Taxing on foreign income

[Doronazl]

i am trying to obtain a tax opinion letter, that will talk about the thai law which says that foreign income for thai resident is taxable only if it was remitted during the same year it was earned.

im getting mixed signals, got this answer to be exact  : 

 

Please note that Section 41 of the Thai Revenue Code actually states that assessable

income derived from working abroad or from property held overseas would be taxable

upon bringing such income into Thailand.

 

 

 

However, based on a number of tax rulings

the internal practice of the Revenue Department for many years is to only tax such income if it is brought into Thailand in the same year.

 

 

 

any inputs ?

,

 

[userabcd]

This has been discussed many times on the forum.

 

Refer this booklet from one of the big accounting firms for 2018/2019 tax year www.pwc.com/th/en/tax/thai-tax-booklet-2018.html, many other big accounting firms have similar such booklets and info. 

 

You could of course make an appointment with one of the big accounting firms whom I'm sure would provide you with an opinion letter based on your specific tax circumstances in Thailand for a fee.

[Doronazl]

16 hours ago, userabcd said:

This has been discussed many times on the forum.

 

Refer this booklet from one of the big accounting firms for 2018/2019 tax year www.pwc.com/th/en/tax/thai-tax-booklet-2018.html, many other big accounting firms have similar such booklets and info. 

 

You could of course make an appointment with one of the big accounting firms whom I'm sure would provide you with an opinion letter based on your specific tax circumstances in Thailand for a fee.

as i explained : thats what i did, i hired them to get me that letter, which they did but they mention in the letter that by law thai goverment can tax the funds when they come in thailand but IN PRACTICE they dont do that and only tax it if it came in the same year

that confuses me ????

[Doronazl]

i mean, what if in the future il relocate to another country and i would get asked for tax returns, im not sure this letter would be enough to show that i dont owe taxes for those funds since the law says something different than what im explaining

[userabcd]

You are asking what if for the future and documents to submit to another country? 

 

What does your home country say about income taxes on all your assets.

 

If worried about tax document and evidence for the future, go to your nearest RD and get a tax number, declare your earnings, income, dividends, interest, capital gains, benefits, family situation where the income is  arising, paid and during what period. See what revenue department will do.

 

Are you resident in Thailand and another country where you have income and assets?

 

What does your home countries tax laws say about your income, assets and tax whilst you are resident in a 2nd country, you need to also understand your countries tax laws for residents and non residents, domicile and the double taxation treaty existing between countries.

 

If you are unsure about taxes in Thailand and are not satisfied with a Thailand based accountants written opinion, you should maybe consult an accountant in your home country. They would best advise you for the future and what documentation you must have in case you move to another country or back to your home country.

[Doronazl]

1 minute ago, userabcd said:

You are asking what if for the future and documents to submit to another country? 

 

What does your home country say about income taxes on all your assets.

 

If worried about tax document and evidence for the future, go to your nearest RD and get a tax number, declare your earnings, income, dividends, interest, capital gains, benefits, family situation where the income is  arising, paid and during what period. See what revenue department will do.

 

Are you resident in Thailand and another country where you have income and assets?

 

What does your home countries tax laws say about your income, assets and tax whilst you are resident in a 2nd country, you need to also understand your countries tax laws for residents and non residents, domicile and the double taxation treaty existing between countries.

 

If you are unsure about taxes in Thailand and are not satisfied with a Thailand based accountants written opinion, you should maybe consult an accountant in your home country. They would best advise you for the future and what documentation you must have in case you move to another country or back to your home country.

thank you for the response.

ok so about my home country first - no global income tax , only residents can be taxed, i havnt been a resident there for  3 years.

 

i am a resident of thailand for the last 3 years, i am getting monthly salary from a thai company and paying taxes for that salary.

 

regarding getting the letter form another country - wouldnt the most accurate information will come from accountants here in thailand since we are talking about thai laws ?

