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

[whiteman]

nz dollar jumped 1 % on this news today

[Thaindrew]

3 minutes ago, Lorry said:

The word "only" was added by you, its not in coconuts and not in the original from the RD, which has been translated in this thread 3 times

correct, it all relates to "tax residents" which is in absolute terms anyone that lives here 180 days in a tax year

[Dogmatix]

24 minutes ago, El Matador said:

To give a bit of perspective.

Indonesia and Vietnam tax everyone on their worldwide income.

Malaysia only taxes local income. And Philippines only taxes local income IF YOU ARE FOREIGNER. But if you get a Filipino passport you will get taxed worldwide.

 

Seems Thai nationals will be taxed worldwide wherever their income comes from without any possible loophole as they are the main target according to the articles.

Still have to see the details if foreigners will be taxed exactly the same on their worldwide income. Although I doubt it will happen, a tax system like in the Philippines could be an option if they want to keep stable their base of expats. That would be a positive discrimination for once.

Tax treaties only offer a protection to avoid to pay twice a tax on the same income but can't avoid bureaucracy and potential increased taxes if the treaty is not that great. Some of them were written 30 years ago in a very different context.

 

If they introduce someday a 90 days visa exemption (as some are thinking), you could do your 2 visa exemptions in a year and call it a day. Hassle free, and without all the bureaucratic nightmare, that would be an attractive alternative.

They will definitely not give foreign residents a more favorable tax regime than Thais. 

 

Thais working in countries with no double tax treaty like Israel will be taxed twice on their remittances home.

 

The difference with global taxation is that you can avoid Thai completely, if you never remit the overseas earnings to Thailand but many need the money to live on or buy property, cars etc.

 

Also when global taxation is introduced, a country just starts taxing foreign income that arises after that date.  Thailand intends to tax foreign income that arose at any time in the past without time limit, if it is remitted to Thailand.

[NanLaew]

4 hours ago, pizzachang said:

...A retired citizen from another country (not a Thai or a Thai passport holder) is not a "tax resident".  

The definition of a tax payer in Thailand as it CURRENTLY stands.

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 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.
 

https://www.rd.go.th/english/6045.html

It's the same criteria that the US, UK and many other nations use to determine your income tax liability. It isn't your pension status, age, height or haircut that determines whether you owe the revenue department any money. It's the simple metric of how many days you are physically in the country. The US, UK and others determine this by having access to immigration databases (airport, airline, port and border passport desk data).

 

[NanLaew]

1 hour ago, bannork said:

1 hour ago, freeworld said:

Taxes dont discriminate on citizenship or nationality. It is residence based as in most countries.

So does that mean Thai migrant workers sending money home from overseas are going to be taxed?

If they are like my Thai brother-in-law who only comes home from Turkey for about 30-days each year, no.

[Dogmatix]

1 hour ago, Sheryl said:

Yes, I think this is far from finalized.

 

It seems a common tactic of the Thai government to make announcements as a sort of trial balloon to see what reaction it gets ahead of actually doing something.

 

Doesn't mean this won't happen in some form but what exactly is far from set in stone at this point.

 

If/when the tax code is amended it will be necessary to (1) carefully read the revised text (not possible now as nto yet written let alone ratified yet) and (2) carefully read the Tax Agreement between your country and Thailand as applicable. 

 

I think in most cases any change will not be applicable to funds being transferred in by retirees, for 2 reasons: (1) often of a type exempt under tax treaties (e.g. pensions) and (2) often would not qualify as income (e.g. long term savings).

 

What they are aiming at is a loophole whereby Thai residents  can avoid tax on recently earned or passive income by remitting it to Thailand after the year in which it was earned. Not pension income and equivalent, nor transfer of foreigners' savings that were accumulated in many cases before even moving to Thailand.

 

The problem of course will be to find a wording which makes all that clear with no confusion.

 

Another concern will be ensuring (assuming a change is enacted) that provincial tax offices understand it. As we all know,  the Thai government often does not do a very good job of clearly communicating guidance to the field and different offices often have different interpretations.

