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

[RafPinto]

What will suffer the most is the property market.

If you bring in your hard earned money and will be taxed here, many will think twice before buying anything here plus there are hundreds of new condo towers going up. Who is buying all those apartments?
The Chinese? Forget about. I read that they are selling everywhere their properties, US, Canada, Europe and Thailand.

The new PM, ex CEO of a real estate company will get soon some calls to relax.
Interesting times ahead.

[redwood1]

13 minutes ago, RafPinto said:

What will suffer the most is the property market.

If you bring in your hard earned money and will be taxed here, many will think twice before buying anything here plus there are hundreds of new condo towers going up. Who is buying all those apartments?
The Chinese? Forget about. I read that they are selling everywhere their properties, US, Canada, Europe and Thailand.

The new PM, ex CEO of a real estate company will get soon some calls to relax.
Interesting times ahead.

Correct the Thai property market will be stone cold DEAD from here on out until this madness is droped if it ever is....

I see about a 95% drop in sales..

[Dogmatix]

16 hours ago, Felt 35 said:

So am I and best to get that gift away before New Year is my thinking.????

Felt 

I feel that looking at gifts is a dead end, if the money doesn't come from already taxed income in Thailand. Anyway the limit is 20 mil for family members and 10 mil for others, not 100 mil, which is inheritance tax.

[Dogmatix]

7 hours ago, Misty said:

Martin my experience with Immigration and the increasing difficultly and requirements of renewing a NonB visa was similar to yours. One difference was that I own a Thai company, and therefore had a binding commitment of sorts. I switched to the LTR visa and have been very happy with the BoI. They are a pleasure to deal with, and the LTR visa itself is a real breath of fresh air.

 

It's interesting to me now that the Royal Decree granting LTR tax privileges seemed to be specifically intended to thwart any change in interpretation of the Thai Revenue Department's Resolution No 2/2528.  It's almost as if the change in interpretation we see now was known, and expected, when the LTR visa system was set up.

My initial thought was also that the BOI was prescient in providing the exemption from tax on foreign sourced income and could have had an inking that something like this might happen.  But when you look at the wording of the Royal Decree it seems that this may not have really been the case.  They seem to have intended to carve out an exemption from the original interpretation only in that they gave exemption from tax on prior year foreign source income remitted to Thailand only, which was all that is taxable under the current interpretation.  Had they had full prescience they would have provided exemption for foreign source income earned in any year in the past and remitted to Thailand.  The Royal Decree potentially exposes LTRs to random visits from RD officials with outstretched hands examining bank remittances and making the owner prove it was income earned only in the prior tax year and not in years earlier than that which are assessable under the Royal Decree combined with the reinterpretation.

[Dogmatix]

3 hours ago, Srikcir said:

What is "earned income"?

Not pension/social security distributions.

 

US Internal Revenue Service:

• Examples of earned income are wages, salaries, tips and other taxable employee compensation. Earned income also includes net earnings from self-employment . Earned income DOES NOT include amounts such as pensions and annuities, welfare benefits, unemployment compensation, worker's compensation benefits.  https://www.irs.gov/government-entities/Indian-tribal-governments/itg-faq-2-answer-what-income-is-considered-earned-income

 

KPMG observation of effect on Section 41 Paragraph 2 of the Thai Revenue Code by the proposed tax changes:

• Previously the assessable income derived by a Thai tax resident from employment, a business carried on overseas, or from a property situated overseas, would have been subject to Thai personal income tax. The new interpretation means that foreign-sourced income brought into Thailand from 1 January 2024 onwards will be subject to Thai individual income tax... (my bold emphasis)

US Foreign Earned Income Exclusion:

• The US foreign earned income exclusion was created to avoid double taxation for Americans living abroad.

      If taxed other than as earned income by Thailand, tax likely cannot be credited against US income for US tax purposes. In effect a double taxation and violation of US-Thailand tax treaty. But Thailand wants now to emphasize more investments from the US Government?

