Thailand Tax Identification Number (TIN)

[Digitalbanana]

On 11/25/2021 at 4:52 PM, Nik23 said:

I reside in Thailand, single, with '' Extension of stay based on  on Retirement”. Does this make me eligible to get a Thailand Tax Identification Number (TIN)  and thus, de able to do annual tax reports?

Yes, I am same situation as you. I went to my local tax office and they gave me a number (free service) inside 15 minutes.

[JimGant]

17 hours ago, Geir Rasch said:

If tax in you home country is higher than in Thailand, you will save money by paying tax to Thailand if your home country have a tax agreement with Thailand.

You're describing the Norwegian system, where all your Norwegian pensions (including government pensions) are, per treaty, taxable by Thailand if you're a tax resident there. And these pensions will be exempt from Norwegian taxes IF you show them your Thai tax return receipt showing these pensions were taxed by the Thais. So, if the Thai tax is lower than what the Norwegians would charge, you've made some money (but, again, you have to prove you paid taxes on these pensions to Thailand. No proof, pay Norway).

 

But, if you're a Yank, and poy taxes to Thailand, you get a credit for those taxes against your US taxes -- but unlike Norway, you don't get to exempt that income from US taxes.The end result is you end up paying the higher of either the Thai or the US tax: If your Thai tax is higher than your US tax on this same income, you'll get a 100% credit and thus pay no US tax on this income. Conversely, if the Thai tax is less, you'll only get a partial credit, equal to the Thai tax, against your US tax -- so your total tax bill will be all the Thai tax plus the US tax on this income, after the credit is taken. Bottom line is, you'll pay a total tax, part to Thailand part to the US, equivalent to what you would have paid to the US had there been no Thai tax paid. No good deal a la Norway.

 

 

Edited December 1, 2021 by JimGant

[mahjongguy]

58 minutes ago, JimGant said:

... if you're a Yank, and poy taxes to Thailand, you get a credit for those taxes against your US taxes...

Many ex-pats here choose to do it that way, let Thai Revenue keep the withholding and claim that on their 1040 as Foreign Tax Paid, but for Americans that is not correct per the IRS. They have a general rule that if it is possible to re-claim money withheld then the taxpayer must make a reasonable attempt to do so.  Then, of course, you claim the entire amount of interest and dividends paid as income. The withholding was temporary and now re-paid so it is no longer relevant. 

 

 

[JimGant]

47 minutes ago, mahjongguy said:

They have a general rule that if it is possible to re-claim money withheld then the taxpayer must make a reasonable attempt to do so. 

Agreed -- but the operative word is "reasonable." As many of us reading this forum for years have witnessed, your mileage varies considerably when trying to get a Thai Tax ID that will enable a refund of those withholding taxes on your bank interest. If I needed to quote to the IRS auditor why I couldn't get a Thai Tax ID, I'd reprint reports from this forum, like, no work permit, no Tax ID. But, the IRS is not going to audit your reporting of a credit for a piddly amount of Thai taxes paid on a piddly amount of Thai interest.

 

And from a legal standpoint, Thailand really has first dibs on taxing that interest, per tax treaty. Why they allow a refund to farangs with a tax ID, I dunno.

 

And from an ethical standpoint, you, the US taxpayer, is not cheating on taxes -- you're still paying the same tax bill, instead, it's now divided between Thailand and the US. Doesn't it make sense that Thailand gets to tax your Thai bank interest to pay to fill in their potholes?

 

Christ, as a retired CPA, this would be a slam dunk argument, in favor of the credit, with the IRS. I argued, and won, definitely more elaborate cases, including allowed deduction for shoes for airline employees (I won). So, for Yank taxpayers with withheld Thai taxes on bank interest, take the credit. If married, and the interest is less than $600, you don't even have to file an extra form -- just plug in the number on the 1040 line. (So, even for those with a Thai tax ID, and going thru the annual refund drill with the Thai tax authorities, switching to the tax credit, in the comfort of your computer and Turbotax, may be easier.)