 

my main worry is this, i had some job opportunities in the past, in NZ and Canada, i eventually started my online business so that went off the table but i really cant know the future so what if me and my wife decides to relocate to one of those countries ? or any other country for that matter, in which case i would want to bring my money into that country - the banks in other countries could ask me for tax returns ,right ? 

the kind of letter im trying to obtain could be enough to show what im claiming , that i do not owe taxes for this money.

anyway thats my way of thinking, i would be happy to have your input

[ballpoint]

All that Thailand cares about is whether you brought any money earned outside Thailand into the country the same tax year it was earned.  That doesn't absolve you from paying taxes on that money in the country where it was earned though, which is what you seem to be asking.  It may well be that some place you move to in future will want to see proof that appropriate tax has been paid on those earnings, in the country of origin, and the fact that you didn't have to declare them in Thailand won't be regarded as that proof.

[userabcd]

I don't know about submitting tax returns to the banks but currently banks seem to be an extension of tax offices and demand all sorts of evidences about ones money even as far back as the 80's.

 

Generally at the moment with banks I think you need to prove to them that the source of funds was legal with salary slips, accountants letters, investment and sales/trading evidences, bill of sale of property, Letters from employers etc...

 

Taxes on income are handled with the tax departments and I think the banks only report ones assets to the tax authorities.

 

I don't know how the tax regimes work in NZ and Canada and if it is a requirement to fill in and submit tax returns but if you were working there surely their payslips would reflect what taxes and benefits had been deducted.

[Doronazl]

2 minutes ago, userabcd said:

I don't know about submitting tax returns to the banks but currently banks seem to be an extension of tax offices and demand all sorts of evidences about ones money even as far back as the 80's.

 

Generally at the moment with banks I think you need to prove to them that the source of funds was legal with salary slips, accountants letters, investment and sales/trading evidences, bill of sale of property, Letters from employers etc...

 

Taxes on income are handled with the tax departments and I think the banks only report ones assets to the tax authorities.

 

I don't know how the tax regimes work in NZ and Canada and if it is a requirement to fill in and submit tax returns but if you were working there surely their payslips would reflect what taxes and benefits had been deducted.

yes i have all the documents to prove it is legal, jus t the tax returns im worried about.

il revise my question then, not banks, say a tax department on another country asks for tax returns, how do i prove i wasnt supposed to pay taxes for it

 

[Doronazl]

7 minutes ago, ballpoint said:

All that Thailand cares about is whether you brought any money earned outside Thailand into the country the same tax year it was earned.  That doesn't absolve you from paying taxes on that money in the country where it was earned though, which is what you seem to be asking.  It may well be that some place you move to in future will want to see proof that appropriate tax has been paid on those earnings, in the country of origin, and the fact that you didn't have to declare them in Thailand won't be regarded as that proof.

without going into more details, i do not owe taxes in the country of origin, that i can assure you.

so if what youre saying is true i would get stuck when they ask for tax returns ????

[userabcd]

8 minutes ago, Doronazl said:

yes i have all the documents to prove it is legal, jus t the tax returns im worried about.

il revise my question then, not banks, say a tax department on another country asks for tax returns, how do i prove i wasnt supposed to pay taxes for it

 

Which country?

 

I guess you could always try to submit a zero tax return to revenue department to just have an evidence that you paid tax or not.

 

The accountants opinion letter which you hold would back that up.

 

When you worked in Canada and NZ how did you pay tax on the earnings and how was it recorded?

[Doronazl]

2 minutes ago, userabcd said:

Which country?

 

I guess you could always try to submit a zero tax return to revenue department to just have an evidence that you paid tax or not.

 

The accountants opinion letter which you hold would back that up.

 

When you worked in Canada and NZ how did you pay tax on the earnings and how was it recorded?

il be filing tax returns in thailand

but only for the portion of thai income , the salary im getting from the thai company

so il have those papers , just not for all my incomes cause for the foreign one(dividents) i dont owe taxes since i keep it out of thailand.

as for canada and NZ, i never worked there, just had job offers in both which i turned down since i decided to stay in thailand

[Naam]

45 minutes ago, ballpoint said:

All that Thailand cares about is whether you brought any money earned outside Thailand into the country the same tax year it was earned.  That doesn't absolve you from paying taxes on that money in the country where it was earned though, which is what you seem to be asking.  It may well be that some place you move to in future will want to see proof that appropriate tax has been paid on those earnings, in the country of origin, and the fact that you didn't have to declare them in Thailand won't be regarded as that proof.

