How expats can live in Thailand and legally avoid income tax

[lyseoy]

While investigating exactly when expats become liable to income tax in Thailand, I came across this excellent summary:

 

https://www.tilleke.com/sites/default/files/Thailand-Tax-Guide.pdf

 

From D.7 it's clear that someone who derives all his/her income from sources outside Thailand AND doesn't bring this income into Thailand the same year it's earned, actually has zero assessable income. And D.9 says that in that case, no tax return needs to be filed.

 

How nice for people who only live in Thailand and travel periodically to other countries for work ????

 

 

[JaiLai]

I would say this is one reason why a lot of people still put up with this place.

[topt]

The OP makes a positive change from the many posters who have come on here asking how they can pay their supposed Thai tax obligations - when they have no current need to do so...........

[KittenKong]

15 hours ago, JaiLai said:

I would say this is one reason why a lot of people still put up with this place.

Definitely my main reason for staying here. Take that away and I would be on the first plane out.

[Time Traveller]

17 hours ago, lyseoy said:

From D.7 it's clear that someone who derives all his/her income from sources outside Thailand AND doesn't bring this income into Thailand the same year it's earned, actually has zero assessable income. And D.9 says that in that case, no tax return needs to be filed.

Your forgetting the fact that most countries on the earth tax income of non residents. So no matter where your foreign income comes from, you're paying taxes somewhere, even if you're not actually filing taxes anywhere. 

 

[Rod the Sod]

Actually it gets even better than that.

 

I have no earned income coming into Thailand so I am not liable to complete a tax return nor register for tax. But I do....

 

Why? Firstly, I can reclaim the withholding tax on my 800k Time Deposit (currently worth TB1,800p.a.). Secondly I feel that I have done everything I can to make my presence known to the authorities with nothing to hide, but thirdly, and most importantly, I can get Tax Residence letters from Thailand which I use to reclaim withholding tax on dividend income from Switzerland (currently worth circa TB100k p.a.).

 

The Tax man did look at me rather strange when I volunteered to complete previous years tax returns and pay the late lodgement penalty even though I had no tax to pay, but he did see my logic in doing it to get the Residency Letters.

 

Hope it helps someone out there....RtS

[wolf81]

46 minutes ago, Time Traveller said:

Your forgetting the fact that most countries on the earth tax income of non residents. So no matter where your foreign income comes from, you're paying taxes somewhere, even if you're not actually filing taxes anywhere. 

 

I'd figure an offshore company would solve that problem. I work remotely using a Seychelles offshore. And The Seychelles don't tax offshore companies either, you just pay a small nominal fee each year to maintain the company. Perhaps around 700 EUR in my situation. I definitely intend to make use of that ruling in the near future.

Edited March 6, 2019 by wolf81

[oznomad]

21 minutes ago, Rod the Sod said:

Actually it gets even better than that.

 

I have no earned income coming into Thailand so I am not liable to complete a tax return nor register for tax. But I do....

 

Why? Firstly, I can reclaim the withholding tax on my 800k Time Deposit (currently worth TB1,800p.a.). Secondly I feel that I have done everything I can to make my presence known to the authorities with nothing to hide, but thirdly, and most importantly, I can get Tax Residence letters from Thailand which I use to reclaim withholding tax on dividend income from Switzerland (currently worth circa TB100k p.a.).

 

The Tax man did look at me rather strange when I volunteered to complete previous years tax returns and pay the late lodgement penalty even though I had no tax to pay, but he did see my logic in doing it to get the Residency Letters.

 

Hope it helps someone out there....RtS

Hi. What did you do to get a Tax Residence letter, and presumably a tax number? Searching this site and googling hasnt given me any results. Thanks.

[Rod the Sod]

8 minutes ago, oznomad said:

Hi. What did you do to get a Tax Residence letter, and presumably a tax number? Searching this site and googling hasnt given me any results. Thanks.