[LivinLOS]

On 11/28/2021 at 7:04 AM, OJAS said:

Depends on the terms of the double taxation agreement between your home country and Thailand (if one exists).

It does.. But again many expats seem to wildly miss understand what DTAs do. A DTA doesnt enable you to pay taxes where you choose, a DTA will allow you to claim back taxes from the country you are not resident in.. Thereby preventing dual taxation. 

For a resident of Thailand who receives income the correct practice is to register non residency to ensure it is not taxed at source and correctly declare it here. That may not even incur a liability if money isn't remitted to the kingdom in the year it is earned. 

The situation I outline above the taxes are legally due in Thailand. The fact that Thailand makes no effort to collect them leads expats to think theres actually no tax liability. That is incorrect. My primary business (among a few other things) is cross border taxation consultancy and payrolling. Specifically EU and UK / Ireland but the same general OECD models apply. 

 

[LivinLOS]

3 hours ago, JimGant said:

You're describing the Norwegian system, where all your Norwegian pensions (including government pensions) are, per treaty, taxable by Thailand if you're a tax resident there. And these pensions will be exempt from Norwegian taxes IF you show them your Thai tax return receipt showing these pensions were taxed by the Thais. So, if the Thai tax is lower than what the Norwegians would charge, you've made some money (but, again, you have to prove you paid taxes on these pensions to Thailand. No proof, pay Norway).

 

But, if you're a Yank, and poy taxes to Thailand, you get a credit for those taxes against your US taxes -- but unlike Norway, you don't get to exempt that income from US taxes.The end result is you end up paying the higher of either the Thai or the US tax: If your Thai tax is higher than your US tax on this same income, you'll get a 100% credit and thus pay no US tax on this income. Conversely, if the Thai tax is less, you'll only get a partial credit, equal to the Thai tax, against your US tax -- so your total tax bill will be all the Thai tax plus the US tax on this income, after the credit is taken. Bottom line is, you'll pay a total tax, part to Thailand part to the US, equivalent to what you would have paid to the US had there been no Thai tax paid. No good deal a la Norway.

 

 

Thats actually almost the same in all EU countries.. Its just Norway has such a high tax rate and low tax free allowance that pensions benefit by being on Thai tax rates and so being in Norwegien Thai residents interest to make the change, means the change is well documented. 

The exact same thing applies to all uk / EU countries for any tax deferred pension scheme (read most) and any investment capital gains etc. 

 

[LivinLOS]

On 11/28/2021 at 10:05 AM, Nik23 said:

Thank you for your response. So, according to what you say, if Thailand wants, can tax the montly remittance some people send, in order to maintain retirement status?Also i dont think is correct that e.g. is you send here your rental income  is taxable because you will pay tax for this in your country, thefore you cannot have double taxation.

Rental income is a specific case. Because it arises from a fixed asset in the home country you cannot avoid paying taxes on it there.. But a REIT or unit trust doing the same thing, the investment returns would be taxable here. 

 

[Geir Rasch]

4 hours ago, JimGant said:

You're describing the Norwegian system, where all your Norwegian pensions (including government pensions) are, per treaty, taxable by Thailand if you're a tax resident there. And these pensions will be exempt from Norwegian taxes IF you show them your Thai tax return receipt showing these pensions were taxed by the Thais. So, if the Thai tax is lower than what the Norwegians would charge, you've made some money (but, again, you have to prove you paid taxes on these pensions to Thailand. No proof, pay Norway).

 

But, if you're a Yank, and poy taxes to Thailand, you get a credit for those taxes against your US taxes -- but unlike Norway, you don't get to exempt that income from US taxes.The end result is you end up paying the higher of either the Thai or the US tax: If your Thai tax is higher than your US tax on this same income, you'll get a 100% credit and thus pay no US tax on this income. Conversely, if the Thai tax is less, you'll only get a partial credit, equal to the Thai tax, against your US tax -- so your total tax bill will be all the Thai tax plus the US tax on this income, after the credit is taken. Bottom line is, you'll pay a total tax, part to Thailand part to the US, equivalent to what you would have paid to the US had there been no Thai tax paid. No good deal a la Norway.

