to other citizens only. You have your own version, called FATCA. It serves the same purpose. Furthermore, I was talking about opening a bank account elsewhere. In Western countries. You won't open an account in Singapore, UK, Germany, Switzerland, Hong Kong, etc. without a tax id, solid proof of address, residence permit in your passport. Guaranteed.

[humbug]

this is another wum elite thread. If you want to be registered to pay taxes a work permit pays taxes on income. Marriage visas, retirement visas and elite visas are for living. If you are scared if a tax man stay in your home country and keep paying your taxes. To come on here wuming about this visa is just daft. This visa can help you obtain a work permit for which you already know.

[alexanderhu]

How could I pay tax with work permit (that I have no idea how to get) on trading income? It doesn't make much sense to me. Residence permits has very little to do with taxes so if a government creates a new residence category, in this case the Thai Elite, which allows the applicant to stay in the country for up to 20 years without leaving it, it is obviously expected from the applicant to be able to spend that two decades in legal clarity. If you live in a country where you clearly are a tax resident based on the tax laws and your income may be subject to taxes but you have no idea how to declare them because you can't even get a tax id, then I'm sure you would be looking for a solution as well unless you prefer cheating the tax man; - which may be the case based on your useless comment. However I have an advice for you as well, less labeling and more useful content.

Edited January 8, 2019 by alexanderhu

[userabcd]

Where/whether I pay taxes is not the bank's business: Unfortunately banks and financial institutions in other countries are increasingly asking for this information.

 

As for your tax query, have you consulted with a tax specialist in your home country to get their opinion.

[chainarong]

6 hours ago, alexanderhu said:

I'm not from the US. Whether it's taxable or not is one question but whether is a Thai Elite member who is living in the country full time is a tax resident or not is another one. If yes then he or she should be able to obtain a tax id. If such person can't obtain a tax id then he or she must maintain a home elsewhere where you can obtain a tax id otherwise it's impossible to open and maintain bank accounts since all banks wants to know the customer's tax residency.

In the case of the Thai elite, you don't work period, why would you want to, there's other Visa's that are available if you want to work and pay Thai taxes.

[Misty]

Thailand's "Regulatory Guillotine" project is supposed to be addressing work permit / visa reform in the near future, reportedly with the aim of clarifying and simplifying the current rules.  From your post and a number of other Thaivisa discussions, it seems clear the issue of what qualifies as "Thai-sourced income" needs to be addressed  - let's hope this will be covered as part of the Regulatory Guillotine project, and soon.

 

 

[Mattd]

9 hours ago, alexanderhu said:

Basically in order to be able to obtain a tax id, one must have taxable income and must have a visa that allows that person to obtain taxable income in the country

This is incorrect info, anybody can obtain a Thai Tax ID number, a lot of people have done so to claim back tax paid on interest on a bank account etc. Go back to the RD and ask them again, it can be done if you really want one.

[yunnantea]

According this link (Interactive Associates) and I've seen the same mention several other places:

 

Quote

 

Similarly, the income is considered foreign when it is derived from the same activities listed above, only taking place outside of Thailand. It will be taxed in Thailand provided the following conditions are met:

• An individual is a Thai tax resident
• The income is brought to Thailand in the same calendar year it is received

The first condition is clear – a Thai tax resident is a person residing in Thailand for at least 180 days or more in a year. Such residents are liable to pay tax on income from sources in Thailand as well as foreign sources brought into Thailand (non-tax residents are subject to tax only on Thai sourced income).

 

The second condition, however, may need some clarification. For example, when a Thai tax resident earns foreign income in 2015 and does not transfer the funds to Thailand until 2016, they are not liable to pay personal income tax on that portion of the income. They would have to pay tax only if the amount was transferred to Thailand in the same year it was received – 2015.

 

So... it seems to me that you can always just remit funds from the year previous (not that they have any way to prove when then funds were earned).  If your US LLC is an S-Corp all the income is considered to be personal income, so you should be safe from being taxed as a foreign company in Thailand.  Just my two cents.