 

If you refer to the Thai text of Section 41 of the Revenue Code, you will see that it uses the expression มีเงินได้ which means literally receive money. That is a much broader definition that "earn" and could complicate this approach. 

[Dogmatix]

1 hour ago, RafPinto said:

What will suffer the most is the property market.

If you bring in your hard earned money and will be taxed here, many will think twice before buying anything here plus there are hundreds of new condo towers going up. Who is buying all those apartments?
The Chinese? Forget about. I read that they are selling everywhere their properties, US, Canada, Europe and Thailand.

The new PM, ex CEO of a real estate company will get soon some calls to relax.
Interesting times ahead.

The condo developers have been surprisingly silent.  As you say the Chinese money laundering crowd were the main game for developers pre-COVID but are slow to return.  Expats who live in Thailand are a more steady market for condos and retirees tend to buy in resort areas where there are few Thai buyers.  They are effectively shut out of the market from 1 Jan.  People who move to Thailand, buy immediately and stay over 180 days in their first tax year will get nailed too, in many cases without realising it until a deputation of RD people show up at their nice new condo.  Very easy for RD to track since foreign buyers need in most cases need to show they have remitted the entire purchase price to Thailand.  Who will accept remitted 20 mil to buy their dream retirement condo in Phuket and finding that after accruing for tax, they have only 13.6m left to pay for the condo?  

 

Another aspect is expat retirees who already have funds in Thailand earning the paltry 0.5% interest to live on for many years or will remit them before 1 Jan.  I was talking to a friend in this situation who accumulated savings from many years working in the Kingdom before retiring.  He was looking at buying piece of land in Chiang Mai and building his dream house there. However, he wants to keep his options open to return to his home country for healthcare reasons and doesn't want to import his entire savings pot to Thailand to earn 0.5% interest and maybe have difficulties sending it out again in future. So he has shelved his plan to buy property in Thailand permanently because it would have eaten into the pot of money he already has in Thailand and could make him have to remit cash from overseas and pay tax earlier.  I guess many expats are having similar thoughts about shelving plans to buy property in Thailand, even if they are in a position to get the money in before  Jan or already have the funds in Thailand. One never knows what they might come up with next and the idea of RD staff coming and knocking on foreigners doors is not appealing.

[John Singer]

It is a mystery to me how the new PM, co-founder of Sansiri, could come up with a plan that leaves 99% of foreigners contemplating buying property in Thailand scratching their heads about how to get funds for a purchase into the country. 

I don't see this happening. 

[John Drake]

2 minutes ago, John Singer said:

It is a mystery to me how the new PM, co-founder of Sansiri, could come up with a plan that leaves 99% of foreigners contemplating buying property in Thailand scratching their heads about how to get funds for a purchase into the country. 

I don't see this happening. 

"Somebody" told him to do it, and he said, "yes." That's how he governs.

[RafPinto]

5 minutes ago, Dogmatix said:

The condo developers have been surprisingly silent.  As you say the Chinese money laundering crowd were the main game for developers pre-COVID but are slow to return.  Expats who live in Thailand are a more steady market for condos and retirees tend to buy in resort areas where there are few Thai buyers.  They are effectively shut out of the market from 1 Jan.  People who move to Thailand, buy immediately and stay over 180 days in their first tax year will get nailed too, in many cases without realising it until a deputation of RD people show up at their nice new condo.  Very easy for RD to track since foreign buyers need in most cases need to show they have remitted the entire purchase price to Thailand.  Who will accept remitted 20 mil to buy their dream retirement condo in Phuket and finding that after accruing for tax, they have only 13.6m left to pay for the condo?  

