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

[Davejf2017]

Please read from this link maybe it should clear this matter up https://www.belaws.com/thailand/double-tax-agreements/

I hope the Thai government keep to the LAW.

[blackcab]

3 hours ago, Hokeus said:

Thus, mainly it would apply to Thai citizens and foreigners working in Thailand who do pay tax on income and are defined as “tax residents”.

 

If foreigners working in Thailand with high skills and incomes are taxed globally then it's going to be next to impossible to recruit these types of people to work in Thailand.

 

Quite often multinational companies with operations in Thailand have key management staff from the company's home country working in Thailand.

 

The biggest demographic I can think of would be the Japanese, who as a country massively Foreign Direct Invest in Thailand.

 

Can you imagine taxing the CEO of Toyota (Thailand) on his income in Japan?

[trainman34014]

5 hours ago, mikebell said:

But how will you live?  I save up my pension & send 5K UKP a number of times a year; will I be taxed on that?  I have 800K in a Thai bank & they tax the interest on that.  Is that reclaimable?

Re the second part of your question....Yes; you can reclaim the Tax on your 800k and Tax on any other Savings or Fixed rate account that you have.   I've been doing it for 15 years; you need to visit your local Tax Office to get details of how to claim and what's needed.  Once you have claimed once they will give you a Tax Number which speeds up the process in future years.

[chilly07]

5 hours ago, Mike Teavee said:

I've always thought that the guys using the >65K pm income method for their retirement extensions are leaving themselves open to having to pay tax on it.

 

Obviously some income streams like state pensions may be exempt but private pensions would seem to be fair game, even if they've already paid tax on the income in their home countries. 

Use of agents  would become universal! 

[trainman34014]

32 minutes ago, JonnyF said:

This will never happen. It would be complete lunacy to deter people bringing money into Thailand by forcing them to pay tax on it. It would destroy the retirement market, the real estate market, foreigners supporting Thai families from overseas etc.

 

I predict there will be a roll back on this fairly shortly. It will all be a "misunderstanding" and whoever dreamt it up will be sent to Yala to work as a parking warden. And rightly so.

Or be promoted to Deputy Prime Minister !

[RocketDog]

2 hours ago, gamb00ler said:

A minor point.... the exemption you gave is for wage income.  Self employment income also has the same exemption but is NOT exempt from employment tax.

Aha. Good point. I didn't see that point or it's new.

I studied up six years ago when I retired and knew I wouldn't be working again anyway.

However, I still file every year in USA of course, including the FBAR statement for foreign accounts.

For the first time in my working life I paid zero income tax for 2022. My ssa income with standard deductions was below the threshold. I was amazed. Will be the same for 2023, but they will crush me when I sell my USA house next year.

[RocketDog]

1 hour ago, Jingthing said:

US citizens etc. are subject to US taxation rules regardless of the country of our tax residency.

 

 

https://www.konradlegal.com/2023/01/31/thailand-tax-guide-for-us-expats/

Agreed. That's what I was saying.

There's a story of a American couple who emigrated to Canada with their 3yo child. When the child was grown and working in Canada IRS sent him a notice of unpaid taxes for the last 30 years, with penalty and interest of course. I don't know the outcome though. I will assume IRS prevailed, he declined to pay, and just never entered the USA again.

[RocketDog]

1 hour ago, DrPhibes said:

Actually not exactly accurate.  The first $112,000 of 2022 WORK income out of the US that fits in a 12 month window out of the country that can span more than one calendar year where your not in the US more than 330 days can be excluded.  Enrolled Agent with the IRS ????

Also, if you pay for foreign housing you can take a larger deduction but not terribly much.

[bob smith]

5 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!

Indeed.

 

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

[ukrules]

1 hour ago, h3ith said:

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.

Are you sure on that about previous years income, there's various others in this thread who are suggesting that this is the precise 'loophole' which is being closed.

 

A scenario which I doubt, but I would leave that to the accountants.

[RocketDog]

2 hours ago, No Forwarding Address said:

So I assume pensions will be exempt, but if not, Vietnam and Cambodia are looking better all the time.

To my knowledge, starting year or two ago one cannot get a visa for more than a month in Vietnam now without being married to a national.

NB. I went to Cambodia once and would never consider living there. To each his own though.

[Expat68]

5 hours ago, Mike Teavee said:

I've always thought that the guys using the >65K pm income method for their retirement extensions are leaving themselves open to having to pay tax on it.

 

Obviously some income streams like state pensions may be exempt but private pensions would seem to be fair game, even if they've already paid tax on the income in their home countries. 

Still pay tax in home country whether state or private 

[Ben Zioner]

4 minutes ago, ukrules said:

Are you sure on that about previous years income, there's various others in this thread who are suggesting that this is the precise 'loophole' which is being closed.

