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

[redwood1]

Here you go folks......The answer to why all this talk about new taxes...

 

Because..

 

 

https://www.thaiexaminer.com/thai-news-foreigners/2023/09/25/calls-for-clarification-of-new-regime-income-tax-foreigners-overseas-income/

Thai economy is driven and owned by a small elite

This is leading to the government seeking a wider tax base with much of the country’s wealth, held by a small elite in holdings that are mobile and able to be managed against changes in the country’s tax code.

Because of this imbalance in power, such tax changes run a risk of disrupting the country’s economy which is very much dependent on this elite class.

 

 

[Dogmatix]

2 hours ago, JimGant said:

Oh, come on. You think all cash flow into Thailand will be looked at as taxable income? First and foremost, this would kill foreign direct investment by individuals -- and FDI is a major item in a strong economy. And guess who rides herd on FDI? Why, no other than BoI. So, their new golden boy on the street -- the LTR visa -- isn't going to be torpedoed, as long as BoI maintains its substantial horsepower.

 

But forget just LTR visas. Remember, one of the "get out of jail free" cards was having a DTA between your home country and Thailand -- and there are 61 of those. But the kicker is that you have to pay taxes (they don't say what kind) to your home country. I would presume such taxes would be income taxes against income taxable by both Thailand and your home country. For Yanks, you're home free with this, as you're already paying Uncle Sam taxes on your worldwide income. For Europeans not paying tax to anyone -- well, you may now become part of what the OECD wants, namely, everyone paying taxes to someone.

 

But back to FDI: Thailand is NOT going impede cash flow into Thailand for investment, by branding all wire transfers, and similar, as "taxable income." That would be ludicrous. And for Yanks, they'll probably just leave us alone. For Europeans, well, maybe a peak at their tax returns -- or maybe not. But don't expect too much until CRS and FATCA reporting are more mature -- and Thailand can finally have a clear look at income that should be, but has not, been reported. And somewhere down the road, the stupid "remitted" requirement for delineating income will be cancelled -- and Thailand can join the rest of the world on how to tax foreign income.

 

Anyway, if you're about to transfer 250k USD to buy some real estate, and this is easily identifiable as from after-tax entities in your transfer account (or probably even not ---), have at it, as Thailand is not going to shoot themselves in both feet by screwing around with your transfer, as regards FDI. 

 

I wonder how many dealings you have had with Thai bureaucrats. If the RD order is allowed to stand, as it is, they will tax all those things according to the letter of the order, or each individual tax office's interpretation of it. The are under great pressure to collect more tax and foreigners are a perfect target because they have no vote and the Thais in the villages don't give a monkeys about them. What you are saying is that some of this is so dumb that they will have to walk back some or all of it.

Edited September 27, 2023 by Dogmatix

[K2938]

2 hours ago, MistyBlue said:

I inadvertently phrased my response as a question rather than a statement, apologies I wasn't asking a question.

 

I disagree with your interpretation.  Thailand does not have a remittance tax.  It has a tax on income that is earned in an assessable year whilst a tax resident, which is then payable when that income is remitted to Thailand (this is not the same as a remittance tax and may not actually end up being payable depending on the tax treaties).   This seems consistent to me with the BOI responses being quoted, I just think you're interpreting the responses incorrectly.

 

Time will tell...

This email from Thai Elite posted by somebody else on the internet by the way also talks about taxation of SAVINGS, but the future will tell...

 

P.S.:  As I am just reposting this, I cannot personally confirm the accuracy of this email, but I do not really suspect that anybody would fake this

[Dogmatix]

2 hours ago, MistyBlue said:

Exactly this.  There is nothing in the tax code to say they tax capital remittance.  Only income/gains during an assessable year is taxable.

What they have said though is that they will tax remitted income that arose outside Thailand in any previous tax year. That allows them to tax anything on the basis that all savings were earned at some point.

[Lorry]

3 hours ago, JimGant said:

Oh, come on. You think all cash flow into Thailand will be looked at as taxable income? First and foremost, this would kill foreign direct investment by individuals -- and FDI is a major item in a strong economy. And guess who rides herd on FDI? Why, no other than BoI. So, their new golden boy on the street -- the LTR visa -- isn't going to be torpedoed, as long as BoI maintains its substantial horsepower.