 

Another aspect is expat retirees who already have funds in Thailand earning the paltry 0.5% interest to live on for many years or will remit them before 1 Jan.  I was talking to a friend in this situation who accumulated savings from many years working in the Kingdom before retiring.  He was looking at buying piece of land in Chiang Mai and building his dream house there. However, he wants to keep his options open to return to his home country for healthcare reasons and doesn't want to import his entire savings pot to Thailand to earn 0.5% interest and maybe have difficulties sending it out again in future. So he has shelved his plan to buy property in Thailand permanently because it would have eaten into the pot of money he already has in Thailand and could make him have to remit cash from overseas and pay tax earlier.  I guess many expats are having similar thoughts about shelving plans to buy property in Thailand, even if they are in a position to get the money in before  Jan or already have the funds in Thailand. One never knows what they might come up with next and the idea of RD staff coming and knocking on foreigners doors is not appealing.

2 weeks ago, I visited a new project in the Phrom Phong area. Beautiful low rise apartment building.
Their main market is Japanese buyers .
I asked the sales person if there are Chinese buyers and he replied.
Most of the apartments 20million and up were sold to investors from "Myanmar".
Who would have thought this?

 

 

 

 

[Dogmatix]

Re the LTR visas.  These are pretty good way for those can afford them to come to Thailand and the tax exemption looks pretty good, even if it is only for prior year income.  However, nothing is set in stone in Thailand, particularly regarding foreigners.  A government that decides to tax poor foreigners but exempt rich foreigners in the interests of fairness and equality is vulnerable to attack by opposition politicians. The terms of various editions of the Elite card have changed many times.  The original card was only a million, I seem to recall, and provided the right to own land which was axed within a few months before anyone had attempted to exercise it.  The LTR visas are valid for 10 years but since the Immigration Act only allows a maximum of a 2 year visa, the BOI has to use roll overs to camouflage this reality, since amending the Immigration Act is not something any government seems to ever want to do, as they can just issue a patch work of ever changing National Police Orders to fill in the details instead without undergoing parliamentary scrutiny.  I guess no government will try any funny business in the first 10 years but after that no one can guarantee what renewal terms will look like, specially if some LTR visa holders are accused of money laundering and other crimes.

Edited September 26, 2023 by Dogmatix

[RafPinto]

Bringing money in to purchase a home: pay tax

Selling the property: pay tax

 

Rent and don't buy.
Soon, the market will be flooded with apartments for rent as there are hundreds of new building blocs going up and if nobody buys them they will be up for rent.

My better half is a bank manager and she says that most loans to buy real estate are now not more approved by head office.

[redwood1]

2 minutes ago, John Drake said:

"Somebody" told him to do it, and he said, "yes." That's how he governs.

Exactly....My impression is he is just a empty shell that smiles and waves and does what he is told...

[Dogmatix]

5 minutes ago, RafPinto said:

2 weeks ago, I visited a new project in the Phrom Phong area. Beautiful low rise apartment building.
Their main market is Japanese buyers .
I asked the sales person if there are Chinese buyers and he replied.
Most of the apartments 20million and up were sold to investors from "Myanmar".
Who would have thought this?

Drug dealers, junta family members etc.

[John Drake]

2 minutes ago, redwood1 said:

Exactly....My impression is he is just a empty shell that smiles and waves and does what he is told...

After nine years, people forgot just what a fiasco the last PTP government was. Prayuth looks like George Washington in comparison.

[jonny on the spot]

10 minutes ago, John Singer said:

It is a mystery to me how the new PM, co-founder of Sansiri, could come up with a plan that leaves 99% of foreigners contemplating buying property in Thailand scratching their heads about how to get funds for a purchase into the country. 

I don't see this happening. 

The man in hospital/prison, this mans boss probably had this great idea.

[RafPinto]

1 minute ago, jonny on the spot said:

The man in hospital/prison, this mans boss probably had this great idea.

He should be careful that his fortune will not be taxed when bringing back home.

[Dogmatix]

3 minutes ago, redwood1 said:

Exactly....My impression is he is just a empty shell that smiles and waves and does what he is told...

Yes. The Thaksin marketing, PR consultants organise his schedule and spin the trivial events like greeting Chinese tourists at the airport up into major headlines for consumption by Thai TV networks to be forgotten the next day.  Just like when T was PM. 

