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

[Mike Lister]

9 minutes ago, stat said:

I did get it, however the joke is on you as you already posted several "misunderstandings" or errors and you simply do not care to admit them.

Back on my ignore list you go.

[Negita43]

3 hours ago, The Cyclist said:

They might be effected if you decide to remit that money to Thailand after the 01 Jan 2024.

Yes that was what I was asking since taking money out of an ISA is completely tax free (and doesn't have to be reported to the tax authorities) so if I then send this to Thailand what is the status of that money since it's not taxable in the UK (and is it covered in the DTA agreement - I think not as I think ISAs came after the DTA agreement)

[Jenkins9039]

Just now, Negita43 said:

Yes that was what I was asking since taking money out of an ISA is completely tax free (and doesn't have to be reported to the tax authorities) so if I then send this to Thailand what is the status of that money since it's not taxable in the UK (and is it covered in the DTA agreement - I think not as I think ISAs came after the DTA agreement)

Only state pension comes under DTA.... for UK.

[AL Duclur]

If a country taxes me on worldwide income I would expect to get most of the same privileges as citizens with the exception of voting. That would include access to the national medical insurance system and right to buy a home or land in my name just like Thais. 

 

Without those rights I wouldn't stay in Thailand. 

[JimGant]

20 minutes ago, Mike Lister said:

Another way to look at things is that the DTA can't be invoked for income you haven't declared.

...but it can be invoked to not declare certain income.

[Mike Lister]

Just now, JimGant said:

...but it can be invoked to not declare certain income.

OK, and how does the tax payer communicate that fact to the RD and do they just leave them in the dark as to how they are managing their tax affairs in Thailand?

[Dogmatix]

Found this on the website of an international law firm, called Watson, Farley and Williams with an office in Bangkok.  They point out that P. 161/2566 is merely an administrative directive to RD officers and is not law (and therefore not binding on taxpayers). And they expect that it will have to upgraded into a legal amendment, presumably either through a Royal Decree or an Act of Parliament. 

 

https://www.wfw.com/articles/recent-development-in-thai-tax-on-foreign-sourced-income/

 

IMPLICATION FROM THE DEPARTMENT INSTRUCTION NO. PAW 161/2003

If enacted and upon it becoming into effect, a Thai Tax Resident will be liable for PIT when their Foreign-Sourced Income is brought into Thailand, regardless of the tax year in which the income was earned.

A press release issued by the Revenue Department on 18 September 2023 further added that the amount of tax paid in the source country that acceded to a double tax treaty (“DTA”) with Thailand could be applied as a tax credit as Thai PIT payable, in accordance with rules stipulated under an applicable DTA.

Whilst this new instruction could have significantly affected PIT implications, it is worth noting that at this stage the Departmental Instruction is an internal guidance for revenue officers, rather than law. As such, it is anticipated that this proposed instruction will be escalated to legislative channel before it is officially implemented as law.

London Trainee Megha Vijh also contributed to this article.

 

The Q&A that the RD provided on P. 1610/2566 shortly after its announcement skirted around the issue of its legality.  Below is my own translation of Q11 and the answer.

 

QUESTION #11

Is Revenue Department Order No. P.161/2023 a law or not?  Are taxpayers under a legal obligation to comply with this order or not?

ANSWER:

It is not a law. It is an order explaining the meaning of the Revenue Code Section 41 paragraph 2. Taxpayers have a duty to comply with the law in paying taxes. Thus the this type P. administrative order from the director-general of the Revenue Department is considered a guideline for Revenue Department staff to follow in order for them to provide advice to taxpayers, so they may follow the law correctly.

 

The answer looks like a mealy mouthed and self-contradictory attempt by the director-general to give himself the authority to unilaterally reinterpret or amend the Revenue Code through a RD administrative order to staff which will then be binding on taxpayers.  However they had to admit it does not have the force of law which would logically mean it is not legally binding on taxpayers.  

 

With this shoot from hip, edict happy Thaksinite government with an absentee finance minister directing the RD anything is possible.  However, you would think that the RD legal department would advise against leaving a reinterpretation with such wide ranging implications as a mere administrative order to staff on how to advise taxpayers with no force of law, so that it can be readily challenged in the Central Tax Court which might actually find against the RD director-general for over reach of authority.  If there is to be some form of enactment, that would involve at the very least, I imagine, a cabinet resolution involving some discussion among the coalition ministers and possibly some revisions.  However, as I said, anything seems possible with this flakey blast from the grim past government with its concerns focused squarely on short term political self interest and no cares about negative implications for the Thai economy or fairness towards taxpayers who have organized their affairs to comply with a 38 year old interpretation of the law.

 

[Dogmatix]

4 minutes ago, JimGant said:

...but it can be invoked to not declare certain income.

