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

[jayboy]

29 minutes ago, Dogmatix said:

Most likely everyone is going to have to file a tax return.

 

I wonder how that will be enforced.It's a fair assumption that the vast majority of foreign retirees in Thailand have never filed a tax return and have no TIN.They may have been badgered by their banks overseas to provide a TIN but to date this can be fobbed off, maybe not forever though.

 

So how will they be compelled to file a tax return? A return to the infamous tax clearance certificate of the 1980s? Awkward questions at visa renewal time? It's hard to see the authorities putting much effort into this with a bunch of mostly not that well off farang oldsters - when the target is presumably well off Thais.My advice to those in the former category is to lie low until matters are clearer.

[The Cyclist]

1 hour ago, Dogmatix said:

Many decisions remain for the RD to make. So far they have just scrawled a few lines to reinterpret the tax law and left it at that

 

Yet here you are with almost 240  posts of doom and gloom, conjecture and speculation in this thread alone.

 

Amazing

 

[Morch]

31 minutes ago, jayboy said:

 

I wonder how that will be enforced.It's a fair assumption that the vast majority of foreign retirees in Thailand have never filed a tax return and have no TIN.They may have been badgered by their banks overseas to provide a TIN but to date this can be fobbed off, maybe not forever though.

 

So how will they be compelled to file a tax return? A return to the infamous tax clearance certificate of the 1980s? Awkward questions at visa renewal time? It's hard to see the authorities putting much effort into this with a bunch of mostly not that well off farang oldsters - when the target is presumably well off Thais.My advice to those in the former category is to lie low until matters are clearer.

 

Your last line was pretty much what I was told by immigration.

[samtam]

1 hour ago, Dogmatix said:

 

The problem is that there has been no effort made by the RD or the government to think this through to see if it is even net beneficial to Thailand, let alone draft the hundreds of pages of regulations needed to cover the complex situations that will arise or even explain how to claim a tax credit when there is no space for this on the form.  So it is not surprising that a great deal of angst, uncertainty and speculation has arisen.  Probably many people will decide not to move to Thailand, leave Thailand and/or not invest in Thai property due to the uncertainties created, even though it might not turn out to be disadvantageous to them. That is a result of utter incompetence and idleness of the RD and government. 

 

Well I certainly know of one, and a rich one at that, who was planning on moving here next year, buying a condo upwards of THB60M. Not happening now, until there is clarification either way, so the implications, (and cost) can be assessed. I imagine it is a thought being held by many, especially the rich SE Asians and Chinese who would make up the majority of the overseas funds to buy Thai property.

[redwood1]

1 hour ago, Mike Lister said:

It will be whatever you say it is, you just have to be able to support what you say it is, with evidence.  If you keep saying it's all old savings that predates 1 Jan 24, they may look more closely, I would. You seem not to understand basic accounting. Every pot can contain many things but they can all be separated on paper to determine what is principle and what is interest or income, it's what companies do when they compile a balance sheet, you just need to do similar.

 

If you have 100 in a pot, 60 of which is old savings and 40 of which earns interest, you can transfer 60 safe in the knowledge it's old savings that you can prove. When you get ready to transfer the 40, you need to know what part of it is principle and what is income. 

 

Old savings saved over many decades I think is impossible to PROVE...When it was earned...

[OzzBlizz]

9 hours ago, Dogmatix said:

Would you take tax advice about being a Thai tax resident from someone who has a vested interest in persuading you to become a Thai tax resident?

 

Heres the thing about taking advice, it is all about having free will in your decision making. Lurking in here to find answers from long time members for things that many are not clear on, seems to be like little power trips for the long time members to release dopamine, and while its always nice to help each other without being overly critical, it should be also noted that not everyone can be another Ubon Joe. Everyone has a choices and persuasion from a person that runs a business that would hope to have even more business and along with keeping a good reputation, so where is the gain in knowingly deceive anyone? I am always more apt in weighing the business persons point of view, instead of the many in here that say "I'm not a tax expert"  So... right or wrong, why do you have so much interest in another's decision making? 