 

But forget just LTR visas. Remember, one of the "get out of jail free" cards was having a DTA between your home country and Thailand -- and there are 61 of those. But the kicker is that you have to pay taxes (they don't say what kind) to your home country. I would presume such taxes would be income taxes against income taxable by both Thailand and your home country. For Yanks, you're home free with this, as you're already paying Uncle Sam taxes on your worldwide income. For Europeans not paying tax to anyone -- well, you may now become part of what the OECD wants, namely, everyone paying taxes to someone.

 

But back to FDI: Thailand is NOT going impede cash flow into Thailand for investment, by branding all wire transfers, and similar, as "taxable income." That would be ludicrous. And for Yanks, they'll probably just leave us alone. For Europeans, well, maybe a peak at their tax returns -- or maybe not. But don't expect too much until CRS and FATCA reporting are more mature -- and Thailand can finally have a clear look at income that should be, but has not, been reported. And somewhere down the road, the stupid "remitted" requirement for delineating income will be cancelled -- and Thailand can join the rest of the world on how to tax foreign income.

 

Anyway, if you're about to transfer 250k USD to buy some real estate, and this is easily identifiable as from after-tax entities in your transfer account (or probably even not ---), have at it, as Thailand is not going to shoot themselves in both feet by screwing around with your transfer, as regards FDI. 

 

 

The  new RD order is about Personal Income Tax. This had nothing to do with FDI.

 

Yes, the order literally says that savings brought into Thailand wil be taxed as income.  This is the wording of the order, and that's why Thai Elite sees it this way (see the  2 posts above mine).

Yes, bringing in 20m to buy a condo will incur 35% tax.

However, people who buy a condo for 20m may very well be rich enough to be tax exempt (LTR, maybe Elite, tax avoidance schemes concocted by expensive tax advisers). And even if they pay 35% - very few foreigners would leave Thailand if everything was 35% more expensive than now.  Most would still consider Thailand cheap or good value. 

 

Edited September 27, 2023 by Lorry

[Misty]

4 hours ago, Dogmatix said:

So the LTR visa will not allow someone to come and transfer their nest egg here to buy property and car etc, unless they earn all that after getting the LTR visa, which is unlikely to retirees.

What if they earn all that before they became a Thai tax resident. 

 

Or as in my case if they earned all that and paid Thai tax on it already as a tax resident, but before getting an LTR visa.

[MistyBlue]

34 minutes ago, K2938 said:

This email from Thai Elite posted by somebody else on the internet by the way also talks about taxation of SAVINGS, but the future will tell...

Again I think you are confusing the capital value of savings with the income of savings in an assessable year.

[MistyBlue]

5 minutes ago, Misty said:

5 hours ago, Dogmatix said:

So the LTR visa will not allow someone to come and transfer their nest egg here to buy property and car etc, unless they earn all that after getting the LTR visa, which is unlikely to retirees.

What if they earn all that before they became a Thai tax resident. 

Then it isn't assessable income.

[FritsSikkink]

On 9/20/2023 at 9:39 PM, david555 said:

A small visit to Phnomh Pehn or Sihanoukville before the 6 months "stay Thailand " kicks in could be a solution ....

 

Just a thought for some

It is 180 days in a year, so you should move to Cambodia for 6 months a year.

[MistyBlue]

11 minutes ago, Lorry said:

Yes, the order literally says that savings brought into Thailand wil be taxed as income.

I don't think they have said that at all.  It is the assessable income brought in. (Interest generated from the savings whilst a tax resident. Not the capital value.)

[Misty]

41 minutes ago, K2938 said:

This email from Thai Elite posted by somebody else on the internet by the way also talks about taxation of SAVINGS, but the future will tell...

 

P.S.:  As I am just reposting this, I cannot personally confirm the accuracy of this email, but I do not really suspect that anybody would fake this

Interesting. I was forwarded an email with nearly identical wording from a completely separate, non Thai government, entity.  So I wonder who really originated this verbage - was it Thailand Privilege, the sender of the email I received, or someone else?  Especially the bit that is highlighted which seems pretty much nonsensical.

