Taxation on expats resident in Thailand

[JimGant]

On 6/28/2020 at 4:24 PM, Max69xl said:

You never pay tax in Thailand if there's a treaty between your home country and Thailand. You pay tax where the pension was earned. 

Baloney. The US-Thai tax treaty gives exclusive taxation rights to the US for US government pensions -- but gives "exclusive" rights to Thailand for private pensions, to include IRAs, for US persons resident in Thailand. But Thailand chooses not to take advantage of this tax treaty provision, so, seemingly, the US person resident in Thailand pays no taxes to anyone. Nope. Uncle Sam, in all its tax treaties, has what's called a "saving clause," whereby, even if certain incomes are designated "exclusive" to your resident country, you still must declare them in your US tax return -- but can take a credit for any taxes paid to Thailand, thus avoiding double taxation. So, since Thailand is not interested in taxing your private pension or IRA, per the treaty, you end up paying taxes on this to Uncle Sam, i.e., no Thai taxes thus no tax credit against your US taxes. No free lunch -- after all, these treaties are for avoiding double taxation -- not for avoiding paying any tax to anyone. 

 

Many countries have begun to follow the US by implementing procedures to preclude not paying taxes to anyone.

 

From the Norwegian-Thai example:

Quote

Under the tax treaty between Norway and Thailand article 18, pensions are only liable to tax in the recipient's country of residence. If a Norwegian pension is liable to tax in Thailand pursuant to this provision, Norway will exempt the pension from tax. The tax exemption in Norway is however limited to the part of the pension that is taxed in Thailand.

Thus, all Norwegian pensions, to include gov't., are taxable by Thailand for Norwegians residing in Thailand. The trick is to get Thailand to actually tax these pensions, as they're seemingly reluctant to do. And unlike a one-for-one tax credit, like with the US-Thai situation, if Thailand taxes all your Norwegian pensions, but this happens to be at a much more favorable rate than the Norwegian rate -- good deal! Your total tax bill is the lesser Thai tax bill. But you have to show the Norwegian tax authorities your tax bill from Thailand in order to get this exemption. Thus, I can only assume many, if not all, Norwegians are paying taxes on their pensions to Norway, not to a reluctant Thailand. Rather stupid on Thailand's part, for sure. Why they don't take advantage of these tax treaties is definitely costing them revenue....

 

[Leaver]

1 hour ago, JimGant said:

Baloney. The US-Thai tax treaty gives exclusive taxation rights to the US for US government pensions -- but gives "exclusive" rights to Thailand for private pensions, to include IRAs, for US persons resident in Thailand. But Thailand chooses not to take advantage of this tax treaty provision, so, seemingly, the US person resident in Thailand pays no taxes to anyone. Nope. Uncle Sam, in all its tax treaties, has what's called a "saving clause," whereby, even if certain incomes are designated "exclusive" to your resident country, you still must declare them in your US tax return -- but can take a credit for any taxes paid to Thailand, thus avoiding double taxation. So, since Thailand is not interested in taxing your private pension or IRA, per the treaty, you end up paying taxes on this to Uncle Sam, i.e., no Thai taxes thus no tax credit against your US taxes. No free lunch -- after all, these treaties are for avoiding double taxation -- not for avoiding paying any tax to anyone. 

 

Many countries have begun to follow the US by implementing procedures to preclude not paying taxes to anyone.

 

From the Norwegian-Thai example:

Thus, all Norwegian pensions, to include gov't., are taxable by Thailand for Norwegians residing in Thailand. The trick is to get Thailand to actually tax these pensions, as they're seemingly reluctant to do. And unlike a one-for-one tax credit, like with the US-Thai situation, if Thailand taxes all your Norwegian pensions, but this happens to be at a much more favorable rate than the Norwegian rate -- good deal! Your total tax bill is the lesser Thai tax bill. But you have to show the Norwegian tax authorities your tax bill from Thailand in order to get this exemption. Thus, I can only assume many, if not all, Norwegians are paying taxes on their pensions to Norway, not to a reluctant Thailand. Rather stupid on Thailand's part, for sure. Why they don't take advantage of these tax treaties is definitely costing them revenue....

 

There's going to be some people getting nasty letters to their registered addresses in their home country's in the future.

 

Not only a demand for current tax, but also back taxes, and possibly a fine. 

 

Taxation has no boarders now.