Thai gov. to tax (remitted) income from abroad for tax residents starting 2024 - Part I

[DodgerRodger]

27 minutes ago, Sheryl said:

There is a complete exemption on Social Security and annnuities for US citizens, this is specified in the Tax treaty between US and Thailand.

 

I would suggest everyone review the relevant tax agreement between their own country and Thailand. 

 

 

Thank you Sheryl and that is exactly what I just did with minimal effort using google.  My research quickly showed me not to worry.  Here's the wording from the Double Taxation Agreement between Thailand and Hong Kong

 

Article 18 PENSIONS

1. Subject to the provisions of paragraph 2 of Article 19, pensions (including a lump sum payment) and other similar remuneration paid to a resident of a Contracting Party in consideration of past employment shall be taxable only in that Contracting Party.

2. Notwithstanding the provisions of paragraph 1, pensions (including a lump sum payment) and other payments made under a pension or retirement scheme which is :

   1. (a)  a public scheme which is part of the social security system of a Contracting Party or local authorities thereof; or

   2. (b)  an arrangement in which individuals may participate to secure retirement benefits and which is recognised for tax purposes in a Contracting Party,

   shall be taxable only in that Contracting Party.

 

[Old Nomad]

This would be relevant for some German expats. While Germany has a tax agreement with Thailand, many Germans choose to be taxed in Thailand, relying on TH not collecting the tax on their pensions even though it is entitled to do so. The German tax on typical pensions is not high, e.g. 63€ tax for 1700€ per month pension in 2020.

[Sheryl]

1 hour ago, shortstop2 said:

Like some Americans my Social Security (government program) income is paid directly to Bangkok Bank.  Wonder if this will be taxed?

 

Perhaps better if I have my Social Security paid into an USA bank account?

As previously posted.  under the Tax Agreement between the US and Thailand, US Social Security is exempt from Thai taxation.

[Sheryl]

42 minutes ago, shortstop2 said:

The USA has a DTA with Thailand.  However, I have arranged my finances so that I am in a 0% tax bracket.  So my income, Social Security, Traditional IRA withdrawals and Roth IRA withdrawals could be taxed in Thailand?

No. 

 

Please read the Tax Agreement between the 2 countries.  Such income can only be taxed in US. Doesn't matter if US rules mean you owe 0. Thailand still cannot tax such income. 

[dannyb123]

4 hours ago, Thaindrew said:

The Thailand Elite Visa is listed as exempt from Tax on the IRS website

Where exactly does it say this, I've not been able to find it

[Gknrd]

So basically each year if from the US. You will have to show 800K in the bank. Or 65K monthly coming in each month. Then show a current W-2 or what ever showing all income and where your income is coming from. 

I wonder how the agents are going to get around that one... hahaha

Edited September 18, 2023 by Gknrd

[Arkady]

5 hours ago, h3ith said:

The Google translation refers to (A) "income due to work duties or business conducted abroad" or (B) "because of property". 

 

A) Section 40 of the revenue code:

A1) Any of us is a tax resident of TH if we stay more than 180 days. Tax residency has nothing to do with the immigration status or the type of extension. 

 

A2) "Income derived from employment, whether in the form of salary, wage, per diem, bonus, bounty, gratuity, pension, house rent allowance, monetary value of rent-free residence provided by an employer, ..." 

"Pension" among all these types of income seems to refer to private pensions paid by an employer, (perhaps) not government pensions.

The double-tax treaty between your country and TH regulates where government pensions and private pensions are taxable. In previous years, many retirees could not even get a Thai Tax ID even when they asked for one. 

 

B) Section 41 paragraph 2: capital gains, interest, dividends. "A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax." 

This decree does not change the current tax law, which only imposes tax on financial income if you transfer it into TH in the same calendar year when it was earned.

Employment income is different - it's always taxable in TH if you earn it while you are in TH, even if you receive it from a foreign employer and park it in a foreign bank account. 

 

(C) Income tax on capital, i.e. on the savings you transfer from your foreign savings account to TH: No, cannot happen. If you transfer 5mil THB of savings to buy a condo and TH were to impose 25% income tax on the incoming 5mil, then the real estate market would implode. This decree does not change the tax law, which only taxes income but not the substance or capital.