 

 

The system you describe fot yanks is the same as in Norway when it comes to tax on salary. If you pay tax to say Thailand of salary, then the norwegian system gives you credit for that tax. They caculate tax as if all were to be taxed in Norway. Then they deduct the tax with tax paid in Thailand, so the result would be the same as if all tax were paid to Norway. So tax on pension is special. They don’t deduct calculated tax, they deduct the pension with the part of your pension taxed in Thailand and calculate tax from a lower sum. As you mentioned this system save you money when paying tax to Thailand as long as tax in Thailand are lower than tax in Norway. If Norway is the only country having this practise I don’t know.  

[userabcd]

1 hour ago, LivinLOS said:

Rental income is a specific case. Because it arises from a fixed asset in the home country you cannot avoid paying taxes on it there.. But a REIT or unit trust doing the same thing, the investment returns would be taxable here. 

 

"But a REIT or unit trust doing the same thing, the investment returns would be taxable here"

 

Do you also mean they are taxable in Thailand even when the income, interest or capital gain were not remitted to Thailand?

[topt]

8 hours ago, userabcd said:

Do you also mean they are taxable in Thailand even when the income, interest or capital gain were not remitted to Thailand?

No - if not remitted in the calendar year paid to you. However as mentioned the Thai Revenue service are unlikely to know if that is the case or not currently so it should be of no concern - currently.

[LivinLOS]

15 hours ago, userabcd said:

"But a REIT or unit trust doing the same thing, the investment returns would be taxable here"

 

Do you also mean they are taxable in Thailand even when the income, interest or capital gain were not remitted to Thailand?

if remitted into the country in the year it is received. 

[mahjongguy]

17 hours ago, JimGant said:

And from a legal standpoint, Thailand really has first dibs on taxing that interest, per tax treaty. Why they allow a refund to farangs with a tax ID, I dunno.

I agree with your statements, and this one question has a simple answer. Thai Revenue does indeed have first dibs; they refund the withheld interest and dividends only if and when they don't add up to the minimum level of taxable income. If I had a job and earned 250k a year, there would be no refund for me.

[LivinLOS]

7 hours ago, topt said:

No - if not remitted in the calendar year paid to you. However as mentioned the Thai Revenue service are unlikely to know if that is the case or not currently so it should be of no concern - currently.

The only real practical issue this whole thing throws up, is to make it clear to people using the monthly income route for non imm retirement or marriage visas, that by signing that they are bringing monthly income into the kingdom, as it is earned, they are creating a technical liability. Not only that but they literally sign a declaration of that liability and provide proof of it, wrapped up with a pretty little bow around it. 

Currently that tax liability is not chased, but I genuinely wonder why, given how clear cut it is, how it is then would be to chase, and how politically 'making foreign residents pay thier fair share the same as Thai people' would be wildly popular. 

Sure some will be able to prove that the income used was taxed at source (some !!) and even then the vast majority of DTAs would instruct the person to claim back tax from the government where you are no longer resident. Thats how dual taxation agreements work, they dont always protect against being charged 2 lots of tax, but they provide a system of claiming the tax back where you dont reside. 

And again, yes this is a complex issue. People use 'pensions' to refer to all kinds of non work related income, to both tax paid and tax differed actual pension plans, but also to all manner of investment returns, dividends, commissions, etc etc etc.. Then add in the differences in tax rates, territorial or as per the us citizen based taxation etc and its hard to make a single statement where all answers fit everyone. The facts are this, if your resident in Thailand 180 days per year your resident for tax purposes, and Thailand specifically includes pension income as income subject to taxation. 

Edited December 2, 2021 by LivinLOS

[mahjongguy]

"...Thailand specifically includes pension income as income subject to taxation...

 

Yes they do, but with conditions. In my case:

 

- My U. S. government pension (Social Security) is subject to taxation by the IRS because I have additional income.