[Dogmatix]

3 hours ago, MartinL said:

 

Confirmed on pages 6 & 7 of this booklet:-

 

https://www.pwc.com/th/en/tax/assets/thai-tax/thai-tax-2022-23-booklet.pdf

 

although I read elsewhere - can't find it now - that this is for income from employment after 65 only.

 

A number of people here say or imply that all transfers from overseas will be taxed at 35%. On what basis is this claim made? Too many pages here to read the lot and find out so I might have misunderstood. No graduated taxation for incoming foreign transfers?

35% is the top marginal rate of tax in Thailand kicking in at 4,000,001 baht.  In saying 35% the implied situation is a large transfer well above the 35% threshold, so most but not all, of it would taxed at 35%. 

Edited September 27, 2023 by Dogmatix

[Misty]

2 minutes ago, MistyBlue said:

I don't think they have said that at all.  It is the assessable income brought in. (Interest generated from the savings whilst a tax resident. Not the capital value.)

MistyBlue, there is some disinformation circulating that is confusing savings with return on assets. I've been sent it a couple of times now.

 

Like your name btw.

[Dogmatix]

17 minutes ago, MistyBlue said:

I don't think they have said that at all.  It is the assessable income brought in. (Interest generated from the savings whilst a tax resident. Not the capital value.)

True but giving themselves the right to tax income arising in any prior tax year with no time limit, rather than just the one previous tax year, as before, also allows them to assess all savings/capital as income because it was obviously earned at some time in the past. While you can produce evidence that income was earned, how could you produce evidence that savings were never derived from income earned in any form whatsoever?  If no evidence is required showing how the funds in a remittance were derived, it will be too easy for everyone to avoid tax by claiming they have remitted their non-assessable savings/capital only which by the way is likely to be comingled with accumulated interest which is also taxable. CRS reporting is not going to show enough detail to help determine any of this.

Edited September 27, 2023 by Dogmatix

[MistyBlue]

7 minutes ago, Misty said:

MistyBlue, there is some disinformation circulating that is confusing savings with return on assets. I've been sent it a couple of times now.

 

Like your name btw.

Yeah return on assets could be more problematic. Key is evidencing the value paid before a gain is made. Easy enough if records are kept on purchases or if the gain is realised and capital reset before coming a tax resident.  If not then some professional advice might be needed on how to determine the purchase cost of the asset.

[MistyBlue]

31 minutes ago, Dogmatix said:

True but giving themselves the right to tax income arising in any prior tax year with no time limit, rather than just the one previous tax year,

Going forwards perhaps we will need to keep records of assessable income earned in a tax year and match that to the year it is brought in.

 

31 minutes ago, Dogmatix said:

While you can produce evidence that income was earned, how could you produce evidence that savings were never derived from income earned in any form whatsoever? 

That is not unique to Thailand.  Same could be said for any country in which one is a tax resident.

 

31 minutes ago, Dogmatix said:

assess all savings/capital as income because it was obviously earned at some time in the past.

This is not correct.  Not all savings have been earned.  A few examples: compensation payments, inheritance, lottery winnings, state benefits.  In any case, the issue is not about how you made your savings, it's about how much income your savings generate in an assessable tax year.

 

31 minutes ago, Dogmatix said:

it will be too easy for everyone to avoid tax by claiming they have remitted their non-assessable savings/capital only

Then they will be committing tax fraud if they make that claim and they haven't.

Edited September 27, 2023 by MistyBlue

[Celsius]

2 hours ago, redwood1 said:

Here you go folks......The answer to why all this talk about new taxes...

 

Because..

 

 

https://www.thaiexaminer.com/thai-news-foreigners/2023/09/25/calls-for-clarification-of-new-regime-income-tax-foreigners-overseas-income/

Thai economy is driven and owned by a small elite

This is leading to the government seeking a wider tax base with much of the country’s wealth, held by a small elite in holdings that are mobile and able to be managed against changes in the country’s tax code.

Because of this imbalance in power, such tax changes run a risk of disrupting the country’s economy which is very much dependent on this elite class.

 

 

Well thanks for that.

 

Under no circumstances should one have money in Thai bank account and that includes marriage/retirement funds starting in 2024.

 

Clearly stated in the article disguised as "wealth inequality" 

 

I also think Thai baht is on the way to major devaluation.

