Thai Tax Liability On Non Remitted Overseas Earnings

[TCA]

I plan an extended stay with friends living in Thailand, visiting on a Non Immigant O visa and will likely spend over 6 months in Thailand next year. Reading the taxation rules on the Hull consulate's website, it states that anyone who spends 180 days or more in Thailand in any tax year is considered resident for tax purposes and is therefore liable to pay tax not only on income from sources within Thailand but also outside of Thailand. It's the same as being UK resident really.

Does anyone know of any instances where people on long stays have been pulled up on this? I presume that as for the UK, the overseas income does not need to be remitted to the country of residence for tax liability to ensue. I'm not sure how the Thai authorities would know of a person's worldwide income if monies aren't sent to Thailand as I think any new bank co-operation agreements are in effect in the EU only? Don't know.

Can anyone shed any light as if needbe I will limit my stay in Thailand to 180 days to avoid tax residency?

Thanks

TCA

[singa-traz]

http://www.rd.go.th/publish/6045.0.html

1. Taxable Person

Taxpayers are classified into "resident" and "non-resident". "Resident" means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand on a cash basis, regardless where the money is paid, as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however, subject to tax only on income from sources in Thailand.

[gregchambers]

As far as I am aware, if you stay over 180 days you would be taxed on any income remiited to Thailand from overseas BUT not on any money taken from your savings (hint!)... BTW the UK has lots of concessions for people who are not UK citizens re tax on worldwide income unlike for UK citizens who have money from abroad but are UK resident.

If you are still resident in the UK but coming to Thailand for more than 180 days in a tax year, ie paying tax on your UK income, I think you would still be okay in Thailand as there is a double taxation agreement here... and, anyway, no-one actually checks unless you apply for a work permit in Thailand when you are automatically put in the tax system.

I believe that farang retirees generally DON'T pay tax on their pensions in Thailand, but may be wrong as am not there yet.

So in theory if over 180 days you could be taxed but can avoid by using savings and also double taxation rule but best just to completely avoid the tax system by not having a work permit which you would not need anyway unless doing a local job.

Of course, all above is subject to change on the whim of the government and implementation of old laws that have been temporarily put on hold (ie fifteen years ago you used to have to go to the tax office if here for more than ninety days to explain why and if more than 180 days would have to pay tax on Thai based income if any - I used to do something like 178 days just to get them all excited when adding up the days in the country)

[TCA]

Thanks a lot for both your answers. That clears things up. It's all down to the remittance basis for foreign income, unlike the UK. I couldn't see how they could enforce anything other than that anyway, except through large amounts of "goodwill" from potential taxpayers. The Hull Consulate site wasn't clear on that but I just wanted some other confirmation. I won't be entering the Thai tax system through work and shall be using my 'savings' to fund my stay.

Cheers

TCA

[gdhm]

I would have thought there were several additional issues/possibilities/concerns to those given or implied here.

I AM NO EXPERT but MY understanding of "double Taxation" agreements is that usually:

1) You must still try and pay the tax where you reside more than 180 days (e.g. Thailand). You cannot just elect which country suits you. IF your country would allow payment GROSS of tax so you can pay tax in the country you reside in 180+ days then that is what you are supposed to do.

2) Double Taxation agreement does not usually imply that if taxed in one country you do not have to pay tax in the other (that is too simplistic). My understanding (once again I reiterate I am no tax expert) is that you do not need to pay tax in Thailand (for instance) ONLY IF the tax you pay in the first country is EQUAL or HIGHER than the tax you would have been due to pay in the second country. IF IT IS NOT then you are liable for the difference to the second country.

3) I DO NOT KNOW, but I would imagine you are obliged to make a Thai Tax declaration if living in Thailand over 180 days whether tax would be payable/demanded anyway. So Thailand can ascertain if monies are due to it above that paid in taxes in the first country. If so I myself having been here 15 months need to check things out for certain.

4) I would think it is very easy for Thailand, ANYTIME IT WANTS, to check whether a person here over 180 days in any year is declaring and/or paying Thai tax. Thai Immigration have a lot of requirements already for Visas and extended Visas. All they need to do for a person applying for an extension/new Visa in Thailand more than 180 days is ask for Thai Tax declaration/payment proof.

5) If indeed there is a "no Thai taxation" proviso on Pensions form abroad (which I have not found yet) does that apply to ANY Retiree pension and not only state age retirement pensions (e.g. I am 55 retired and on a Private Company Pension taxed at source in the UK)?