- I do not transfer any of my SS income to Thailand until it has "matured".

 

So, all Thai Revenue requires of me is that I submit a copy of my 1040 (just the first page) when I file to get my 15% bank interest refunded. This is all the proof they require to see that the U.S. has first dibs on the SS pension.

[JimGant]

3 hours ago, LivinLOS said:

if your resident in Thailand 180 days per year your resident for tax purposes, and Thailand specifically includes pension income as income subject to taxation. 

The big exception found in many tax treaties is that government pensions are taxable only by the government paying them (interesting that Norway doesn't follow this rule). Thus, my military pension and social security are exempt from Thai taxation, so even if I had those payments direct deposited to a Thai bank (certain evidence that money is sent to Thailand in year paid), there would be no Thai tax liability. Now for a private pension, I certainly would not have it direct deposited to Thailand, but instead filter it through one of my long established US bank accounts.

[MajorTom]

21 hours ago, Geir Rasch said:

As you mentioned this system save you money when paying tax to Thailand as long as tax in Thailand are lower than tax in Norway. If Norway is the only country having this practise I don’t know.  

Is this even so if you are tax-emigrated from Norway? I know they then charge you a flat source-tax of 15% on pension. (If you live in Thailand. This varies from country of residence for some reason, and some are even exempt)

Going this route also means you give up your membership in the national health care system, voting rights etc.

[LivinLOS]

20 hours ago, mahjongguy said:

"...Thailand specifically includes pension income as income subject to taxation...

 

Yes they do, but with conditions. In my case:

 

- My U. S. government pension (Social Security) is subject to taxation by the IRS because I have additional income.

- I do not transfer any of my SS income to Thailand until it has "matured".

 

So, all Thai Revenue requires of me is that I submit a copy of my 1040 (just the first page) when I file to get my 15% bank interest refunded. This is all the proof they require to see that the U.S. has first dibs on the SS pension.

OK correct.. As I say at the end its very hard to cover all cases. You also must accept that the US is a wild anomaly being one of (IIRC) only 2 countries in the world that tax non resident citizens and US government based social security not being tax deferred. 

Almost the entire rest of the OECD world doesnt world that way. Most countries tax based on territorial residency and most pensions are merely tax deferred savings.  

[LivinLOS]

20 hours ago, JimGant said:

The big exception found in many tax treaties is that government pensions are taxable only by the government paying them (interesting that Norway doesn't follow this rule). Thus, my military pension and social security are exempt from Thai taxation, so even if I had those payments direct deposited to a Thai bank (certain evidence that money is sent to Thailand in year paid), there would be no Thai tax liability. Now for a private pension, I certainly would not have it direct deposited to Thailand, but instead filter it through one of my long established US bank accounts.

Another American ?? 

No most pensions are not 'taxable only by the government paying them' through the EU / UK / etc you declare non residency and pensions are paid tax free (and sometimes lose inflation protection increases from time of declaration) and then you pay your taxes where you live when you receive the pension. 

Most 'pensions' are simply tax deferred savings wrapped in one or another financial structure, to enable the draw down of those savings outside of peak earning years and provide income over old age past working lifetime. 

[JimGant]

52 minutes ago, LivinLOS said:

No most pensions are not 'taxable only by the government paying them' through the EU / UK / etc you declare non residency and pensions are paid tax free (and sometimes lose inflation protection increases from time of declaration) and then you pay your taxes where you live when you receive the pension. 

Well, UK government pensions, per tax treaty with Thailand, are taxable only by the UK.  Thailand cannot tax these pensions, so feel free to direct deposit into a Thai bank in year paid. I'm not going to look at every EU tax treaty to see if they are like the UK's. We've already pointed out that Norway does allow Thailand to tax its gov't pensions, but I believe they're an outlier on this matter.

 

Quote

Any pension paid by the Contracting State or a political subdivision or a local authority thereof to any individual in respect of services of a governmental nature rendered to that State or subdivision or local authority thereof shall be taxable only in that State.

Thai/UK Tax Treaty