I would say a DTA can be invoked to justify not declaring income that is not assessable in Thailand, i.e. US SS which cannot be taxed in Thailand according to the treaty. Apart from that and government service pensions there is little or nothing else where the treaties say "shall be taxed" in the contracting state that pays it.  Where the treaties say "may be taxed" you would have to declare the income and claim a tax credit, where tax has been paid.  If you have not yet paid tax on the income, you would have to pay full Thai tax on it and claim a Thai tax credit on your foreign tax return. 

 

[JimGant]

19 minutes ago, Mike Lister said:

OK, and how does the tax payer communicate that fact to the RD and do they just leave them in the dark as to how they are managing their tax affairs in Thailand?

I would suggest the RD doesn't care about income that is not taxable.

[Mike Lister]

3 minutes ago, Dogmatix said:

I would say a DTA can be invoked to justify not declaring income that is not assessable in Thailand, i.e. US SS which cannot be taxed in Thailand according to the treaty. Apart from that and government service pensions there is little or nothing else where the treaties say "shall be taxed" in the contracting state that pays it.  Where the treaties say "may be taxed" you would have to declare the income and claim a tax credit, where tax has been paid.  If you have not yet paid tax on the income, you would have to pay full Thai tax on it and claim a Thai tax credit on your foreign tax return. 

 

Yes, it's a justification. But before it can be justified it has to be exposed, declared and accounted for. A person can't simply import a million baht into their Thai bank account and not say anything to the RD, just because they know it is excluded under a DTA. What happens next, the RD Audit team shows up his house and asks him about the 1 mill. baht that his bank told them about and he says, Oh that, it's excluded income under a DTA, go away.....and closes the door. I don't think so!

 

 

[Mike Lister]

Just now, JimGant said:

I would suggest the RD doesn't care about income that is not taxable.

That's my point, how do they know it's not taxable, if you don't some how tell them, do they employ mind readers!

[Lorry]

8 hours ago, Happy happy said:

This practice ought to apply even after the new regulations.

I suppose you told the RD already what they ought to do?

 

8 hours ago, Happy happy said:

And there is nothing that has been announced so far to change this practice.

There is no need for an announcement that people should follow the law.

 

End of 2025 we will all learn,  whether the RD thinks like you - I very much hope so - or not.

 

[Dogmatix]

59 minutes ago, JimGant said:

And if your assessable income is above 60000 baht, and you're single -- you're supposed to file? Minimum wage is 300 baht per day, meaning if you work 6 days a week, 52 weeks a year -- 93600 baht is your annual income. Wow, a lot of minimum wagers, and sub minimum wagers, are subject to a 2000 baht fine. Can you define "ludicrous"?

Your numbers are not correct. A single taxpayer gets a 60k allowance and there is a nil tax band up to 150k a year. If you have staff and they earn more than that, ie 210k a year or 17.5k a month, you have to deduct withholding tax based on that basic allowance.  If they earn less than that, you don't deduct anything and they don't have to file a tax return. For most employees who have had withholding tax deducted, it is beneficial for them to file a tax return. Since tax is withheld applying only the basic deduction, they will be able to claim a tax refund, if they qualify for more deductions, e.g. for having elderly parents, children, being over 65, paying life or health insurance premiums etc.  However, it has to be said that only 3.3 million people paid income tax in Thailand in 2019. So the addition of, say 200k, foreign pensioners to the tax net could conceivably increase the number of souls trapped in the income tax net by 6%. However, I don't think it would be worthwhile in terms of net effect on the total tax take, including VAT and tax on sales of condos and land etc.

[Dogmatix]

Deleted by Dog.

[JimGant]

4 minutes ago, Mike Lister said:

That's my point, how do they know it's not taxable

....'cause you didn't include it on your tax return...... Give this circle jerk a rest -- RD is NOT interested in non-assessable income. Period.

[Mike Lister]

3 minutes ago, JimGant said:

....'cause you didn't include it on your tax return...... Give this circle jerk a rest -- RD is NOT interested in non-assessable income. Period.

Really? Well not including something on your tax return can also be construed as tax evasion, don't ya think!

[Dogmatix]

11 minutes ago, Mike Lister said:

Yes, it's a justification. But before it can be justified it has to be exposed, declared and accounted for. A person can't simply import a million baht into their Thai bank account and not say anything to the RD, just because they know it is excluded under a DTA. What happens next, the RD Audit team shows up his house and asks him about the 1 mill. baht that his bank told them about and he says, Oh that, it's excluded income under a DTA, go away.....and closes the door. I don't think so!

Actually I believe that is exactly how it works.  Take the example of income from Thai dividends or land sales in Thailand.  The RD can presumably see that coming into my bank account but I don't have to declare them and claim tax credits because they are not assessable since tax has already been withheld from them.  Why would non-assessable foreign source income be different?  As I said there are very few types of income that "shall" be taxed in the other country under DTAs. So it is a very narrow category anyway. If the inspectors come round asking about those remittances, showing them that they were non-assessable income covered by a treaty should satisfy them. If not, sue them in the Central Tax Court.