Kind regards, Dave

[Naam]

no tax on overseas income if not remitted to Thailand. as simple as that! even when remitted there are ways to avoid tax LEGALLY without cheating. "hint, hint hint".

[gdhm]

no tax on overseas income if not remitted to Thailand. as simple as that! even when remitted there are ways to avoid tax LEGALLY without cheating. "hint, hint hint".

Hi Dr. Naam,

Many Thanks.

I hope you will be kind enough to bear with me and my lack of knowledge on the precise technicalities of Taxation terminology.

Just so I have dotted the I's and crossed the T's. When you say "income if not remitted to Thailand". Does that mean:

1) provided all my pension/income is paid into an overseas bank account (in my case UK) which I can then draw via ATM) then I have NO Thai tax liability.

2) Would the same apply if I transferred money from that account into a Thai account once the pension was received (or irregularly when extra cash needed)?

3) Is there legal requirement to fill in a "NIL" Thai tax return declaration each year. I ask because I made an error on this one in Spain - no tax liability but a declaration WAS required to that effect each year)

I wish to do what is correct/legal and not run the risk of of later problems due to ignorance.

Kind Regards, Dave

[lopburi3]

This is in the wrong forum and will be moved.

There is no attempt to tax those retired and the procedure in force for remitted income would only tax money brought into Thailand during the same year as earned. Savings would not be taxed.

[kudroz]

There are 2 things you want to make sure of.

1. That the income your earn isn't sourced in Thailand. (meaning that the location of the activity for which the payment is being made is not in Thailand)

2. That your income that is sourced outside of Thailand isn't remitted to Thailand in that same year. (document your money transfers to Thailand from savings you have accumulated from prior years)

[Naam]

There is no attempt to tax those retired and the procedure in force for remitted income would only tax money brought into Thailand during the same year as earned. Savings would not be taxed.

= summarized crisp and clear!

[samran]

There is no attempt to tax those retired and the procedure in force for remitted income would only tax money brought into Thailand during the same year as earned. Savings would not be taxed.

= summarized crisp and clear!

have enough cash flow that earnings go in one pile, get saved for a year, and then get repatriated the next? Live of savings in year one?

Possible?

[naka]

There is no attempt to tax those retired and the procedure in force for remitted income would only tax money brought into Thailand during the same year as earned. Savings would not be taxed.

= summarized crisp and clear!

have enough cash flow that earnings go in one pile, get saved for a year, and then get repatriated the next? Live of savings in year one?

Possible?

That's the right way, in theory anyway.

Naka.

[bkk_mike]

Why do you keep saying "ünlike the UK".

If you're not UK (or Irish) "domiciled". (literally, the normal country of residence of your father at the time of your birth - not necessarily where you were born), you don't pay tax in the UK on offshore earnings, except what you take into the country. (Even if you are a British citizen, and resident in the UK for tax purposes.)

This is why London has so many wealthy foreigners willing to live there. They're not liable to tax on their global income, only what they make in the UK, or choose to take into the UK out of their offshore income. (and similar to Thailand, if you can prove it's savings, or money from the sale of assets that you've held offshore since before you were resident, rather than income you're taking in, there's no tax).

(The Irish are unfortunate in that there's a tax treaty in place between Britain and Ireland which means this doesn't apply to Irish people living in the UK).

Edited May 21, 2007 by bkk_mike

[TCA]

Why do you keep saying "ünlike the UK".

If you're not UK (or Irish) "domiciled". (literally, the normal country of residence of your father at the time of your birth - not necessarily where you were born), you don't pay tax in the UK on offshore earnings, except what you take into the country. (Even if you are a British citizen, and resident in the UK for tax purposes.)

This is why London has so many wealthy foreigners willing to live there. They're not liable to tax on their global income, only what they make in the UK, or choose to take into the UK out of their offshore income. (and similar to Thailand, if you can prove it's savings, or money from the sale of assets that you've held offshore since before you were resident, rather than income you're taking in, there's no tax).

(The Irish are unfortunate in that there's a tax treaty in place between Britain and Ireland which means this doesn't apply to Irish people living in the UK).

I said "unlike the UK" but perhaps should have added "in my circumstances". I was talking with regard to my own situation and that of anyone else who is UK domiciled, UK resident and ordinarily resident who has income from any source worldwide, in that whether remitted to the UK or not, worldwide earnings are liable for UK income tax. I didn't elaborate because it made no difference to my question which was in respect of the regulations in Thailand. But you have added to the confirmation that Thailand works on a remittance basis given the required conditions mentioned. Thanks.

TCA