[Mike Lister]

8 hours ago, redwood1 said:

 

Old savings saved over many decades I think is impossible to PROVE...When it was earned...

You only have to prove that it was earned BEFORE 1 Jan 2024, how hard can that be.

[neil324]

So it's either 2 years of seasoning income before remitting into Thailand or spend 179 days or less in Thailand.

 

Whats the criteria for filing a Thai tax return. Do you still have to file, if no tax is due?

 

When you become a Thai tax payer, what do you get in return, other than access to the country? Free healthcare, state pension, social security?

[neil324]

On 11/14/2023 at 4:38 AM, Mike Teavee said:

I've been paying AVCs for the past 16 years, that's what HMRC called them so that's the term I use, this is the 1st time I've heard of VINs but a quick look on the government website seems to suggest they've adopted that terminology.

 

It doesn't matter to me as I stopped paying in April this year as I now have 40 years NI contributions which is what I need to get a full State Pension having been contracted out for 20 years, self employed for 2 years & working overseas the rest of the time. 

 

 

UK pays a full state pension with 35 years of NI contributions. 

 

Also a UK resident with 0 years NI contributions can get Pension Credit, which is the same amount as the state pension.

[redwood1]

4 minutes ago, neil324 said:

So it's either 2 years of seasoning income before remitting into Thailand or spend 179 days or less in Thailand.

 

Whats the criteria for filing a Thai tax return. Do you still have to file, if no tax is due?

 

When you become a Thai tax payer, what do you get in return, other than access to the country? Free healthcare, state pension, social security?

 

Here is what immigration will give you for paying taxes

 

 

 

[jts-khorat]

12 hours ago, jayboy said:

It's hard to see the authorities putting much effort into this with a bunch of mostly not that well off farang oldsters

 

On the contrary, I expect the first batch of foreigners living here longer than the 180 days getting caught in the net, having to provide proof in such a convoluted way that they simply cannot.

 

Maybe, just maybe, after a while it will dawn on the Thai tax office that this is all too difficult. For those in the first batch, though, this will all come too late. Court cases for tax evasion in Thailand are surely -- as everywhere in the world -- not a laughing matter.

 

As to those that dream that they can "prove" that the money sent in is not "income" by providing this or that foreign language document after slicing up their foreign accounts in creative ways: you will be in for a rough surprise, if you do not already afford yourself an expensive tax office (which kills the very idea of living here comparably cheaply through your old age).

 

As always the old adage goes: 'being right and getting right is a different pair of shoes'. Happy paying, folks!

[Dogmatix]

13 hours ago, jayboy said:

 

I wonder how that will be enforced.It's a fair assumption that the vast majority of foreign retirees in Thailand have never filed a tax return and have no TIN.They may have been badgered by their banks overseas to provide a TIN but to date this can be fobbed off, maybe not forever though.

 

So how will they be compelled to file a tax return? A return to the infamous tax clearance certificate of the 1980s? Awkward questions at visa renewal time? It's hard to see the authorities putting much effort into this with a bunch of mostly not that well off farang oldsters - when the target is presumably well off Thais.My advice to those in the former category is to lie low until matters are clearer.

It’s a good question. Traditionally they rely on taxpayers who are not liable to salary withholding tax to declare themselves. Probably nothing will change for some years and then the RD might start negotiating with Immigration to cooperate on this. 

[Mike Lister]

1 hour ago, neil324 said:

So it's either 2 years of seasoning income before remitting into Thailand or spend 179 days or less in Thailand.

 

Whats the criteria for filing a Thai tax return. Do you still have to file, if no tax is due?

 

When you become a Thai tax payer, what do you get in return, other than access to the country? Free healthcare, state pension, social security?

There is no 2 year seasoning period, where did you come up with that!

 

The criteria for filing a Thai tax return is income (including remittances) of over 120k Baht per year.