 

If you still feel it's a grey area then maybe consider Malaysia and MM2H program as you don't even have to file taxes there (they don't tax worldwide income at all) .

Edited January 8, 2019 by yunnantea

[from the home of CC]

sorry to the Danes but somethings rotten in Denmark...

[Misty]

1 hour ago, yunnantea said:

According this link (Interactive Associates) and I've seen the same mention several other places:

 

So... it seems to me that you can always just remit funds from the year previous (not that they have any way to prove when then funds were earned).  If your US LLC is an S-Corp all the income is considered to be personal income, so you should be safe from being taxed as a foreign company in Thailand.  Just my two cents.

 

If you still feel it's a grey area then maybe consider Malaysia and MM2H program as you don't even have to file taxes there (they don't tax worldwide income at all) .

Pretty sure the rules above apply to "foreign-source" income only.   Foreign source income such as dividends, interest that are earned overseas.  These rules do not apply for income earned doing work in Thailand. That is Thai-source income, and it is taxable in Thailand whether or not it is  brought into Thailand.

 

The question becomes: does Thailand consider day-trading to be work (as the OP notes, Hong Kong and Singapore do), and as such it is Thai-source income and taxable, or does Thailand consider day-trading to be passive investment income like dividends and interest?  Perhaps some of the cross border tax professionals can weigh in on that.  

Edited January 8, 2019 by Misty
spelling

[ThomasThBKK]

You can get a tax id, and pay taxes on money you remit into thailand.

That should make you legally quite safe.

 

You need a signed letter of consent from your landlord that states that you are living in your apartment. It acts as a proof of address, and the chanote copy is attached there. I am not sure what other proof of addresses they accept.

 

Then you need to fill out their tax id application, also u need to attach copies of your visa and passport.

 

 

Make sure u fill out that your income is from overseas investments, i would urge u to get a thai tax accountant for this tho.

 

This can be done with an elite visa.

 

 

 

 

 

[LivinLOS]

11 hours ago, alexanderhu said:

However, in practice this is not really possible. I talked with numerous tax advisors and accountants and the answer was that a Thai Elite member cannot become a tax resident and is not able to obtain a tax id because he or she cannot be employed in the country, cannot open and manage a business and so on. I decided to contact the tax authorities directly and guess what, they can't say for sure that either.

Not correct.. Go along, say you have investment income not earned income.. and Voila TTN dispensed. 

[LivinLOS]

39 minutes ago, Misty said:

The question becomes: does Thailand consider day-trading to be work (as the OP notes, Hong Kong and Singapore do), and as such it is Thai-source income and taxable, or does Thailand consider day-trading to be passive investment income like dividends and interest?  Perhaps some of the cross border tax professionals can weigh in on that.  

Thailand considers capital gains from stock trades (presumably also shorts) to be investment / passive income and not active earned income. Part of why they never charged those Chinese stock traders. 

However no one has ever to my knowledge clarified the line in the sane where passive might become active (trader per day, system operation, etc etc) clear full time stock trading feels like work, however legally on the record they have repeatedly stated it is not work / earned income. 

[humbug]

the OP is a wum and elite visa gets these every month these wum threads. The OP knows full well that if you want to work in Thailand then you have to change from an elite visa to a work permit. This thread is another way to attack living visas like marriage/retirement/elite hoping the authorities will see and intervene in the future on such issues. Its pretty obvious the OP is from the chinese state probably hoping the authorities will take notice and charge tax statements to these kind of visas. Especially now with so many more chinese living and buying property

Edited January 8, 2019 by humbug

[ThomasThBKK]

Your post doesn't make any sense.

 

Many people on elite visa don't need to work in thailand but still pay taxes on remitted income into thailand, dividend payouts in thai companies they have invested in, real estate investments etc.

 

 

Ops question is totally valid, his only problem is that whoever he talked to was incompetent.