Quote

That doesn't absolve you from paying taxes on that money in the country where it was earned though

incorrect information!

[ballpoint]

1 hour ago, ballpoint said:

That doesn't absolve you from paying taxes on that money in the country where it was earned though

53 minutes ago, Naam said:

incorrect information!

Why do you say that?  Not having to pay Thailand taxes on overseas earned income does not mean that you don't need to pay taxes in the country that income was earned.  If that is incorrect then what you are saying is that, because you don't have to pay tax on it in Thailand, you don't have to pay tax on it anywhere.  Which definitely is incorrect.

 

 

[OJAS]

2 hours ago, Naam said:

incorrect information!

 

1 hour ago, ballpoint said:

Why do you say that?  Not having to pay Thailand taxes on overseas earned income does not mean that you don't need to pay taxes in the country that income was earned.  If that is incorrect then what you are saying is that, because you don't have to pay tax on it in Thailand, you don't have to pay tax on it anywhere.  Which definitely is incorrect.

 

 

It all depends on the terms of the double taxation treaty between Thailand and the country in which the overseas income was earned.

[ballpoint]

9 minutes ago, OJAS said:

 

It all depends on the terms of the double taxation treaty between Thailand and the country in which the overseas income was earned.

Yes, but if you don't pay tax on it in Thailand because you don't bring it into the country the same year it was earned, then the tax authorities in the place it was earned aren't going to be interested in hearing that as an excuse for not paying anything to them.  As an example, say I went to Australia and worked for a month earning $X.  I get the money paid into my Australian bank account and don't bring it into Thailand, where I spend the rest of the year.  I don't have to pay any Thai tax on that money, however, I do have to pay Australian tax on it.  And what do you think the Australian tax department will say if I tell them I don't have to pay because Thailand says I don't have to?

[Naam]

6 hours ago, ballpoint said:

Why do you say that?  Not having to pay Thailand taxes on overseas earned income does not mean that you don't need to pay taxes in the country that income was earned.  If that is incorrect then what you are saying is that, because you don't have to pay tax on it in Thailand, you don't have to pay tax on it anywhere.  Which definitely is incorrect.

Mate... you are making assumptions based on a "wealth of no idea on finance and taxes". let me give you "my" example being a German not resident in Germany, banking in Singapore and investing in sovereign as well as corporate bonds worldwide free of income tax. i could even bank in Germany and hold some of my assets (including German assets) without paying a single penny in taxes and that since i retired 30 years ago.

 

note: "tax free" does not apply to share/stocks who's dividends are taxed at source by most countries. 

[Naam]

5 hours ago, OJAS said:

7 hours ago, Naam said:

incorrect information!

 

6 hours ago, ballpoint said:

Why do you say that?  Not having to pay Thailand taxes on overseas earned income does not mean that you don't need to pay taxes in the country that income was earned.  If that is incorrect then what you are saying is that, because you don't have to pay tax on it in Thailand, you don't have to pay tax on it anywhere.  Which definitely is incorrect.

It all depends on the terms of the double taxation treaty between Thailand and the country in which the overseas income was earned.

sorry OJAS, incorrect information too. in his case (working in Australia) a double tax agreement is irrelevant and work is taxed.

[wordchild]

12 hours ago, Naam said:

Mate... you are making assumptions based on a "wealth of no idea on finance and taxes". let me give you "my" example being a German not resident in Germany, banking in Singapore and investing in sovereign as well as corporate bonds worldwide free of income tax. i could even bank in Germany and hold some of my assets (including German assets) without paying a single penny in taxes and that since i retired 30 years ago.

 

note: "tax free" does not apply to share/stocks who's dividends are taxed at source by most countries. 

Whisper it quietly K Nam,

As you say, be a resident in Thailand but keep your assets (and income) offshore from Thailand, in a safe, stable  jurisdiction, where there  no tax liability for non residents. Probably better to pick a non EU country (for long term security)  eg Sing, but there are others

Only bring funds into Thailand during the first couple of business days of each year (to avoid any risk of a future challenge). Then sit back  and enjoy a tax free life, completely legally.