 

What you get in return for filing taxes is exactly what you get when you don't, plus, if ever a tax clearance certificate is required, you'll be eligible to get one.

[beammeup]

1 hour ago, neil324 said:

So it's either 2 years of seasoning income before remitting into Thailand or spend 179 days or less in Thailand.

 

Whats the criteria for filing a Thai tax return. Do you still have to file, if no tax is due?

 

When you become a Thai tax payer, what do you get in return, other than access to the country? Free healthcare, state pension, social security?

Could you elaborate on the 2 years seasoning. First I have heard of that. Maybe I am missing something?

[The Cyclist]

14 hours ago, Dogmatix said:

It is likely to affect all retirees.  Definitely those who used the prior years loophole are affected

 

As ' The new interpretation of the rule ' is effective from 01 Jan 2024 could you please explain how anything prior to 01 Jan 2024  will definitely be affected ?
 

Could you come up with an explanation backed up with something direct from the RD or stop spreading horse manure.

 

A little reminder

 

" Income remitted to Thailand after the 01 Jan 2024 for tax residents may be assessable and liable for taxation "

 

Subject to Legal challenges, DTA's, furthr announcements from the Thai Gov / RD or kicked into touch as being too difficult.

[Dogmatix]

1 hour ago, neil324 said:

Whats the criteria for filing a Thai tax return. Do you still have to file, if no tax is due?

 

When you become a Thai tax payer, what do you get in return, other than access to the country? Free healthcare, state pension, social security?

You are not required to file a tax return, if you are sure you have no assessable income. The RD reports that around 4 million pay income tax but they are receiving anout 10 million tax returns. The 6 million tax returns filed by people who didn’t have to pay tax must comprise largely people who had tax withheld by employers but need to reclaim it because with allowances they are under the threshold. Some may just file to be safe or because they got in the tax net and feel they have to keep filing. If you have dividends but no other income you can get back more tax than you actually had withheld from the dividends by filing a tax return. Many Thai investors who don’t work file for this reason.

 

What do you get in return if you are a foreign tax payer in Thailand? Nothing.  Social security is based on contributions and you can get those benefits, if you pay the contributions but don’t earn enough to pay tax like the migrant workers. 

[The Cyclist]

2 minutes ago, beammeup said:

Could you elaborate on the 2 years seasoning. First I have heard of that. Maybe I am missing something?

 

You are missing the lets get hysterical gene 

[Dogmatix]

1 minute ago, The Cyclist said:

 

As ' The new interpretation of the rule ' is effective from 01 Jan 2024 could you please explain how anything prior to 01 Jan 2024  will definitely be affected ?
 

Could you come up with an explanation backed up with something direct from the RD or stop spreading horse manure.

 

A little reminder

 

" Income remitted to Thailand after the 01 Jan 2024 for tax residents may be assessable and liable for taxation "

 

Subject to Legal challenges, DTA's, furthr announcements from the Thai Gov / RD or kicked into touch as being too difficult.

Due to your uncivil jibes and foul language I am not going to reply to any more of your posts Cyclist. So please don’t ask any more.

[The Cyclist]

2 minutes ago, Dogmatix said:

Due to your uncivil jibes and foul language I am not going to reply to any more of your posts Cyclist. So please don’t ask any more.

 

You just did 

 

I make no apologies if straight talking and calling out your horse manure comes across as uncivil jibes and foul language. That says more about you than it does about me.

 

I gave you an opportunity to prove me wrong . And I see nothing in the quote below that is either uncivil or foul language.

 

It is a pretty straightforward question.

 

11 minutes ago, The Cyclist said:

As ' The new interpretation of the rule ' is effective from 01 Jan 2024 could you please explain how anything prior to 01 Jan 2024  will definitely be affected ?
 

Could you come up with an explanation backed up with something direct from the RD or stop spreading horse manure.

 

Every single reader / poster on this thread should be given access to the information that you supposedly have that no-one else has.