 

A scenario which I doubt, but I would leave that to the accountants.

You are right, it is income earned in the "said year" brought into the kingdom in "any year", after January  9 though, that becomes taxable. Thanks google translate.

 

So the poster who suggested to transfer one or two years income before January 9 was right.

 

[Hokeus]

25 minutes ago, blackcab said:

 

If foreigners working in Thailand with high skills and incomes are taxed globally then it's going to be next to impossible to recruit these types of people to work in Thailand.

 

Quite often multinational companies with operations in Thailand have key management staff from the company's home country working in Thailand.

 

The biggest demographic I can think of would be the Japanese, who as a country massively Foreign Direct Invest in Thailand.

 

Can you imagine taxing the CEO of Toyota (Thailand) on his income in Japan?

But that seemingly is the intent of the law. If you work in Thailand, and are paid your salary offshore for the work you are doing in Thailand, then you should still pay income tax in Thailand on that money. If however you are already paying tax in the domicile where the money is being earned then you wouldn’t be required to pay the tax in Thailand because that would result in double taxation, which I don’t think would be the intent. 

[Autonuaq]

5 hours ago, freeworld said:

Probably if tax resident in Thailand one would need to submit a tax return and then the DTA would discount the tax already paid and evidence would be submitted or you pay the tax in Thailand and claim relief/refund in ones home country.

 

I guess the accountancy profession is going to flourish.

 

 

5 hours ago, connda said:

Eventually someone is going to write, "Does that mean farang's pension income too."

Short answer would probably be "No," at least for those countries with bilateral tax agreements with Thailand.  If you're paying income tax in your home countries, then Thailand has no claim to tax the income twice.

 

 

all works and is depending on where your world income is defined. when you live and stay in thailand your world income ids in Thailand. Many Dutch have seen this problem with the Social Security Organization (SVB). The SVB (government) transferred lesser pension money to Thailand as you also could have red in the Thai media.

The exact definition about where you have your world income you can find when you google.  

Beware when you are married and stay out of the country longer than 10 years and the choice of rights that apply is not registered. After 10 years this becomes the right of your country you have stayed with your partner.  All does make that you think that the UK rights apply but due to that you stayed longer than 10 years the law of the country you stay become the one that governs.
There is many more to take in account when you stay longer the 90 days outside your country of residence, when you are not staying abroad for your work.

 

it is not tax or the social security there are many things to take in account that people are not aware of. 

 

Bewise and make sure that you know which country it is that then one your world income. 

[SuperSaiyan]

2 hours ago, ThomasThBKK said:

 

 

Only if the tax in that country is higher, else you pay the difference. If it's zero on lets say capital gains, then you pay full thai tax rate on that imo. 

 

DTAs are very specific

Only if the DTA says so, you can't just assume that.

[Expat68]

5 hours ago, Ohyesuare said:

Yeah it's reclaimable if you want to go through the hassle.

No hassle, it is easy 

[BE88]

3 hours ago, Hokeus said:

Or live mainly from an overseas debit card and never physically bring much money in. 

Or use all the money you have in Thailand and change country.

[h3ith]

2 minutes ago, ukrules said:

this is the precise 'loophole' which is being closed.

This decree cites the current tax law, Section 41, almost verbatim.  "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 in accordance with the provisions of this Part."

Since it does not differ from the current law, it does not seem to invalidate the remittance principle (calendar year seasoning). It seems to be an enforcement decree instead of a change of the law.

Employment and business income from abroad are always be taxable, irrespective of the year.

But perhaps they will force tax residents to prove that all incoming amounts did not comprise any current-year financial income (dividends, interest, capital gains), which would be a bureaucratic nightmare. 

[mran66]

1 hour ago, h3ith said:

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. 

Question remains how they define the 'taxable income' that is transferred to Thailand - currently anything that has been earned during previous tax years, is not taxable, rather the income earned is capitalized at the end of each tax year, and free to transfer to Thailand next year without Thailand treating it as taxable income.

 

So how they define the 'taxable income' according to new proposed ruling in such case (which I believe is relevant for quite a few foreigners living here). Say if I have investment portfolio of $10M, on which I got $1M income in 2023, and transfer $100K to Thailand in 2024, will the 100K be defined as taxable Thai income? My claim is that I did not send any income earned in 2023, I rather sent 100k of the capital I sold during the year, and kept & re-invested all earnings outside of Thailand?

 

Can I claim that I am just transferring my earlier investments/savings that I sell to send to Thailand, or do they treat any sent funds as income up to the actual earned income during the year?

 

If the latter, I bet many current tax residents, incl myself, will not be tax resident for long...also, it would have some hit on foreign private investments  as well as those would be treated as taxable income...