[Mike Lister]

1 minute ago, Dogmatix said:

Actually I believe that is exactly how it works.  Take the example of income from Thai dividends or land sales in Thailand.  The RD can presumably see that coming into my bank account but I don't have to declare them and claim tax credits because they are not assessable since tax has already been withheld from them.  Why would non-assessable foreign source income be different?  As I said there are very few types of income that "shall" be taxed in the other country under DTAs. So it is a very narrow category anyway. If the inspectors come round asking about those remittances, showing them that they were non-assessable income covered by a treaty should satisfy them. If not, sue them in the Central Tax Court.

Ah, but, income from Thai dividends is reported to the RD by the Thai bank or broker hence they have an independent source of information by which to confirm if tax has/has not been paid already. That same secondary source of information doesn't accompany overseas income. All the RD knows is that payment was received, from a foreign source, they don't know anything about it other than what somebody has told them. In the case of my SSc, Bangkok Bank holds a copy of the original form used to notify SSc and to establish the transfer hence the bank can tell them the source of those funds and RD is capable of concluding that the funds are exempt under the DTA.  But RD does not hold a comparable form for my UK State Pension yet every month, an amount is paid into the same account. How does RD know the source of those funds and whether tax has been paid on them? They don't, how can they?

[Lorry]

8 hours ago, Happy happy said:

 

The RD have told many retirees if their income is brought into Thailand and they are covered by a double taxation agreement they are not expected to file returns or pay taxes.

I omitted double taxation agreement in my earlier post but most retirees here are covered by that.

 

 

 

Sounds good.

Do you actually know any retirees who were told so by the RD?

I do know retirees who were refused a tax number for want of taxable income (even if they remitted millions of baht to Thailand).

But I have never heard that the RD referred to a DTA.

[JimGant]

29 minutes ago, Mike Lister said:

Well not including something on your tax return can also be construed as tax evasion, don't ya think!

Not if it's not taxable.....Jeez.

[Mike Lister]

26 minutes ago, JimGant said:

Not if it's not taxable.....Jeez.

The problem is Jim that, at first glance, the RD is not able to tell the difference between the taxpayer who has legitimately excluded income under a DTA and not filed a return, and, the person who is trying to evade tax and not filed a return, because nobody has told them what that income is. You can only see the issue from your perspective, you seem unable to look at the issue from a RD perspective in order to better understand what they might require. 

[Dogmatix]

1 minute ago, Mike Lister said:

The problem is Jim that, at first glance, the RD is not able to tell the difference between the taxpayer who has legitimately excluded income under a DTA and not filed a return, and, the person who is trying to evade tax and not filed a return, because nobody has told them what that income is. You can only see the issue from your perspective, you seem unable to look at the issue from a RD perspective in order to better understand what they might require. 

I think my example of Thai land sales is helpful here. I could sell land for 100 million and payment would most likely be in the form of a cashier cheque paid into my bank account with probably some paid in cash that I might also pay into my bank.  This would be a reportable transaction under money laundering law, I believe, and the RD, if it looked at the transaction, would find that the purchaser of the cashier cheque was an individual which could mean anything, including a sale of shares in a private company which would be taxable or a gift over the tax free amount. However, I am under no obligation to report this transaction because sales of land are taxed at the Land Office on a transactional basis and don't push up the progressive tax rate on your income.  I could make 90 million baht profit on this land sale and still not have enough other income to need to file a tax return at all. Unfortunately, however, a similar sale of immoveable property overseas will push you into 35% tax.  

[Mike Lister]

1 minute ago, Dogmatix said:

I think my example of Thai land sales is helpful here. I could sell land for 100 million and payment would most likely be in the form of a cashier cheque paid into my bank account with probably some paid in cash that I might also pay into my bank.  This would be a reportable transaction under money laundering law, I believe, and the RD, if it looked at the transaction, would find that the purchaser of the cashier cheque was an individual which could mean anything, including a sale of shares in a private company which would be taxable or a gift over the tax free amount. However, I am under no obligation to report this transaction because sales of land are taxed at the Land Office on a transactional basis and don't push up the progressive tax rate on your income.  I could make 90 million baht profit on this land sale and still not have enough other income to need to file a tax return at all. Unfortunately, however, a similar sale of immoveable property overseas will push you into 35% tax.  

But the subject is income received from overseas, not income derived from transactions in Thailand.

[The Cyclist]

13 minutes ago, Mike Lister said:

But the subject is income received from overseas, not income derived from transactions in Thailand.

Correct.

 

And that source of income will either be covered by a DTA and therefore not taxable in Thailand.