 

Sent from my LYA-L29 using Tapatalk

 

 

 

 

[Krupps]

I a man an investor from Hongkong and I appreciate you have raised this important issue here.

 

from what I have read before here on this forum it is not a problem to obtain a tax ID when on a retirement visa.

I know you are talking about ThaiElite, but I think you should try again with Thai IRS.

perhaps the people you have met so far were all incompetent or plain lazy.

 

For example, you could say you need a Thai Tax ID for filing with US bank/brokerage, e.g. W8-BEN, to claim the tax treaty rate for dividend 

withholding tax that is in place for Thai tax residents who hold US stocks.

That is a real problem for dividend income investors, without Tax ID 

the withholding rate is a whopping 30%, the treaty rate is only 10%, if I remember correctly.

 

so good luck with that.

 

And please note that your problem extends beyond paying tax !

 

Increasingly, you will also need your visa AND a local Tax ID to be accepted by your financial institution as a client from overseas, unless you are also a national of your country of tax residence. 

I had one of my accounts temporarily suspended from trading because the documentation was not up to date and lacked a tax id.

 

lastly, I strongly advise you to check whether your bank/brokerage accepts clients from Thailand at all.

I have heard about some US guys who got their accounts terminated back home when they provided a Thai address because their institution did not accept Thai clients.

 

btw, in HK there is no tax on capital gains from trading stocks, zero.

you don't even need to file an annual tax return if that's your only source of income

 

Edited January 8, 2019 by Krupps

[humbug]

24 minutes ago, ThomasThBKK said:

Your post doesn't make any sense.

 

Many people on elite visa don't need to work in thailand but still pay taxes on remitted income into thailand, dividend payouts in thai companies they have invested in, real estate investments etc.

 

 

Ops question is totally valid, his only problem is that whoever he talked to was incompetent.

 

Sent from my LYA-L29 using Tapatalk

 

 

 

 

no its not the point. The op really is a wum, what he is highlighting is to work full time on his income whatever that is and use thailand as a base and use the thai tax structure to satisfy his passport countrys tax man.

That means he requires a work permit not a living visa such elite/retirement/marriage. That is why if you have an elite and wish to work they can help you change the visa to a work permit. I am sure people have changed to a work permit after starting a business or other work etc.

 

The op is fully aware of the need of a work permit.

[Firefan]

There are a couple of issues here; first of all, the original intention of the (lifetime) Thai Elite visa, was for rich tourists (golfers Etc.) to easy come and go in and out of Thailand - it was NOT (originally at least) intended for long stays - and I believe that one even had to leave the country (not just do 90 day reports) every 3 months. Therefore a work permit can not be connected still today - as many of the legalities behind establishing the visa have NOT been changed. 

 

A tax ID is possible on other long term/non work related visas(extensions). I know several retirees getting tax refunds on their Thai dividend and interest income using that, only reason I see for it NOT being possible on the Thai Elite is what I mentioned above; the Thai Elite is STILL(the laws behind it) considered a (fancy) "tourist visa" - and I do not think one can get a tax ID on a tourist visa.

 

Also; if day trading ones own account/money is considered work, when is my (own) money management NOT considered work? When I check my pension account quarterly?, when I sell some stocks monthly/annually to rebalance my portfolio? When my Thai or foreign time deposit expire and I research and buy into a new time deposit? When I sell a stock, I no longer like? None of those are work. I simply manage my private money (even if trade more often).

 

Finally; it is true that foreign banks/institutions are now asking for for foreign tax ID numbers. FACTA and other new rules require them to ask for it, and yes; they can decide to close or limit functionalities until it is supplied.

 

Cheers! 