Oznomad, first go to your local Tax Office and register for tax (take passport, Blue Book etc.) and they give you a number. The tax year runs Jan 1 - Dec 31 and so before end March go and ask to complete a tax return taking your Tax Number with you. If you are late they charge you TB200 penalty. They will probably complete it for you. If you are reclaiming withholding tax on Bank deposit interest you need a certificate from your Bank beforehand (just ask them for it). After two weeks you receive your tax refund. So that is your tax registration and return completed. Now armed with a copy of your tax return (duly stamped and signed by the Tax Office to show it is legit) and usual ID/Blue Book papers you go to the Department that issues Tax Residency Letters. I asked the first tax officer and he gave me the details for my area (if you are in Wattana BKK I can let you know these). The only other thing you need do is photocopy your passport pages and highlight the entry and exit stamps. You need to show that you have been in Thailand for 181 days (I think or thereabouts), so I created a table in "Word" that showed them the dates and I cross referenced to the photocopy stamp pages. They were happy that I had taken away the hard work for them and was told to return 2 weeks later. I claimed Tax Residency letters for 2017 and 2018 and on the due date, there they were. Without these you cannot claim tax back under double taxation laws so well worth the small amount of effort involved. Good luck. Let me know if you need to know anything else. RtS

[oznomad]

5 minutes ago, Rod the Sod said:

Oznomad, first go to your local Tax Office and register for tax (take passport, Blue Book etc.) and they give you a number. The tax year runs Jan 1 - Dec 31 and so before end March go and ask to complete a tax return taking your Tax Number with you. If you are late they charge you TB200 penalty. They will probably complete it for you. If you are reclaiming withholding tax on Bank deposit interest you need a certificate from your Bank beforehand (just ask them for it). After two weeks you receive your tax refund. So that is your tax registration and return completed. Now armed with a copy of your tax return (duly stamped and signed by the Tax Office to show it is legit) and usual ID/Blue Book papers you go to the Department that issues Tax Residency Letters. I asked the first tax officer and he gave me the details for my area (if you are in Wattana BKK I can let you know these). The only other thing you need do is photocopy your passport pages and highlight the entry and exit stamps. You need to show that you have been in Thailand for 181 days (I think or thereabouts), so I created a table in "Word" that showed them the dates and I cross referenced to the photocopy stamp pages. They were happy that I had taken away the hard work for them and was told to return 2 weeks later. I claimed Tax Residency letters for 2017 and 2018 and on the due date, there they were. Without these you cannot claim tax back under double taxation laws so well worth the small amount of effort involved. Good luck. Let me know if you need to know anything else. RtS

A most excellent post. Thanks Rod. I am in Jomtien. We can safely assume that the rules will be different here but it's a great starting point. Cheers.

[maprao]

Most people file and pay tax in their home countries. Before the money ever arrives in Thailand....

 

Plus if someone's withholding tax on interest or dividend is 100kpa at per say on a modest 2% return that's like 250 million in the bank. With that sort of budget there are far better places to retire than Thailand...

 

If it is withholding tax on a return of 100k then Thailand it is. For me anyway..

[Letseng]

3 hours ago, Rod the Sod said:

Actually it gets even better than that.

 

I have no earned income coming into Thailand so I am not liable to complete a tax return nor register for tax. But I do....

 

Why? Firstly, I can reclaim the withholding tax on my 800k Time Deposit (currently worth TB1,800p.a.). Secondly I feel that I have done everything I can to make my presence known to the authorities with nothing to hide, but thirdly, and most importantly, I can get Tax Residence letters from Thailand which I use to reclaim withholding tax on dividend income from Switzerland (currently worth circa TB100k p.a.).

 

The Tax man did look at me rather strange when I volunteered to complete previous years tax returns and pay the late lodgement penalty even though I had no tax to pay, but he did see my logic in doing it to get the Residency Letters.

 

Hope it helps someone out there....RtS

Tks for your informative post.

I have got as far as getting a tax no. (Pathumwan office). My pension has been arriving in Thailand monthly for some years. 

While I had the good intention to declare my income, the obstacle is how do I go about it. I cannot read Thai nor do I speak enough to deal with tax issues. The tax residency letter would be very useful to reclaim withholding tax back home.

I do spend more than 183 days in Thailand.

Are there tax advisors one can get to deal with the Thai side?

Tks for any help you can give.

 

[Baerboxer]

I would still recommend registering for tax in Thailand and getting a Thai tax id number.

 

This is important unless you are claiming tax residence in another country. Banks, offshore banks included will ask you where you are resident for tax purposes and for your tax id in that country. If you say you don't need to register etc etc you'll find the banks want a lot more information as might the revenue in your home country.

 

Also, if you have interest earning bank accounts here, then tax is deducted at source once the interest reaches a certain level. If you complete a tax return then you may be entitled to a refund.

 

Avoid tax is usually an offense in most countries. Ensuring you comply with the regulations in the most beneficial way isn't. 

[Rod the Sod]

12 minutes ago, Letseng said:

Tks for your informative post.