In the worst case, the revenue office may demand proof of how much financial income was included in the 5mil, e.g. 200,000 interest income in the months before it was transferred. Then they could impose a 5% tax on the 50,000 of interest that exceeds 150,000. That's not a new tax law. It was just not enforced. 

 

(D) TH has signed up for the Automatic Exchange of Information with most other countries. So if an account owner is registered with a TH residence address with his bank in the EU, ANZ or UK, then the TH revenue department will receive data about incoming payments the next year. In 2025, a foreigner who received a 2024 stream of payments from some Western business in his Western bank account may be asked to explain the source: "We've got these data from your foreign bank. Did you earn foreign business or employment income while you lived (and apparently worked) in TH?"  

A well thought out and explained commentary but there are some potential issues.

 

A2 There is a ruling for the RD's tax lawyers from the early 2000s that I can't lay my hands on for the moment to the effect that foreign pension income remitted to Thailand by Thai tax residents in the year it was earned was indeed deemed taxable income.  The RD has done nothing to try to enforce this probably because it would be too much trouble and very little would be collected, since a great deal of the pensions would be covered by DTAs. That is still true but this idea doesn't seem very well thought through, so nothing can be said to be impossible.

 

B Section 41 of the Revenue Code indeed appears to say that income earned abroad in the previous tax year is taxable when remitted to Thailand and that has always been the RD's interpretation until now.  However, when you look at the Thai original and take into account that Thai has no definite or indefinite articles, you can see that see that it could be interpreted as income earned abroad in a previous tax year is taxable when remitted to Thailand.  And that unfortunately appears to be the interpretation that Srettha as finance minister has instructed the RD to make.  If you consider the intent, it seems that the previous interpretation was intended.  That is a wordy language and makes up for vagaries like having no definite or indefinite articles by adding more phrasing for the avoidance of doubt, e.g. "in any previous tax year whatsoever".  But the drafters didn't say that which implies they meant only the previous tax year for which you have to file a tax return.  Some may say this interpretation is non-intuitive and is merely a sleight of hand tactic by the government to try to raise more revenue without the need to subject amendments to the Revenue Code to parliamentary scrutiny and test the unity of the marriage of convenience coalition. It could be that the new interpretation will be challenged in the tax court.

 

D The exchange of information agreement is a concern in this context.  I received a letter from the UK taxman accusing me of concealing income that had obviously come from a bank somewhere reporting a remittance. I had to pay my tax accountant to send them a letter explaining that I was a non-UK tax resident but regularly filed tax returns on UK sourced income. The same could easily happen in reverse in Thailand.

 

 

 

[bob smith]

Right, everyone calm down. 
 

this is in the very early stages of development. I remain highly skeptical that any of this will affect us farangs living here long term. Even if it does I’ve got 25mil in the bank and investments ready to be liquidated at a moments notice, and the Thai government can’t touch a single cent. 
 

always have a plan b folks, but for now I think this remains in the ‘up in the air’ category, ie, don’t worry too much about it.. yet. 

Edited September 18, 2023 by bob smith

[GeorgeCross]

2 hours ago, Metapod said:

Thailand is going to lose A LOT of wealthy expats over this change.

yep if you make $1M in investment income you would need to pay the thai gov $375,000 before you could transfer a single dollar for living expenses lol

 

caribbean anyone?

[alanrchase]

I shall be declaring any money I send over as coming from an inheritance. Once I have used up the amount that I can prove as inherited I will review the situation.

[bob smith]

3 hours ago, Felton Jarvis said:

Many of us will be saying “Hello” to Hun Manet. Cambodia has looked good for quite a while. Easy terms, minimal paperwork.

Do you know what mate, it may not be a bad idea. I can live pretty much anywhere and if I am forced to relocate on the back of a technicality then so be it. 
 

how I make MY money is nobodies business but my own. If the Thai government wants to stick their grubby little hands into my pocket for whatever reason then I will be out of here faster than you can say noodle soup!! 

Edited September 18, 2023 by bob smith

[ericbj]

This may be of interest, although last updated in June this year:
https://www.thethailandlife.com/income-tax-thailand

[burner2014]

4 hours ago, bob smith said:

Indeed.

 

the article seems more aimed at Thais earning income abroad than foreigners bringing money in.

Point is... even if it's not targeting foreigners. It makes the whole process a lot more headache and most probably paperwork heavy. This will not attract money to invest into the country like real-estate. Maybe a lot of exceptions coming though e.g. for all Chinese? ????