 

 

Edited September 18, 2023 by mran66

[Hokeus]

2 hours ago, NoDisplayName said:

Lucky the Thai government has no access to or oversight of Thai banks, or they'd be able to enforce a 15% tax withholding charge on all incoming Wise transactions.

Good point. If they wanted to start taxing that money though then they would probably start having Wise deduct it and withhold it directly from each transfer. And if they would impose it on Wise transfers then they would need to impose it on every incoming foreign bank transfer to a Thai bank too. But I don’t think it would ever come to taxing incoming transfers from foreigners. The money would simply stop coming in completely if they did that and it would be really devastating for the economy. Business would grind to a halt. In fact, I am not aware of any country that imposes a tax withholding like that. 
 

Also, any payment that can be made in Thailand using a debit or credit card can simply be made using a Wise debit card. Then the money never has to even be physically transferred in. 

[Ben Zioner]

7 minutes ago, h3ith said:

This decree cites the current tax law, Section 41, almost verbatim.  "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 in accordance with the provisions of this Part."

Since it does not differ from the current law, it does not seem to invalidate the remittance principle (calendar year seasoning). It seems to be an enforcement decree instead of a change of the law.

Employment and business income from abroad are always be taxable, irrespective of the year.

But perhaps they will force tax residents to prove that all incoming amounts did not comprise any current-year financial income (dividends, interest, capital gains), which would be a bureaucratic nightmare. 

Please read again and ponder over the meaning of "in any tax year".

[blackcab]

3 hours ago, billd766 said:

But the UK HMRC only taxes UK based income. The US taxman taxes ALL income worldwide for US taxpayers.

 

That's not quite correct.

 

https://www.gov.uk/tax-foreign-income#:~:text=Whether you need to pay,tax on your foreign income.

[h3ith]

9 minutes ago, Ben Zioner said:

You are right, it is income earned in the "said year" brought into the kingdom in "any year",

"Any year" could be a translation flaw. Imagine accumulating capital gains, interest or dividends for 20 years, and then transferring 5% of it to TH? How could anyone sort out how much of the incoming amount was based on financial income over the previous 20 years as opposed to original savings?

I imagine the revenue office may demand evidence that the incoming amount was not work or business income. And that it was not financial income earned in the current year. Which would be burdensome enough. But "any year" for 10 or 20 past years, for all incoming bank transfers, would be absurd.

[blackcab]

3 hours ago, JackGats said:

Reading this news I'm glad my LTR visa includes a non-tax clause for anything earnt out of Thailand. It couldn't have come at a better time.

 

Will this exemption last or will it be amended in time?

 

How would it appear to (wealthy) Thai citizens that they are being taxed globally, but certain foreigners get a much better deal than they do?

[Hokeus]

3 hours ago, Thaindrew said:

HSBC have a global debit card that has no transaction or exchange fees and even gives a rebate on spend

That’s good to know, but what I read is that to get an HSBC global debit card it requires you to first have an HSBC expat bank account with a balance of at least £50,000 or a have an annual salary of at least £100,000. So the debit card is mainly geared towards HSBC Premiere customers. 
 

The good thing about Wise though is that they don’t require a minimum account balance to be maintained to get a Wise debit card, the account can be opened online from anywhere in the world, and they pay monthly interest on all account balances that are based in USD, GBP, and EUR. 

[mran66]

1 hour ago, h3ith said:

(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. 

Two or three years ago I actually got a letter from tax office, listing my foreign income that they had to the penny by source, obviously must have received from my home country tax system as otherwise they would not have any way to dig those out. Had to go to Jomtien tax office to sign some papers to state that I had not brought any of those income to Thailand the same year. 

Did not look any evidence of bank accounts or anything that the letter said I had to provide...the lady looked like she was tired of handling such jobs.

[ukrules]

10 minutes ago, Ben Zioner said:

Please read again and ponder over the meaning of "in any tax year".

I was wondering about that, was it worded the same before though and if the separate year thing is a different law/regulation then it may still apply.

 

Also this seems a little bit odd considering it's September 18 today :

 

[eddie61]

Probably means it’s time for more holiday and discretionary spending abroad for those who can…… Airline tickets of course bought abroad with untaxed funds.

I’m not sure that anyone contemplating  moving to Thailand would get a hard on over the idea!

 

Edited September 18, 2023 by eddie61

[h3ith]

1 minute ago, ukrules said:

Please read again and ponder over the meaning of "in any tax year".

It's a decree or order. I'm not a Thai lawyer, but this order does not change the tax law, which should require an act of parliament.  

"Any tax year" may refer to employment income and business profit, to which the remittance principle ("next calendar year") never applied. The order text just did not bother to separate work and business income from financial income.