[jonny on the spot]

9 minutes ago, RafPinto said:

He should be careful that his fortune will not be taxed when bringing back home.

I doubt he has to worry too much about that, same as his prison sentence. 

Should bring his sister back in an advisory capacity too.

Edited September 26, 2023 by jonny on the spot

[K2938]

1 hour ago, Dogmatix said:

The Royal Decree potentially exposes LTRs to random visits from RD officials with outstretched hands examining bank remittances and making the owner prove it was income earned only in the prior tax year and not in years earlier than that which are assessable under the Royal Decree combined with the reinterpretation.

I wonder if "prior year" in the English version of the Royal Decree for LTR visa holders really means "prior years" and the whole thing is just a translation mistake.  This is just a guess, not something I verified myself.  But somebody should.

Edited September 26, 2023 by K2938

[transam]

39 minutes ago, redwood1 said:

Exactly....My impression is he is just a empty shell that smiles and waves and does what he is told...

They expect the numpties to think that......................????......................????

[hotandsticky]

32 minutes ago, jonny on the spot said:

I doubt he has to worry too much about that, same as his prison sentence. 

Should bring his sister back in an advisory capacity too.

 

Yes.........................she is good at financial advice!

[placnx]

21 hours ago, stat said:

You can use cash withdrawal at the counter with BKK Bank without any 220 Baht charge. Check with your CC company some demand a 2% mark up. You can withdraw 500K baht if your bank allows it per day. Also work with yellow bank Krungsri but only for mastercard. Drawdown they make a copy of your passport so maybe a con in regards to 100% identification regarding the new law. If your name is Joe Miller on credit card it will be more diificult to identify the correct Joe Miller.

You might lose on the exchange rate compared to an ATM withdrawal (if the ATM charge is sent to your country in Baht). This is significant for big withdrawals - THB 30K for example.

[moogradod]

2 hours ago, Dogmatix said:

I feel that looking at gifts is a dead end, if the money doesn't come from already taxed income in Thailand. Anyway the limit is 20 mil for family members and 10 mil for others, not 100 mil, which is inheritance tax.

If the gift is from savings (which must always be based on income at some point in time anyway and which is always to somebody else then yourself - in the best case the wife) and which has been taxed abroad prior to sending regardless of the year it was sent, then the receiver is (was always) liable to income taxes. The important point here is, that there is this tax exemption until 20 Mio/year. These are tax free - at least some years ago this was the case. And of this I am sure. Now if you do (did) exactly that nobody in the world can introduce a rule which acts backbards.

 

This would be like if you got a speeding fine some weeks ago, pay the fine and then get another higher bill based on the same event applying a rule that was introduced after the event happened.

 

From a defined point in time in the future this may of course happen.

 

 

[Dogmatix]

43 minutes ago, K2938 said:

I wonder if "prior year" in the English version of the Royal Decree for LTR visa holders really means "prior years" and the whole thing is just a translation mistake.  This is just a guess, not something I verified myself.  But somebody should.

You raise a good point.  The English version of Royal Decree 743 translates it as "in the previous tax year", presumably to match the translation of Section 41 of the Revenue Code.  The Thai is ในปีภาษีที่ล่วงมาแล้ว which is indeed exactly the same wording as the Thai version of Section 41. Literally it means "in tax year that passed already" which is a bit vague but, since Thai has no definite articles and the drafters would have been more specific, had they really meant "in any past tax years" it is obvious that parliament intended "in the previous tax year", as per the translated versions.  

 

I don't know if the RD has to issue another order saying its reinterpretation of ในปีภาษีที่ล่วงมาแล้ว also applies to Royal Decree 743 or whether that will be left to LTRs' and RD inspectors' imaginations.  But I think I now have to walk back my interpretation that the Royal Decree doesn't exempt past years, even though that was clearly the intent of the drafter who had no idea the RD would start taxing past years anyway. It would be hard even for the RD to apply two opposing interpretations to the same phrase in two related pieces of legislation just to collect more tax, although mental gymnastics of that type are not out of the question for Thai bureaucrats.