One of the worlds best kept tax secrets!   Who needs to live in Monaco?  

The other benefit of Sing is there is no inheritance tax. Not really much help for US citizens or those who have retained UK domicile, but for others a nice bonus, (at least for your kids!) 

Edited April 26, 2019 by wordchild

[ballpoint]

13 hours ago, Naam said:

Mate... you are making assumptions based on a "wealth of no idea on finance and taxes". let me give you "my" example being a German not resident in Germany, banking in Singapore and investing in sovereign as well as corporate bonds worldwide free of income tax. i could even bank in Germany and hold some of my assets (including German assets) without paying a single penny in taxes and that since i retired 30 years ago.

 

note: "tax free" does not apply to share/stocks who's dividends are taxed at source by most countries. 

Normally I'd give up by now, but you're one of the good guys, and we appear to be arguing at cross purposes.  I made a simple statement saying that the fact you don't need to pay tax on foreign earnings in Thailand does not absolve you from paying tax in the source country.  Of course, if there is no tax liability in that country, then you don't have to pay anything, but that is according to the laws of that country, and not due to the fact that Thailand says you don't need to pay any taxes here.

 

Further more, you are talking about investment income, whereas I was addressing the question raised in the OP, which mentioned working, not investing, outside Thailand, specifically NZ.  I can assure you that, if you work in NZ you will be liable for tax on that income, whether you need to pay tax on it in Thailand or not.  A point that you seem to agree with in the post above (substituting Australia for NZ).

 

Case in point:  I have a number of investments in Australia.  As a non resident and non citizen, I do not have to pay taxes on capital gains from my fund investments in Australia, which are classed as "non-taxable Australian property".  I have been through this with an Australian tax consultant and the Australian Taxation Office, and this is correct.  Because I reinvest them with the funds in Australia, and don't remit them to Thailand, I also don't have to pay any taxes on them here, where I am a tax resident, but the fact that I don't have to pay tax on them in Australia has nothing to do with that.  I also have bank accounts in Australia.  As a non resident, a 10% withholding tax is deducted from every interest payment.  Again, I don't have to pay any Thai tax on this, but, by claiming that my original statement (the fact you don't need to pay tax on foreign earnings in Thailand does not absolve you from paying tax in the source country) is incorrect, you are effectively saying that I can go along to the Australian Taxation Department and get those taxes refunded, because not having to pay any tax on them in Thailand absolves me from having to do so in Australia.  Yeah, right.

 

Finally, if I was a tax resident of my home country, (and many other Western ones), then I would need to declare all income earned anywhere in the world, whether or not I remitted it back to that country.  The tax authorities would look at my total declared income, (earned within and without my country of residence), how much tax I had already paid on that income, and whether or not they have a tax treaty with the country of origin, before presenting me with a bill.  For that reason I choose not to have any assets at all in my home country, not even a bank account.  Things may be different for Germany, but I can assure you, that if you became a tax resident of a country for which that was a requirement, you would be expected to pay applicable local taxes on all income declared, and would need to show proof of taxes paid in the country of origin if you wanted to make use of any tax treaties between the two.  Which is, after all, what the OP was all about.

 

Edited April 26, 2019 by ballpoint

[wordchild]

21 hours ago, Doronazl said:

yes i have all the documents to prove it is legal, jus t the tax returns im worried about.

il revise my question then, not banks, say a tax department on another country asks for tax returns, how do i prove i wasnt supposed to pay taxes for it

 

you are over thinking this. Why should this ever be an issue, assuming you have followed all the relevant laws in the countries where you live or earn income?

Tax authorities around the world are very familiar with this kind of situation.

Around the world  there are many national anomalies in the treatment of personal income tax.  eg a non UK national , who moves to the UK to work ,is very likely to be classed as not domiciled in the UK. The UK tax laws as applied to non-doms are somewhat similar  to the Thai tax treatment of non Thai sourced earnings.  ie A UK non-dom who lives and works in the UK, need only pay tax on foreign earnings that they subsequently bring into the UK.  If they had savings and investments in say Singapore, (and kept them there or only used the income outside the UK), then they would not have any UK tax liability on those investments. 