I have got as far as getting a tax no. (Pathumwan office). My pension has been arriving in Thailand monthly for some years. 

While I had the good intention to declare my income, the obstacle is how do I go about it. I cannot read Thai nor do I speak enough to deal with tax issues. The tax residency letter would be very useful to reclaim withholding tax back home.

I do spend more than 183 days in Thailand.

Are there tax advisors one can get to deal with the Thai side?

Tks for any help you can give.

 

Hi Letseng. I originally found my starting point from an old post on this site, and then the rest unfolded as I went along. You do not need to know much and I found (as I was told I would) the Tax Officer to be really helpful. He knows what we need to do and in my case he got on and did it. If you have not declared tax before you will have to put your hand up and ask for previous years declarations to be made for which you will pay the princely sum of TB200 for each year missed. As I have no income I am not sure of how quickly they will assess how much you owe and ask you for it. In my case, after I left the Tax Officer I had to go to a lady who photocopied the tax form for me (at a minimal cost) and then (this is the most important bit) she signs and stamps it. This makes it "real" and acceptable elsewhere. I would ask either the Tax Officer of the lady for the location of the office for Tax Residency Letters. For the office in BKK for the Tax Residency Letter in my case, just take your papers (as described in my previous post) to Manoonphol Building 2 (Google Maps), and I think it is the 8th Floor.

 

No need for professional help but if that makes it easier for you, I am sure a quick google will give you names in your location who will be happy to ease a few thousand TB from you.

 

So to answer your question, I would recommend you just grab your papers and head down the Tax Office. You might be pleasantly surprised. In effect, the resident Tax Officer becomes your Tax Advisor. He also spoke enough good English for us to get by and also he is dealing with this stuff all the time, so he will know what to do.

 

Good luck - should be a walk in the park all being well.

[KittenKong]

2 hours ago, Rod the Sod said:

After two weeks you receive your tax refund.

In Jomtien for me it is more like two months.

And as far as I know they have stopped sending cheques and now send some sort of voucher applicable to an electronic payment card which is only available from one bank (Krungthai). Not too hard to get one though, apparently.

[Rod the Sod]

1 hour ago, maprao said:

Most people file and pay tax in their home countries. Before the money ever arrives in Thailand....

 

Plus if someone's withholding tax on interest or dividend is 100kpa at per say on a modest 2% return that's like 250 million in the bank. With that sort of budget there are far better places to retire than Thailand...

 

If it is withholding tax on a return of 100k then Thailand it is. For me anyway..

I see your point, but I am getting over 5% from the divi, not 2% so the capital involved is not as great as you may think. Also, choice of retirement location is not just about how far your money will go. There are a million personal factors at play...Cheers RtS

[myshem]

Not paying tax in EU is not difficult either.

[Rod the Sod]

2 minutes ago, KittenKong said:

In Jomtien for me it is more like two months.

And as far as I know they have stopped sending cheques and now send some sort of voucher applicable to an electronic payment card which is only available from one bank (Krungthai). Not too hard to get one though, apparently.

Ah, for me too, and at first it seemed a bit odd, but let me explain how it works. Take said voucher and original passport to KrunThai Bank (any office). They will give you an ATM card with a PIN number. By the time you reach the ATM the money is already in the "card" and you withdraw like any other cash withdrawal. You can leave some or all of it in for a rainy day. Next year, the tax rebate will automatically be credited to the "card" without the need to go through the process again. A bit different to what we are used to, but it works fine.

[myshem]

3 hours ago, wolf81 said:

I'd figure an offshore company would solve that problem. I work remotely using a Seychelles offshore. And The Seychelles don't tax offshore companies either, you just pay a small nominal fee each year to maintain the company. Perhaps around 700 EUR in my situation. I definitely intend to make use of that ruling in the near future.

 

Hong kong is more convenient.

 

 

[Rod the Sod]

4 minutes ago, myshem said:

 

Hong kong is more convenient.

 

 

Agree. No corporation Tax on overseas income/profit, no income tax if dividends are taken and no investment tax on dividends. 

[topt]

3 hours ago, Letseng said:

While I had the good intention to declare my income, the obstacle is how do I go about it. I cannot read Thai nor do I speak enough to deal with tax issues. The tax residency letter would be very useful to reclaim withholding tax back home.

Have you checked that it would be beneficial to you to pay tax here in Thailand and that whatever country you are from has a DTA that allows you to claim back from them?

 

Not sure but i think you will need more than just a tax residency letter to reclaim WHT.  If you haven't I would suggest you do the calculations first before opening that particular can.........