[Dogmatix]

3 minutes ago, moogradod said:

If the gift is from savings (which must always be based on income at some point in time anyway and which is always to somebody else then yourself - in the best case the wife) and which has been taxed abroad prior to sending regardless of the year it was sent, then the receiver is (was always) liable to income taxes. The important point here is, that there is this tax exemption until 20 Mio/year. These are tax free - at least some years ago this was the case. And of this I am sure. Now if you do (did) exactly that nobody in the world can introduce a rule which acts backbards.

 

This would be like if you got a speeding fine some weeks ago, pay the fine and then get another higher bill based on the same event applying a rule that was introduced after the event happened.

 

From a defined point in time in the future this may of course happen.

 

 

Does the Thai concept of common spousal property "sin somrot" allow for gifts between spouses?  Maybe because there is a special rate for intra-family gifts.  I haven't looked much at the gifting rules. Thai inheritance tax applies to overseas assets, so gift tax could too.

[JimGant]

10 hours ago, Misty said:

It's interesting to me now that the Royal Decree granting LTR tax privileges seemed to be specifically intended to thwart any change in interpretation of the Thai Revenue Department's Resolution No 2/2528.  It's almost as if the change in interpretation we see now was known, and expected, when the LTR visa system was set up.

Indeed -- and certainly BoI would've had knowledge of potential tax changes being discussed. Thus, the Royal Decree effectively grandfathers LTR visa holders under the current rules. Just change the phrase "the previous tax year" to "a previous tax year" -- and you eliminate considerable confusion, thus suggesting there was a translation error from Thai into English.

[moogradod]

10 minutes ago, Dogmatix said:

Does the Thai concept of common spousal property "sin somrot" allow for gifts between spouses?  Maybe because there is a special rate for intra-family gifts.  I haven't looked much at the gifting rules. Thai inheritance tax applies to overseas assets, so gift tax could too.

As soon as a will is involved, the inheritance situation changes anyway. Do yourself a favour and spare worries and money for tranquilizers for the moment. Probably you will need them later.

 

I had to look into details of inheritance and tax before we moved here. You have little chance to filter out the truth by yourself. So I engaged a NUMBER of the most renown internationally operating consulting firms - and I BELIEVE that I got it right in the end - of course based on the existing rules at the time. From what I read here about any planned new future rules there must be more than a bug in it - some things are misinterpreted for sure. Cannot be otherwise. There are as well contradictions. But I want to leave it like that, my stash of medicine has nearly run out, too.

 

[Irrumator]

Let's see what happens, they have a habit of making announcements then quietly dropping them when it becomes clear they are shooting themselves in the foot and it suddenly fades away into the ether.
Otherwise I will be well and truly fahcked as will many others, probably in the high thousands.
Bye bye Thailand, hello Vietnam.  

[stat]

1 hour ago, placnx said:

You might lose on the exchange rate compared to an ATM withdrawal (if the ATM charge is sent to your country in Baht). This is significant for big withdrawals - THB 30K for example.

You get the same rate as you use your credit card inside the bank. I have done it without any problems ever. Just do not use a Visa at yellow bank or pay additional 200 Baht fee. Another plus is a higher limit if your card allows for it.

Edited September 26, 2023 by stat

[stat]

11 hours ago, Misty said:

I have asked the BoI explicity on income remitted, and they have answered me. Why they answer me and not you I do not understand. Do you have an LTR visa?

 

Please post links to your 14 advisors who all agree that this could change everything for LTR visa holders.

 

 

 

Already posted several links before. Boi has answered and confirmed that LTR holders according to their view should be excempt from income tax, but they also stated that they were waiting for clarification from RD. Royal degrees can get changed by royal degrees, at last that is my understanding.