The difference in Thailand is that everyone , including Thai citizens, are taxed as if they were non-doms. Wealthy Thais benefit enormously from this , which is why its unlikely to change anytime soon!

 

 

[wordchild]

2 hours ago, wordchild said:

you are over thinking this. Why should this ever be an issue, assuming you have followed all the relevant laws in the countries where you live or earn income?

Tax authorities around the world are very familiar with this kind of situation.

Around the world  there are many national anomalies in the treatment of personal income tax.  eg a non UK national , who moves to the UK to work ,is very likely to be classed as not domiciled in the UK. The UK tax laws as applied to non-doms are somewhat similar  to the Thai tax treatment of non Thai sourced earnings.  ie A UK non-dom who lives and works in the UK, need only pay tax on foreign earnings that they subsequently bring into the UK.  If they had savings and investments in say Singapore, (and kept them there or only used the income outside the UK), then they would not have any UK tax liability on those investments. 

The difference in Thailand is that everyone , including Thai citizens, are taxed as if they were non-doms. Wealthy Thais benefit enormously from this , which is why its unlikely to change anytime soon!

 

 

also you are likely to find that banks, in particular ones that deal with expats, will be familiar with the Thai tax situation; or, at the least, someone within the bank will be.

The person i deal with at my bank in Singapore is very familiar with this; in fact she once told me that her busiest time for money transfers was the first week of January, when all her Thai clients are making their annual transfers back to Thailand! 

[Doronazl]

5 hours ago, wordchild said:

Whisper it quietly K Nam,

As you say, be a resident in Thailand but keep your assets (and income) offshore from Thailand, in a safe, stable  jurisdiction, where there  no tax liability for non residents. Probably better to pick a non EU country (for long term security)  eg Sing, but there are others

Only bring funds into Thailand during the first couple of business days of each year (to avoid any risk of a future challenge). Then sit back  and enjoy a tax free life, completely legally.

One of the worlds best kept tax secrets!   Who needs to live in Monaco?  

The other benefit of Sing is there is no inheritance tax. Not really much help for US citizens or those who have retained UK domicile, but for others a nice bonus, (at least for your kids!) 

if you read the law, that is incorrect, thats why i started the post m8.

the legistlation specifically says that those funds will be taxes upon bringing them into thailand, no matter what year.

[Naam]

Thailand:

6 hours ago, wordchild said:

One of the worlds best kept tax secrets!   Who needs to live in Monaco?

[Naam]

6 hours ago, ballpoint said:

#0 Normally I'd give up by now, but you're one of the good guys, and we appear to be arguing at cross purposes. 

 

#1 I made a simple statement saying that the fact you don't need to pay tax on foreign earnings in Thailand does not absolve you from paying tax in the source country. 

 

#2 Of course, if there is no tax liability in that country, then you don't have to pay anything, but that is according to the laws of that country, and not due to the fact that Thailand says you don't need to pay any taxes here.

#0

 

#1 the global debt market (e.g. government and corporate bonds)  comprises the biggest share of investment possibilities. any country that (except those with stupid governments) which issues debt is interested to sell that debt at competitive conditions, because it goes without saying that investors prefer to receive a return on their capital of X-% and not X-% minus tax at source and therefore laws are adjusted and no tax is deducted.

 

corporations have no influence on tax laws. they circumvent any existing or potential tax hurdles by establishing a separate corporation in an offshore jurisdiction (dozens rxist!) where the debt is emitted et voilà... problem solved. now all what it takes to earn tax free interest income and pocket capital gains is a tax residence in a friendly country such as the Land of Smiles.

 

#2 that is of course correct.