 

Might be wise for those who do so, to reconsider  filing for refund of bank interest until the dust settles as that would bring you to  the Provincial Tax authorities' attention. I actually stopped doing this a year ago because 2 years running it led to me being called in  for questioning and having to provide extensive documentation of incoming transfers and answer a lot of intrusive questions. I prevailed (and luckily had saved credit advices to show money came in from abroad) but it was such a hassle I decided not worth it for a few hundred baht. A new directive about income from foreign sources, if issued, would much increase the odds of such scrutiny.

 

It would also likely be prudent to carefully read through the Tax treaty between your home country and Thailand to see if the money you are bringing in is exempt and, if it is not, consider the implications; if so, consider how clear the paper trail would be to show this.  For example, I currently have my US Social Security directly deposited to my bank in Thailand and that is the only money I bring in, and the credit advices clearly identify SSA as the originator of the funds. So I'm good. But in the past, before ISS started direct deposits to Thailand,  I was having savings transferred the origin of which would be hard to isolate as there were multiple sources  of funds coming into the same US bank accounts over time. I have always filed US tax returns on all income, including that earned abroad (3rd country, not Thailand) so would always have been protected from double taxation, but establishing that might have been complicated, and might even have necessitated filing both Thai and US tax returns and claiming tax credit on one of them.  A headache I would naturally prefer to avoid.

 

A major concern is that this is not just one of those trial balloons.  It is a Revenue Department order published in the Royal Gazette that has the force of law just like a ministerial regulation.  The order says that from 1 Jan the Clause 41 that says that only previous tax year's foreign income will be taxable, if also remitted in the same tax year, will thenceforce mean foreign income arising at any time in the past will be taxable whenever remitted to Thailand.  This seems a  complete distortion of the meaning of the clause that has been in force and interpreted in the way we all know and love for decades. So this is a done deal and because it is merely a distortion of the previous interpretation of the law, rather than a proper legal amendment, there may not be any ministerial regulations or other fine print to go with it as this would seem odd when there has been no change in the law. It could be walked back with another RD order saying forget about what we said in the previous order but this would be too much of a loss of face. So seems unlikely.

 

Perhaps Srettha as finance minister does intend to amend the Revenue Code.  He is also talking about getting tougher on inheritance tax and land and buildings tax.  And perhaps he would try to amend Clause 41, if he did put up a bill. Of course there is no guarantee that coalition partners, many of whom have probably accumulated wealth from corruption offshore would support this particular amendment or others on IHT for example. It would also take some time (at least a year) which Srettha doesn't have to make it look as if he is doing something about funding the digital wallet which he promised not to finance with more government debt.  So he sees overseas income as low hanging fruit.  No one knows how much it would generate in tax and when the number is known at the end of next year, politics will have moved on. 

[Dogmatix]

3 hours ago, Thaindrew said:

but only if you bring those monies to Thailand right, whatever that means, sure they can track bank transfers, but atm withdrawals, credit card payments etc could they get into that much detail?

 

No but the burden might be on the taxpayer to produce documentary evidence on the source of the income and to show it was already taxed in a DTA country. Also what if Thailand just assesses a tax demand which could happen years after the remittance and tells you to reclaim tax paid in the country of origin?  The Thai system will be out of kilter with other countries that deal with tax on a prior year basis because the RD is now saying it can tax overseas income that arose years ago which would probably make it impossible to reclaim tax.

[Thaindrew]

5 minutes ago, Dogmatix said:

No but the burden might be on the taxpayer to produce documentary evidence on the source of the income and to show it was already taxed in a DTA country. Also what if Thailand just assesses a tax demand which could happen years after the remittance and tells you to reclaim tax paid in the country of origin?  The Thai system will be out of kilter with other countries that deal with tax on a prior year basis because the RD is now saying it can tax overseas income that arose years ago which would probably make it impossible to reclaim tax.

I can see them potential saying that you haven't declared enough money to live so how are you living as a way of taxing you above what you have declared as bringing in. That's fraught with danger given the way other government office like immigration deal with things.