Edited September 27, 2023 by Celsius

[david555]

3 hours ago, FritsSikkink said:

It is 180 days in a year, so you should move to Cambodia for 6 months a year.

Or become SilverSnowbird to home country ....

( Was my plan already why i left Thailand Sept. 2022 to arrange again a Belgian Home-base )

 

Edited September 27, 2023 by david555

[redwood1]

5 hours ago, Celsius said:

Well thanks for that.

 

Under no circumstances should one have money in Thai bank account and that includes marriage/retirement funds starting in 2024.

 

Clearly stated in the article disguised as "wealth inequality" 

 

I also think Thai baht is on the way to major devaluation.

Yep i agee 100% with the Thai baht is on the way to major devaluation....And minimal money should be kept here..

 

I think its clear the elite do not plan on paying taxes..

Edited September 27, 2023 by redwood1

[Mike Teavee]

The more I think about this, the more it blows my mind as to how I could honestly report where any money I remit to Thailand came from & what Tax was paid on it. 

 

E.g. I worked in Singapore for 10+ years & the way Pensions work there is when you leave (or change jobs) they give you the money that you've accrued in your pension for you to do with as you please, after the 1st 6 years I changed jobs & transferred a large amount of "Pension" money to the UK to invest for when I do retire.

 

No tax was due in Singapore (Employer made all of the contributions) or the UK so if I were to sell the shares & remit the money to Thailand would I be liable for Tax on it even though both countries have a DTA with Thailand?

 

 

Seems to me the only "Safe" approach is to just alternate between being Non-Tax resident in Thailand for 1 year in every 3 or 4 & bring enough money across in that year to live on for the other 2 or 3 years.

Edited September 28, 2023 by Mike Teavee

[quake]

1 hour ago, Mike Teavee said:

Seems to me the only "Safe" approach is to just alternate between being Non-Tax resident in Thailand for 1 year in every 3 or 4 & bring enough money across in that year to live on for the other 2 or 3 years.

Sounds like a good work around, if it does go ahead for us expats.

Just hope,  there is no limit on what you can bring in, in that period.

[TroubleandGrumpy]

18 hours ago, hotandsticky said:

Ha Ha......I certainly did in the 25 years that I played golf????

Yeh mate - I still need it - a lot ????

[JimTripper]

I wonder if immigration can refuse exit from the country if back taxes were not paid?

 

They do that in the USA in exceptional cases, the IRS invalidates your passport so you can’t leave.

[hotandsticky]

Just now, JimTripper said:

I wonder if immigration can refuse exit from the country if back taxes were not paid?

 

They do that in the USA in exceptional cases, the IRS invalidates your passport so you can’t leave.

 

 

They couldn't manage to collect a small departure tax; do you really think they could become tax collectors??

[FritsSikkink]

From a business partner:

 

"This new guideline presents significant challenges for Thai tax residents with both Thai and foreign-sourced incomes.  While the department's instruction is not law, it represents the enforcement directive of the tax authority.  The tax authority still needs to investigate several issues relating to how they will enforce this new rule.  For instance, the applicable tax rates (whether they will impose a flat tax rate, different tax rates specifically applied for foreign-sourced income, or at the standard progressive tax rate), how to distinguish between principal (funds from legacy investments, inheritance, original investment principal) versus earnings (interest, dividends, remuneration) from comingled funds, determination of applicable foreign currency exchange rates for tax assessment, etc. At the time of writing this, XXXXXXXXXX is actively following up on further developments on this matter. We hope to provide additional updates and clarifications on this topic soon. "

[TroubleandGrumpy]

10 hours ago, Dogmatix said:

True but giving themselves the right to tax income arising in any prior tax year with no time limit, rather than just the one previous tax year, as before, also allows them to assess all savings/capital as income because it was obviously earned at some time in the past. While you can produce evidence that income was earned, how could you produce evidence that savings were never derived from income earned in any form whatsoever?  If no evidence is required showing how the funds in a remittance were derived, it will be too easy for everyone to avoid tax by claiming they have remitted their non-assessable savings/capital only which by the way is likely to be comingled with accumulated interest which is also taxable. CRS reporting is not going to show enough detail to help determine any of this.

Very true and there are many other potential problems with what has been done by this new PM who is desperately in need of taxation money following a decade of the Junta 'deplenishing' the piggy bank. If anyone still thinks this is not a potentially very serious problem, then they need to read below.