[Naam]

Quote

ballpoint

Finally, if I was a tax resident of my home country, (and many other Western ones), then I would need to declare all income earned anywhere in the world, whether or not I remitted it back to that country.  The tax authorities would look at my total declared income, (earned within and without my country of residence), how much tax I had already paid on that income, and whether or not they have a tax treaty with the country of origin, before presenting me with a bill.  For that reason I choose not to have any assets at all in my home country, not even a bank account.  Things may be different for Germany...

things are more or less the same in Germany. living there as a German citizen means i'm taxed on worldwide income and gains. living outside Germany i'm also taxed on proceeds generated in Germany. however, i'm not taxed on proceeds generated abroad even if the asset is held in a German bank.

[Naam]

1 hour ago, Doronazl said:

7 hours ago, wordchild said:

Whisper it quietly K Nam,

As you say, be a resident in Thailand but keep your assets (and income) offshore from Thailand, in a safe, stable  jurisdiction, where there  no tax liability for non residents. Probably better to pick a non EU country (for long term security)  eg Sing, but there are others

Only bring funds into Thailand during the first couple of business days of each year (to avoid any risk of a future challenge). Then sit back  and enjoy a tax free life, completely legally.

One of the worlds best kept tax secrets!   Who needs to live in Monaco?  

The other benefit of Sing is there is no inheritance tax. Not really much help for US citizens or those who have retained UK domicile, but for others a nice bonus, (at least for your kids!) 

if you read the law, that is incorrect, thats why i started the post m8.

the legistlation specifically says that those funds will be taxes upon bringing them into thailand, no matter what year.

this has been hashed through umpteen times. important is that the practice levying taxes differs from legislation. this practice has several reasons. one of them is because any implementation would extremely reduce the repatriation of funds by Thais or any investment foreigners (not necessarily residents) are planning. imagine if any big ticket item (e.g. a house, a condo or a car would be slapped with 35% income tax) because the money was brought to Thailand from abroad.

 

 

 

[Doronazl]

7 hours ago, Naam said:

this has been hashed through umpteen times. important is that the practice levying taxes differs from legislation. this practice has several reasons. one of them is because any implementation would extremely reduce the repatriation of funds by Thais or any investment foreigners (not necessarily residents) are planning. imagine if any big ticket item (e.g. a house, a condo or a car would be slapped with 35% income tax) because the money was brought to Thailand from abroad.

 

 

 

question is, if and when i relocate and be asked for tax returns for those funds, what i do then ?, i feel the letter wouldnt suffice

[wordchild]

4 hours ago, Doronazl said:

question is, if and when i relocate and be asked for tax returns for those funds, what i do then ?, i feel the letter wouldnt suffice

tax authorities do not (generally)  ask for historic tax returns to demonstrate source of funds that you acquired before you became resident in their country.  All they are properly  concerned about is that you are paying (and have paid in the past) the correct tax in the country where you are currently resident. 

In my working life i have been tax resident in UK, USA, Singapore and now Thailand. In any country i have lived i have never been asked for historic tax returns from another country. Even in the US ,where i once had to go through a full tax audit, i was not asked to produce prior year tax returns from the time before i became resident.

It is true that if other authorities (ie police, Money Laundering officials etc) suspect that someone has funds that may come from illegal activity, then they are likely to investigate the history of those funds. These agencies may well be alerted by your bank or possibly (less likely)  the local tax authorities. You are unlikely to even know that you are being investigated until you are arrested or your assets are frozen. 

 

 

[wordchild]

15 hours ago, Doronazl said:

if you read the law, that is incorrect, thats why i started the post m8.

the legistlation specifically says that those funds will be taxes upon bringing them into thailand, no matter what year.

This is not true. What counts is how the law is written IN THAI and how the Thai tax authorities have always interpreted this law. I have had this explained to me , in some detail,  in the past, by my own Thai tax lawyer. You really need to get a Thai lawyer (expert in Tax) to interpret the law directly from Thai language. There is some subtlety around the way it is written, as i understand it; and this is not clear in  some English translations. That is how it was explained to me anyway.

  Tilleke and Gibbins is one of Thailand's most respected law firms  https://www.tilleke.com/sites/default/files/Thailand-Tax-Guide.pdf   This is their published Thai Tax Guide. 

Have a look at chapter 7.

 

Edited April 27, 2019 by wordchild