 

Or it wont be covered by a DTA and subject to Thai taxation, which you can either pay or spend a barrowload of money legally trying to fight why it shouldn't be taxed.

 

Or you can make your own arrangements to stop that income being remitted to Thailand, whereby saving yourself grief, paying tax or paying legal fees to fight paying tax.

 

Not really hard to understand.

[The Cyclist]

2 hours ago, Negita43 said:

Yes that was what I was asking since taking money out of an ISA is completely tax free (and doesn't have to be reported to the tax authorities)

Just because it is tax free in the UK does not mean it is tax free when it is remitted to Thailand.

 

2 hours ago, Negita43 said:

so if I then send this to Thailand what is the status of that money since it's not taxable in the UK (and is it covered in the DTA agreement - I think not as I think ISAs came after the DTA agreement)

If it is not covered by a DTA then it would be taxable when / if it is remitted to Thailand *

 

* I make no comment on the ability of the RD department on how good or bad they might be at doing their job.

 

** If the figures quoted on Thai's not paying tax are correct, you might be able to draw your own conclusion.

[Mike Lister]

2 minutes ago, The Cyclist said:

Correct.

 

And that source of income will either be covered by a DTA and therefore not taxable in Thailand.

 

Or it wont be covered by a DTA and subject to Thai taxation, which you can either pay or spend a barrowload of money legally trying to fight why it shouldn't be taxed.

 

Or you can make your own arrangements to stop that income being remitted to Thailand, whereby saving yourself grief, paying tax or paying legal fees to fight paying tax.

 

Not really hard to understand.

The point I'm trying to get to the bottom of here is who makes that determination whether that income is covered by a DTA and does that information need to be shared with the RD? All DTA's are different. Others here are saying that the existence of the DTA is sufficient to warrant that the person not even declare it, not file a Thai tax return and not even say anything to the RD. I maintain that can't be the case. I maintain that unless somebody informs the RD what that money is and that it is tax exempt, all the RD will see is that overseas funds were received and nobody said anything. Surely that's the point of this whole exercise by the RD, they want people to pay tax on money received from overseas, when it is taxable. And how will they know if it's taxable? When somebody tells them , typically via  tax return.

[Lorry]

7 minutes ago, Mike Lister said:

The point I'm trying to get to the bottom of here is who makes that determination whether that income is covered by a DTA and does that information need to be shared with the RD? All DTA's are different. Others here are saying that the existence of the DTA is sufficient to warrant that the person not even declare it, not file a Thai tax return and not even say anything to the RD. I maintain that can't be the case. I maintain that unless somebody informs the RD what that money is and that it is tax exempt, all the RD will see is that overseas funds were received and nobody said anything. Surely that's the point of this whole exercise by the RD, they want people to pay tax on money received from overseas, when it is taxable. And how will they know if it's taxable? When somebody tells them , typically via  tax return.

In theory,  you are right. 

But in my experience from 2 different countries where everything is done by the book, even in those countries it would be more like Jim says.

How it will be in Thailand? I don't dare to guess.

[The Cyclist]

6 minutes ago, Mike Lister said:

The point I'm trying to get to the bottom of here is who makes that determination whether that income is covered by a DTA and does that information need to be shared with the RD?

I know and understand the point that you are trying to make. The only answer available at the moment is ' No one has a clue '

 

In almost 15 years in Thailand, I have never filed a tax return in Thailand, I dont know anyone else who has filed a tax return in Thailand. That would include retirees and people working in O&G. The more I think about it, I think I would be correct in saying that I have never even heard it being a topic of conversation.

 

 

[Mike Lister]

1 minute ago, The Cyclist said:

I know and understand the point that you are trying to make. The only answer available at the moment is ' No one has a clue '

 

In almost 15 years in Thailand, I have never filed a tax return in Thailand, I dont know anyone else who has filed a tax return in Thailand. That would include retirees and people working in O&G. The more I think about it, I think I would be correct in saying that I have never even heard it being a topic of conversation.

 

 

I have filed for the past three years. If you file to reclaim tax with held on bank interest you are obliged to declare your income also and if you don't, the tax return is fraudulent because you're saying there is none! So I have filed and declared my income three years running, for me this is nothing new but the downstream implications might be if/when I go to transfer savings or sell my house in the UK. My Thai tax return shows income from the US SSc which I declare but exclude from the calculation, UK state pension income and Thai based savings income. I sometimes pay a small amount of tax, I mostly do not.

 

 

[Guavaman]

8 minutes ago, Mike Lister said:

My Thai tax return shows income from the US SSc which I declare but exclude from the calculation, UK state pension income and Thai based savings income. I sometimes pay a small amount of tax, I mostly do not.

How do you declare SSc it on the tax form -- income from employment?

No. 1 Assessable Income Under Section 40 (1) (2)

 

How do you exclude it from calculation -- where on the tax form ภ.ง.ด.90?