 

I suppose as a minimum you'd have to bring in and declare at least 65000 baht x 12 a year as living expenses to match what they insist people on retirement visas bring in (ignoring agents in the whole process for now). But what would the tax be on 780,000 Baht, not small for sure !

[jacko45k]

8 hours ago, Thaindrew said:

even the locals cannot really vote them out !

So true, sadly.

[Jenkins9039]

6 hours ago, Tippaporn said:

"No doubt foreigners residing in Thailand and making use of govt services and infrastructure should be paying tax in Thailand . . . "

The old gov't services and infrastructure fallacy.  If all tax money were spent legitimately then they'd be flush with cash.  But that's not what happens in the real world.  I reject your claim that you were born yesterday.

They will be flush with cash, our cash!!!

 

How about taxing the Thais, just 3% pay taxes, and every farang road is full of wags that do side hustles and don't pay tax, <deleted> me, 90% of the Thai's i meet scream poverty whilst earning 20,000+ in the grey economy and not declaring or paying.

[kwilco]

1 hour ago, FritsSikkink said:

There are deductibles too.

Sounds like you think they take the whole lot after that!!!

 

that's the level up to which you don't pay tax....they take nothing - the next level how much?

 

150,001 to 300,000 - 5%

300,001 to 500,000 - 10%

500,001 to 750,000 - 15%

750,001 to 1,000,000 - 20%

 

for example....

So if you earn 450k

 

they take nothing from the first 150,

then 10% off 150k  = 15k

and 20% off the last 150k you earned. = 30k

 

so the total deducted would be 45k right?

 

[Hummin]

7 minutes ago, Thaindrew said:

I can see them potential saying that you haven't declared enough money to live so how are you living as a way of taxing you above what you have declared as bringing in. That's fraught with danger given the way other government office like immigration deal with things.

 

I suppose as a minimum you'd have to bring in and declare at least 65000 baht x 12 a year as living expenses to match what they insist people on retirement visas bring in (ignoring agents in the whole process for now). But what would the tax be on 780,000 Baht, not small for sure !

15% ?

[Baht Simpson]

1 minute ago, Hummin said:

15% ?

Assuming normal rates - THB 71,000

 

[Isaan sailor]

No way Uncle Sam will give up their tax reach and control of American expats in Thailand.  A quick look at the Tax Treaty of 1996, Article 10 makes the distinction between dividends earned in the US vs. dividends earned in Thailand.

[Thaindrew]

7 minutes ago, kwilco said:

Sounds like you think they take the whole lot after that!!!

 

that's the level up to which you don't pay tax....they take nothing - the next level how much?

 

150,001 to 300,000 - 5%

300,001 to 500,000 - 10%

500,001 to 750,000 - 15%

750,001 to 1,000,000 - 20%

 

Still very low.

based on bringing in 780,000 a year, which is what a person on a retirement visa has to bring in officially, so reasonable that RD set that as a minimum, then tax is 71,000 a year, less than 10% but its still a nice chunk of money.

 

[Yumthai]

2 hours ago, vibration said:

Many thanks for sharing this as it was something I was not aware of, is it possible that you can document this and many thanks in advance.

Below links to relevant information:

 

https://www.konradlegal.com/2021/10/01/taxation-in-thailand-inheritance-gift-tax/

 

https://www.mondaq.com/withholding-tax/1258476/brief-on-taxation-for-foreigners-under-thai-laws

 

https://taxsummaries.pwc.com/thailand/individual/income-determination

 

 

[Thorgal]

1 hour ago, Lorry said:

The word "only" was added by you, its not in coconuts and not in the original from the RD, which has been translated in this thread 3 times

From page 15:

 

My quote with my own wording : "As per another press release of the same subject this income tax change is only for Thai citizens (no need to thank me...)"

 

The coconut media doesn't refer to farangs as tax-residents. It mentions clearly Thai citizens.

I didn't change the quote of the newspaper...

 

I just wanted to warn people on our community that different versions of the Thai income tax changes (as OP) are confusing.

 

Quote from coconut media : "Thais earning income abroad and exploiting a well-known tax loophole are about to have their vibe killed by the country’s greatest party pooper: The government. A statement issued by the Revenue Department Friday announced that all money earned by Thai citizens must be taxed as personal income, effective January 1, 2024." 