 

This is from the 2022/23 Thailand Taxation booklet provided by @MartinL:

Assessable Income

Residents and non-residents are taxed on their assessable income derived from employment or business carried on in Thailand, regardless of whether the income is paid in or outside Thailand. Residents who derive income from outside Thailand will be subject to tax only where the income is remitted into Thailand in the year in which it is derived

 

IMO that last sentance will be changed in the Taxation Booklet for 2024/25 into something like this - Residents who derive income from outside Thailand will be subject to tax only where when the income is remitted into Thailand in irrespective of the year in which it is derived.

 

IMO is was under the current 'directive' that money being brought into Thailand by long-term Expats was not considered to be 'taxable income'.  The change to the current directive announced by the PM, will mean that money being transferred into Thailand by Expats is potentially 'taxable income'.  What will be considered taxable income by Thai RD, and what will not, in regards to Expat remittances into Thailand, is yet to be seen. As I have said before, IMO anyone who gets a Govt Pension from one of the 61 DTA countries, should be fine. But anyone who transfers over to Thailand money from their savings/investments overseas, is potentially now going to have to deal with that money being declared taxable income by Thai RD.

 

For those unaware, having taxable income does not mean you will have to pay tax.  There are a lot of matters that then come into consideration before 'taxable income' becomes 'tax payable'.   Until we see more details, and until clarifications are made, we do not know for sure which way this will go. To all those that think it absolutely will not go the 'bad' way, I certainly hope that you are right.  Meanwhile the rest of us will continue to reasses things as they develop, while making alternative plans regarding how to avoid this taxation problem - including not living in Thailand, or only staying in Thailand for 179 days maximum in any calendar year. 

 

[lordgrinz]

2 minutes ago, FritsSikkink said:

From a business partner:

 

"This new guideline presents significant challenges for Thai tax residents with both Thai and foreign-sourced incomes.  While the department's instruction is not law, it represents the enforcement directive of the tax authority.  The tax authority still needs to investigate several issues relating to how they will enforce this new rule.  For instance, the applicable tax rates (whether they will impose a flat tax rate, different tax rates specifically applied for foreign-sourced income, or at the standard progressive tax rate), how to distinguish between principal (funds from legacy investments, inheritance, original investment principal) versus earnings (interest, dividends, remuneration) from comingled funds, determination of applicable foreign currency exchange rates for tax assessment, etc. At the time of writing this, XXXXXXXXXX is actively following up on further developments on this matter. We hope to provide additional updates and clarifications on this topic soon. "

Don't worry, Thailand will give full "clarification" at the last possible second, leaving everyone else to pick up the pieces, then pat themselves on the back for a job well done. I think the PM is a complete moron, or is actively trading based on the chaos he has created. I really do hope someone investigates him and his financial actions.

[FritsSikkink]

16 minutes ago, lordgrinz said:

Don't worry, Thailand will give full "clarification" at the last possible second, leaving everyone else to pick up the pieces, then pat themselves on the back for a job well done. I think the PM is a complete moron, or is actively trading based on the chaos he has created. I really do hope someone investigates him and his financial actions.

Trading in what?

[RafPinto]

They are in desperate need of money.

They promised to pay 10,000Baht to each Thai. Where is that money coming from?

They reduced again the price of Diesel and soon electricity.
Do they observe a bit the oil prices? Brent again closer to 100$ and in Thailand, they are cutting the prices. Again, this money has to come from somewhere.

Is the PM now running after each noodle or somtum seller who potentially makes more then 150k a year or after massage girls who often make 30-50k and up but none of them pays 1 baht in taxes.

Easier to put the "farang" at the forefront. Let them pay tax in Thailand.
What do we get in return?
Every single $/EUR/£ send to Thailand is spent here. We just buy houses, apartments, cars, pay international school fees etc.

They will cut themselves if they are not very careful.

My eyes are already on Malaysia where at least I can own a house without putting in someone other's name or opening a dodgy company. I can import a car a gusto, without paying crazy import taxes.

[RafPinto]

I think soon, all those Youtubers living and working here and some of them making big money, they will soon stop to post more videos. Has anyone of them a work permit?