 

The Real Estate lobby will make a statement soon on this topic wait for it ???? they already afraid now to loose customers.

[burner2014]

6 minutes ago, bob smith said:

Do you know what mate, it may not be a bad idea. I can live pretty much anywhere and if I am forced to relocate on the back of a technicality then so be it. 
 

how I make MY money is nobodies business but my own. If the Thai government wants to stick their grubby little hands into my pocket for whatever reason then I will be out of here faster than you can say noodle soup!! 

And I tell you most of us are thinking the same. Yes we may all love Thailand and living here is still good (was better before Covid and the whole inflation on groceries) ... but it's replaceable by other countries in SEA ????

[Jenkins9039]

7 minutes ago, bob smith said:

Do you know what mate, it may not be a bad idea. I can live pretty much anywhere and if I am forced to relocate on the back of a technicality then so be it. 
 

how I make MY money is nobodies business but my own. If the Thai government wants to stick their grubby little hands into my pocket for whatever reason then I will be out of here faster than you can say noodle soup!! 

Experiencing the same, overseas company and dividends every 5-10 yrs.

 

If they want to do this well, the Caymans is screaming hello, and that's a lot of money Thailand won't be getting, i was looking at doing the Cambodian / Thai / HK setup recently due to proximity and young kids when i take my next payment, but with this in mind, Thailand has entered the no beno zone.

[Lite Beer]

Agreement between UK and Thailand

UK-Thailand Double Taxation Convention signed 18 February 1981 (publishing.service.gov.uk)

 

2) (a) 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. (b) However, such pension shall be taxable only in the other contracting State if the recipient is a national of and a resident of that State.

[bob smith]

5 minutes ago, Jenkins9039 said:

Experiencing the same, overseas company and dividends every 5-10 yrs.

 

If they want to do this well, the Caymans is screaming hello, and that's a lot of money Thailand won't be getting, i was looking at doing the Cambodian / Thai / HK setup recently due to proximity and young kids when i take my next payment, but with this in mind, Thailand has entered the no beno zone.

I think it’s just another case of little Thailand flexing it’s muscles and thinking they are bigger than they actually are on the world stage.

 

just wait for the inevitable flip flop in the coming days once they see just how negatively this has been received by the expat community. 

[nomadinuk]

10 hours ago, lordgrinz said:

It will be interesting to see how this plays out, I guess I could just stop sending anything over here, which is fine with me.

If you have a wise account. Maybe you could load that account up and hold it in Thai baht. Then when you want to withdraw from a Thai ATM, use your wise debit card. Other than the 220 baht withdrawal fee, it's a little safer than your money being deducted by maybe 20% or whatever the amount will be when it enters your account. 

[Arkady]

1 hour ago, StayinThailand2much said:

Knowing Thai bureaucracy, one may have to prove it. Say, you made x£/€/$ 20 years ago, then had it in a savings account till now, maybe they will ask you to prove that it was taxed 20 years ago in your home country. - I'm not suggesting that it will be like that, but who knows...

This new interpretation of the Revenue Code to mean ANY previous tax year, rather the apparent intent which was the THE previous tax year, gives rise to exactly that concern, since it appears to set no limit on how long ago that money was earned. Not only that the interest earned on the savings account going back indefinitely could also be deemed as taxable when remitted to Thailand.  The Revenue Code doesn't specify income from property or real estate, as many of the translations suggest, but actually says income earned from assets overseas which could be any form of income generating asset.  Furthermore there is no separate treatment of capital gains in the Revenue Code. So any capital gains, say from selling a house at any time in the past, could be taxed at progressive rates as income, if remitted to Thailand.

[chickenslegs]

Just for fun, I just checked a Thailand Income Tax calculator. I would be better off paying tax here, if the UK allowed it.

https://www.uobam.co.th/en/tax-calculation

[Foxx]

3 minutes ago, nomadinuk said:

If you have a wise account. Maybe you could load that account up and hold it in Thai baht.

Great idea, apart from the fact that Wise doesn't let you hold balances in baht.

[Lorry]

6 hours ago, Thorgal said:

If your overseas money is transferred to Thailand from a private bank account it won't be considered in Thailand as "world income". So, no Thai income tax.

 

Where do you get this idea from?