 

[Tom H]

61 countries have Tax Treaties with Thailand wehich (1) protect against double taxation and (2) in many  cases   explicitly exempt pensions and the like from being taxed by Thailand.

 

Fact!

 

Therfore: Dont worry now and wait until further notice:).

[Gknrd]

5 hours ago, JimGant said:

Wow, what a bunch of misconceptions on this thread. First and foremost, this new rule is not about the timing of cash flow (or no cash flow) from abroad, to Thai tax residents. It's about taxing income earned abroad. Period. And before today's FATCA and CRS reporting avenues, plus similar worldwide financial reporting processes, incoming cash flow was the only method of identifying income. And if that was next year, yes, you could make a rule exempting such cash flow from taxation.

 

No more. Now, with all this financial information sharing, you can identify income earned abroad by Thai tax residents.  And it would make no difference if remitted next year, this year -- or never -- because it's in the worldwide data base as income. Period. Why care when remitted.....? So, the Thai gov't has finally gotten smart on collecting taxes, courtesy of modern data collection methods.

 

So, no need to monitor the source of cash flows coming into Thailand -- not that this could ever be cost effective. So, farang retirees, quit worrying about the Thai gov't wondering about the source of your 65k baht monthly remittances.

 

Not sure why countries with DTA's would be exempted..... As a Yank, my Air Force and Social Security checks are exempt from Thai taxes, per treaty. However, if I had a pension from Boeing, or even my IRA payout, the DTA says that Thailand has first dibs on taxing this income. And it would make sense, that if Thailand could discover this in the FATCA data base, that they would knock on my door and ask why I hadn't declared this income in a Thai tax return.....  Today, of course, I could just say this money was sent from my savings account, co-mingled with other funds -- so it's from last year. The new rule, of course, would end this charade.

 

But, as a Yank, if the Thais taxed my Boeing pension, and my IRA -- and since I have to also declare this income in my US tax return (due to the "saving clause" in the DTA) -- I would just take a credit for this Thai tax. And break even. Thus, nothing to worry about re additional taxes with this new proposed Thai tax law.

 

Now, for those farangs who somehow no longer pay taxes to their mother country -- and haven't paid taxes to Thailand due to the next year remittance policy -- welcome to today's world of CRS reporting: Thai taxes may be in your future.

https://home.treasury.gov/system/files/131/FATCA-Agreement-Thailand-3-4-2016.pdf

Another web site I looked at said Thailand was not able to see the US records. But, the US could request the Thai banks or what ever to see their records. 

Many countries are set up for free exchange between countries. 

How Thailand implements its collection of information will be interesting. May mean all retiree's will have to show a W-2 at immigration on extending their visa. Or, Thailand could want to be added to the list of countries that have information transfer both ways.  

Knowing Thailand it could mean you have to go to a certified Thai tax advisor or attorney each year to have your finances looked at on your on dime, and have them approve it ( either pay taxes owed to Thailand or no taxes due ).  That is what I think might happen. That way immigration will not be involved. If approved by the Thai tax people then you proceed to the immigration office for the usual money in the bank and what ever else.

[Tippaporn]

Well this seems destined to fail.  The banking industry is not onboard.  Taking bets on how many days before this boondoggle gets tossed in the rubbish bin.

First and foremost, the private banking industry is unambiguously unsettled by the announcement. Banks, after all, are gatekeepers to the capital flows that keep an economy robust. Their clients, many of whom have already moved funds out of Thailand, are now confronted with a policy quagmire that could have been avoided with clearer guidelines.

https://www.thaienquirer.com/50755/opinion-thailands-ambitious-plan-to-tax-incoming-funds-risks-falling-flat-due-to-lack-of-clarity/

[StayinThailand2much]

1 hour ago, Thaindrew said:

(...) it all relates to "tax residents" which is in absolute terms anyone that lives here 180 days in a tax year (...)

That would be anyone with a 1-year Non-Immigrant Visa extension, possibly even Elite Visa holders, etc.

