Withholding tax on dividends ?

[William Osborne]

I've been getting regular divided payments from SCB Smart Funds (mutual funds) without any tax deductions for last 4 or 5 years...up until last week where I had to pay a 10% withholding tax....payment before that was August with no deduction.

 

From what i've googled the tax deduction is actually correct for resident and non resident ? ????...but wondering why implement now ?

 

Anyone else have dividend paying funds through Thai banks and what is their tax situation or notice any changes..(I stay here on non o and work overseas)

 

Cheers

Edited September 28, 2019 by William Osborne

[fletchsmile]

Yes, like bank accounts, financial institutions seemed to have changed the default so that tax is deducted. Think it's just part of a wider crackdown on people who dodge taxes, and to make collection more efficient.

 

Although the default set up of 10% WHT deduction has changed, this doesn't change the fact that I can still choose either:

 

1) Deduct 10% flat rate and no more to pay

2) Elect to have no WHT tax deducted and then pay tax if any at marginal rate of tax. This could be zero if income in Thailand is small.

 

To have no WHT deducted you will have to provide your mutual fund provider with your tax number and other documents, including completing a form to choose this option. So it is no longer the automatic default.

 

What this means is that the Revenue department then have your tax number correctly in the system and it is linked to any income you receive, so they can check your income from all sources that are captured by their systems. They can then check that if you have say 200k from all sources then some tax is due at your marginal rate. Much more efficient to check tax is done properly and they can check people who should be paying some tax are.

 

In the past, some people would ask for no WHT, and then never declare the income on tax returns. Dividends received were not effectively matched to tax numbers, and some people never even gave their tax number. So in reality some of those people had a tax liability and were just ignoring it, regardless of how much income they had, and the Revenue wasn't effective at finding them.

 

Now if you want to elect no WHT you have to supply your tax number

 

  

 

 

 

 

 

 

 

Edited September 28, 2019 by fletchsmile

[William Osborne]

Thanks Fletch...it seems that SCB have already assigned me a tax ID ????..

The only income I have in Thailand are the dividends and capital gains from sale of funds so not sure where that leaves me .?

Might give SCB a call on Monday and see what they say.

Another option is to move some cash from high div funds to non div and withdraw 4% every year......which as of now are tax free.

[fletchsmile]

I think banks are now catching up with the legislation changes. I had an email from my RM at Tisco.

 

Electing Zero WHT is no longer an option. 

 

The default is now 10% WHT deduction. If you are a lower rate tax payer you will now have to claim back the WHT via your year end PND 90 income tax return.

Edited October 3, 2019 by fletchsmile

[YT3k72Em]

Same at a local bank asset management division, they removed the option to elect zero, and sent a letter saying those that had it elected are switched back to having WHT deducted. It might be universal now.

[William Osborne]

I guess 10% is not the end of the world.????.....in Europe your paying 20 to 30% and in US 15%...UK still seems to be tax free.

 

Just as long they don't start taxing capital gains...that would be a game changer.

[fletchsmile]

16 hours ago, William Osborne said:

I guess 10% is not the end of the world.????.....in Europe your paying 20 to 30% and in US 15%...UK still seems to be tax free.

 

Just as long they don't start taxing capital gains...that would be a game changer.

US default is 30% for non-US residents. That's a game changer for me. 

 

A W8BEN and DTA can reduce that to 15% for many non-US resident countries, including me as well as Thai spouse. But that also depends on whether your broker wants to bother with the admin. As default is 30% and no reduction for Singapore residents, then several Singapore based brokers, whose main clients are of course Singaporean residents, don't want to bother.  We're in that boat.

 

So things like "low cost ETFs" touted on here by US residents, as if suitable for everyone, are actually expensive to non-residents if they pay divs, because of the tax regime.

 

Yes CGT on gains in Thailand would be a nightmare

 

Singapore is great for tax if non-resident. 

 

[persimmon]

On 10/3/2019 at 1:44 PM, William Osborne said:

I guess 10% is not the end of the world.????.....in Europe your paying 20 to 30% and in US 15%...UK still seems to be tax free.

 

Just as long they don't start taxing capital gains...that would be a game changer.

In the UK there is now a 7 % tax on divis above a 2 k allowance , introduced a couple of years ago.

[William Osborne]

21 hours ago, fletchsmile said:

 

A W8BEN and DTA can reduce that to 15% for many non-US resident countries, including me as well as Thai spouse. But that also depends on whether your broker wants to bother with the admin.

 

So things like "low cost ETFs" touted on here by US residents, as if suitable for everyone, are actually expensive to non-residents if they pay.

 

Internaxx send out the Wben and its 15% based of being resident in Thailand so I assume same for most people on here. Internaxx base your residency on where you spend most of your calendar days.

This is still better than than dealing with any of the European exchanges.

I would be interested to know if same tax for Thai residents with US based Interactive Broker acc ????

 

13 hours ago, persimmon said:

In the UK there is now a 7 % tax on divis above a 2 k allowance , introduced a couple of years ago.

I get well over that in UK dividends for over 5 years and as of end off 2018 tax year, zero tax.....fingers crossed it doesnt change.