[SS1]

This is correct and imo. one of the best things about living Thailand. One reason I left Europe is those nazi tax policies that really suck if you're an entrepreneur. It's great if you live in Thailand and have your company registered elsewhere. 

I'm happy to pay my share of tax on my salary in Thailand, but very glad I don't need to pay anything from income earned outside of the country. It really is a significant advantage over many other countries. 

[JimGant]

On 3/5/2019 at 10:32 PM, topt said:

The OP makes a positive change from the many posters who have come on here asking how they can pay their supposed Thai tax obligations - when they have no current need to do so...........

For some, like Norwegian expats resident in Thailand, all their pensions are subject to thai taxation, under the DTA. But, they have to show Norwegian tax authorities that they have paid taxes to Thailand on this pension income -- if they want such income exempt from Norwegian taxes. The Norwegian tax is a flat 15% on gross proceeds; thus, it sure would make sense to subject one's self to Thai taxation, if such taxation amounted to less ('cause you don't file Norwegian taxes, and make up the difference between the credit offered for Thai tax paid, and the higher Norwgian tax). Of course, should Thai taxes be higher, don't bring your pensions into Thailand in the year paid.

 

But, the point is -- for some folks, paying Thai taxes is a benefit if your mother country has a long arm if you can't show a Thai tax receipt.

[Crisu]

Most people file and pay tax in their home countries. Before the money ever arrives in Thailand....  

Plus if someone's withholding tax on interest or dividend is 100kpa at per say on a modest 2% return that's like 250 million in the bank. With that sort of budget there are far better places to retire than Thailand...

 

If it is withholding tax on a return of 100k then Thailand it is. For me anyway..

 

My home country is TH. I have no other residence. 

The money is invested on SG and EU accounts mainly in bonds (my only dource of income). Non of them is deducting any tax/withholding tax nor i have any tax liability in this countries because i have no tax residence there.

 

Since i not bring this income to TH the same year earned, i have no tax liability in TH too.

 

Therefore all my income from investment i 100% tax free.

 

PS: This year i applied for a TH Tax ID in Bkk and received it in 10min.

 

 

 

[Sheryl]

On 3/6/2019 at 1:54 PM, Rod the Sod said:

If you have not declared tax before you will have to put your hand up and ask for previous years declarations to be made for which you will pay the princely sum of TB200 for each year missed.

 

Yikes! Is that true even if you had no tax liability???

 

I've been here some 15 years and never "declared tax". I have just put money in a Fixed Deposit so was thinking of trying to claim the refund on the tax witheld on the interest. but 15 * 200 is likley more than the witheld tax will be.

 

If thsi is really ther case then I will nto bother.

 

But most countries do not require one to file a tax declaration if no tax liability.

 

???

[topt]

6 hours ago, Sheryl said:

 

Yikes! Is that true even if you had no tax liability???

 

I've been here some 15 years and never "declared tax". I have just put money in a Fixed Deposit so was thinking of trying to claim the refund on the tax witheld on the interest. but 15 * 200 is likley more than the witheld tax will be.

 

If thsi is really ther case then I will nto bother.

 

But most countries do not require one to file a tax declaration if no tax liability.

 

???

I am not sure Sheryl as when I first applied it was only 100 baht for missed years/late claims. However from memory I was claiming for 2 previous years and consequently had to pay the 100 baht as I was late claiming. If you claim after 31st March for the previous year then it is late.

 

Best to check with your local revenue office.

[Naam]

On 3/6/2019 at 9:31 AM, Time Traveller said:

Your forgetting the fact that most countries on the earth tax income of non residents. So no matter where your foreign income comes from, you're paying taxes somewhere, even if you're not actually filing taxes anywhere. 

 

little do you know.

[Sheryl]

15 hours ago, topt said:

I am not sure Sheryl as when I first applied it was only 100 baht for missed years/late claims. However from memory I was claiming for 2 previous years and consequently had to pay the 100 baht as I was late claiming. If you claim after 31st March for the previous year then it is late.

 

Best to check with your local revenue office.

 

Ok that makes sense. You pay a late fine if you file late.

 

Not the same as having to pay a fine for every year you did not file a tax return which is what I though you were saying

[persimmon]

If you receive income from company dividends then that has already been taxed at the relevant rate depending on where the company is registered.

So even if no personal tax is due then the income is not completely tax free.????

[topt]

38 minutes ago, Sheryl said:

which is what I though you were saying

wasn't me