[Thaindrew]

6 minutes ago, Tippaporn said:

Well this seems destined to fail.  The banking industry is not onboard.  Taking bets on how many days before this boondoggle gets tossed in the rubbish bin.

First and foremost, the private banking industry is unambiguously unsettled by the announcement. Banks, after all, are gatekeepers to the capital flows that keep an economy robust. Their clients, many of whom have already moved funds out of Thailand, are now confronted with a policy quagmire that could have been avoided with clearer guidelines.

https://www.thaienquirer.com/50755/opinion-thailands-ambitious-plan-to-tax-incoming-funds-risks-falling-flat-due-to-lack-of-clarity/

Thai Baht is also dropping ...

[Thaindrew]

1 minute ago, StayinThailand2much said:

That would be anyone with a 1-year Non-Immigrant Visa extension, possibly even Elite Visa holders, etc.

LTR visa states tax exemption for overseas earnings but of course that was stated pre this redefining of the current tax law

 

Thailand Elite are vague on the subject, but agents are claiming its a "tax free" visa - I have asked for official confirmation.

 

[Thaindrew]

3 minutes ago, StayinThailand2much said:

That would be anyone with a 1-year Non-Immigrant Visa extension, possibly even Elite Visa holders, etc.

or even tourists that stay a combined 180 days over several visits as happens, of course at 180 days its wrong to truly call them tourists but they are on standard tourist visas and extensions

[Thorgal]

2 minutes ago, Thaindrew said:

or even tourists that stay a combined 180 days over several visits as happens, of course at 180 days its wrong to truly call them tourists but they are on standard tourist visas and extensions

You're a tax-non-resident if your stay is below 180 days and you've earned money on a Thai bank account and from a Thai registered company. Then also you have to pay Thai income tax...

 

[StayinThailand2much]

23 minutes ago, Thorgal said:

Thais earning income abroad (...)

This is not only about Thais. Most of such news articles are translated from Thai, and the original articles regularly ignore that there are also expats, long-time tourists, migrant workers, etc., in Thailand.

[Thaindrew]

1 minute ago, Thorgal said:

You're a tax-non-resident if your stay is below 180 days and you've earned money on a Thai bank account and from a Thai registered company. Then also you have to pay Thai income tax...

 

the 180 day rule in the black and white line yes, sure to be some grey areas as well unearthed later I suppose as with the previous loop hole

[El Matador]

1 hour ago, Dogmatix said:

They will definitely not give foreign residents a more favorable tax regime than Thais. 

 

Thais working in countries with no double tax treaty like Israel will be taxed twice on their remittances home.

 

The difference with global taxation is that you can avoid Thai completely, if you never remit the overseas earnings to Thailand but many need the money to live on or buy property, cars etc.

 

Also when global taxation is introduced, a country just starts taxing foreign income that arises after that date.  Thailand intends to tax foreign income that arose at any time in the past without time limit, if it is remitted to Thailand.

It would be extrememly dumb to tax only when the money is remitted to Thailand as it would create a great incentive to let the money outside of the country. Countries normally tax all the income wherever it is and do deductions if there is a tax treaty. You would have to add all your ATM withdrawals of the year to calculate your taxes otherwise. That would be insane for tax officers too. I think they didn't care till now to check remittances from outside (and never checked if the money was earned the year before or not) which allowed that loophole for years.

[StayinThailand2much]

6 minutes ago, Thaindrew said:

or even tourists that stay a combined 180 days over several visits as happens, of course at 180 days its wrong to truly call them tourists but they are on standard tourist visas and extensions

Yes, correct. But tourists usually don't need to transfer money from abroad to Thailand to satisfy long-term visa regulations.

[stat]

On 9/18/2023 at 7:19 AM, Taboo2 said:

They are learning from the American IRS....which is the world's # 1 crooks and thieves on the planet.  No one can compete with the American IRS...they worship money...it is their God!

You forgot that Germany has the top spot regarding tax rates, with the US and others being a distant competitor. For example if you trade options and future your tax rate can easily go over 100% in Germany, no joke! Top income tax starts at around 65000 USD and is 45%.