 

  

[Naam]

15 hours ago, alexanderhu said:

Also, don't forget those entrepreneurs who decided to live in Thailand full time and has a company in a foreign jurisdiction. Their company if controlled and managed by the only director who lives in Thailand would be unquestionably a Thai resident company and at the very least would have to...

do NOTHING! and the latter is not illegal. if you need a tax ID for banking purposes: some banks (offshore of course) in certain juridictions are stubbornly demanding a tax ID for the beneficary even though CRS (Common Reporting Standard) allows establishing a "tax residence" by simple declaration. most banks in Singapore and Hong Kong are aware of the Thai income tax practice not taxing offshore proceeds if not bla-bla same year...

 

a different story are the requirements of the taxman of your home country!

 

any questions?

[alexanderhu]

In my opinion it's not that simple. So let's take a closer look on the issue in practice. The applicant tells the tax authorities that he or she is going to become a non resident on this and that date. I don't know how it is where you are from but here in the EU usually when you file the paperwork to become a non resident for tax purposes, then you have to file a final tax return and pay your taxes by the date you file your last and final return. Then the applicant moves to Thailand with the Thai Elite visa, rents a flat in Bangkok and then comes the problems. He or she is no longer a resident in her or her former EU country, doesn't have a tax id, doesn't have a proof of address. The latter can be solved with the tenancy agreement and a utility bill which the person hopefully can get in a month or so. Some said that I should keep asking the Thai tax authorities for a tax id and tell them to issue one for me because I have to declare interest income on my local bank account. This may work, I'll give it a try. Then I have a tax id but I'm still not sure if my trading income is considered as a foreign sourced income or as a locally sourced active business/trading income. As far as I know, there is a difference between trading on the stock market and trading with currencies or derivatives because some jurisdiction says that if you're trading on the stock market then you buy or sell and actual asset and they may categorize such positions as foreign sourced income, however when it comes to the currency market, options, futures and so on, then the situation is less clear because the trader doesn't buy or sell any assets but more like bets on the outcome of the particular price movement with a financial instrument. For instance here the ESMA, the European equivalent of the SEC, categorizes FX (currency) trading positions as CFD (contract for difference) positions, or in other words their view is that the currency trader doesn't own or hold any particular assets during the trade. If the Thai tax authority would take a similar view on the issue, then in my opinion any trading income that doesn't involve equities may be categorized as locally sourced and thus subject to personal income tax the regular way.

[humbug]

this thread is misnamed and should not have a visa which is not a permanent resident or work permit attached. Many times we see threads vanish when fools say how do i work on visa on arrival without anyone knowing blah blah This is another blatant attempt to wum. The op seems to want to trash this visa when all he had to do is set up a company in thailand then gain a work permit and pay his taxes. He knows this its just a complete wum. 

[JackThompson]

16 minutes ago, humbug said:

all he had to do is set up a company in thailand then gain a work permit and pay his taxes.

So open a business (at considerable expense), put up capital which serves no purpose, and hire 4 Thais to ... watch him trade stocks?   This is not an activity which takes a Thai's job.  Thailand should take his tax-money and be delighted he pays tax and spends his income here.

[ExpatDraco]

Also, don't forget those entrepreneurs who decided to live in Thailand full time and has a company in a foreign jurisdiction. Their company if controlled and managed by the only director who lives in Thailand would be unquestionably a Thai resident company and at the very least would have to register permanent establishment but these things are not simple to say the least and may not even be possible.

Afaik Thailand does not have CFC laws. As long as the company does not do business in Thailand or with Thai clients the foreign company does not need a permanent establishment.

[Krupps]

My understanding is that capital gains from stock trading abroad 

are classified as worldwide income under Thai tax law.

just read through Deloitte and other consultancies'

country tax guidance, it's freely available online.

 

however, from the discussions I have had here it seems

the taxman does not collect it, the people on retirement 

Visa here told me Thai IRS never asked them to file a return.

 

so it seems nobody cares, just like in other less developed countries.

 

 

 

 

Edited January 8, 2019 by Krupps

[ukrules]

7 hours ago, humbug said:

the OP is a wum

A wum ? What is a wum ?

[ExpatDraco]

A wum ? What is a wum ?

Google knows. ;-)