[GeorgeCross]

at this point its far cheaper for my wife and my 2 kids to live in the uk (no intl school fees) and only the tax situation balanced it out. if they invoke this or withold on all incoming remittances we'll leave no problem.

 

if have to pay tax on global financial income i'd rather do it in a modern country with modern infastructure.

[Jenkins9039]

8 minutes ago, GeorgeCross said:

at this point its far cheaper for my wife and my 2 kids to live in the uk (no intl school fees) and only the tax situation balanced it out. if they invoke this or withold on all incoming remittances we'll leave no problem.

 

if have to pay tax on global financial income i'd rather do it in a modern country with modern infastructure.

5 months thailand for me, caymans/dubai/singapore/hk otherwise. 

 

Even throwing 100k Euro at the Italians is more attractive than this BS.

[Arkady]

22 minutes ago, burner2014 said:

Point is... even if it's not targeting foreigners. It makes the whole process a lot more headache and most probably paperwork heavy. This will not attract money to invest into the country like real-estate. Maybe a lot of exceptions coming though e.g. for all Chinese? ????

 

The Real Estate lobby will make a statement soon on this topic wait for it ???? they already afraid now to loose customers.

Before COVID Chinese buying of condos had become a huge chunk of the developers' market and has apparently been creeping back since the Chinese have been allowed to travel again.  China has a double tax treaty with Thailand but it seems only to address corporate tax payers, not individuals. Perhaps China was only concerned about its state owned enterprises at the time.  Anyway most of the money is assumed to be earned in the black economy in China and wouldn't benefit from a DTA.  So for any Chinese who spends over 180 days a year in Thailand the idea of having to pay tax on money brought in to buy a condo would be a bit of of turn off. Even for those who spend less than 180 days in country, the idea of foreign remittances maybe getting screened for income tax liability could spoke the market completely.

 

Also when you think of a typical expat farang arried to a Thai who wants to bring in a chunk of cash to buy a bit of landed property for his family to live in, they could also be put off. Their money is not even going directly into a real estate investment which might eventually be granted exemption from scrutiny. It is technically being gifted to his wife.

[GeorgeCross]

11 minutes ago, Arkady said:

This new interpretation of the Revenue Code to mean ANY previous tax year, rather the apparent intent which was the THE previous tax year, gives rise to exactly that concern, since it appears to set no limit on how long ago that money was earned. Not only that the interest earned on the savings account going back indefinitely could also be deemed as taxable when remitted to Thailand.  The Revenue Code doesn't specify income from property or real estate, as many of the translations suggest, but actually says income earned from assets overseas which could be any form of income generating asset.  Furthermore there is no separate treatment of capital gains in the Revenue Code. So any capital gains, say from selling a house at any time in the past, could be taxed at progressive rates as income, if remitted to Thailand.

this would mean you would be liable for tax on all income for ALL of the time you have spent in thailand and would have to pay all of it before you could actually get a single $ into your thai bank account!! for some that could be many $100Ks. yikes. that would be madness, all transfers would stop immediately, people would spend down their thai balances, sell up and leave.

[JackGats]

8 hours ago, renaissanc said:

I wonder what the government will do if the money comes from a bank account in another country, which is in a different name to one's own, i.e. someone else sends you money. Surely, that would not be taxed as "personal income tax". 

Could be worse than that, ie considered and taxed as money earnt (without a working permit) from inside Thailand.

[ravip]

10 hours ago, bdenner said:

I'm thinking a lot of you have your "nickers in a twist" over an item that will not effect you!

Pray,  tell 'em why they should not.

You will save many a knicker. 

[ericthai]

10 hours ago, freeworld said:

Its not a money grab if it follows the law or new laws are implemented for govt to get new sources of income.

 

No doubt foreigners residing in Thailand and making use of govt services and infrastructure should be paying tax in Thailand, this is a fuction of the world order.

 

I thought everyone is agreeable to paying their fair share? This is the mantra spewed by many.

 

Its all about being free.

You do realize we are all paying a tax already with VAT.

[bob smith]

Another thing. If forced to pay tax on money earned from abroad in Thailand does that mean we can access the healthcare system free of charge? As my hard earned money will be supposedly going directly to fund it. 
 

also national parks, will I be getting in free or at subsidized rates with all the other tax paying Thais? 
 

so many questions that will need to be answered, and if I don’t like the answers then I will be hopping on a plane with all my riches. Thailand can kiss my behind!