[Mike Lister]

31 minutes ago, Dogmatix said:

You are not required to file a tax return, if you are sure you have no assessable income. The RD reports that around 4 million pay income tax but they are receiving anout 10 million tax returns. The 6 million tax returns filed by people who didn’t have to pay tax must comprise largely people who had tax withheld by employers but need to reclaim it because with allowances they are under the threshold. Some may just file to be safe or because they got in the tax net and feel they have to keep filing. If you have dividends but no other income you can get back more tax than you actually had withheld from the dividends by filing a tax return. Many Thai investors who don’t work file for this reason.

 

What do you get in return if you are a foreign tax payer in Thailand? Nothing.  Social security is based on contributions and you can get those benefits, if you pay the contributions but don’t earn enough to pay tax like the migrant workers. 

That is simple not correct. A substantial portion of those 6 million returns that do not pay tax are returns that are required to be filed, because the filer is self employed, the most common filing status in Thailand. My wife for example is self employed and operates a business that turns over 1 million baht per year. She, like all others in her category, must file an interim return at 6 months and a full return at year end. She is allowed to deduct 60% of her sales as input costs, that means she has assessable income of say 400,000 baht. Deduct from that amount, 60,000 for her Personal allowance, 60,000 for her mother who she supports, circa 5,000 in social security payments, 100,000 she pays into a retirement mutual fund each year and that leaves taxable income of 175,000. The first 150k is zero rated so is not taxable, that leaves her with 5% tax due on 25,000 or 1,250 baht tax per year. In reality, her income is over 600k per year but the generous tax deductions mean she pays virtually no tax. It's really not difficult to legally earn 600k per year and pay zero tax.

 

EDIT TO ADD: My numbers above are approximate, before somebody takes me to task on minutiae. I think the mutual fund deduction is  capped at something like 30% of assessible income so may be lower but nevertheless, the example overall makes the point well.

Edited November 25, 2023 by Mike Lister

[Berkshire]

18 hours ago, The Cyclist said:

 

No

 

A 2 week tourist would not be considered a resident of Thailand for tax purposes.

 

But people have convinced themselves that the Thai authorities have the means, capability and desire to track every ATM withdrawal on a foreign card and then sub-divide that into tourists and residents for tax purposes.

 

My biggest fear is this scenario.  Let's say the Thai gov directed all banks to withhold a certain portion of all incoming foreign transfers.  Let's say 20%.  The only way to get that money back is to file a tax return and prove that tax had been paid...and/or whatever else.  That would be a freakin nightmare.

 

Hence the reason why I brought up the ATM option.

[The Cyclist]

5 minutes ago, Berkshire said:

My biggest fear is this scenario.  Let's say the Thai gov directed all banks to withhold a certain portion of all incoming foreign transfers.  Let's say 20%.  The only way to get that money back is to file a tax return and prove that tax had been paid.

 

I have no idea why you have a fear of something that is nothing more than a rumour, probably started in this very thread.

 

If I have to file a tax return for tax year 2024 - 25 I wii do so. Until clarity is gained, the only income I will be remitting to Thailand after 01 Jan will be my Government Pension ( Covered by a DTA ) taking precautionary measures.

 

This thread is full of unfounded half truths and rumours all the way up to downright lies. No idea what these people are trying to achieve, other than making themselves out to be complete throbbers.

[Mike Lister]

21 minutes ago, Berkshire said:

My biggest fear is this scenario.  Let's say the Thai gov directed all banks to withhold a certain portion of all incoming foreign transfers.  Let's say 20%.  The only way to get that money back is to file a tax return and prove that tax had been paid...and/or whatever else.  That would be a freakin nightmare.

 

Hence the reason why I brought up the ATM option.

That's not the way the tax system works in any country that has at least a reasonable semblance of an economy, tax is not deducted when it is remitted and then left to the tax payer to prove that it wasn't taxable in the first place, that's ludicrous. Thailand needs capital inflows and overseas investment, it's not actively trying to prevent those things! Nobody would do business in a country that operated that way and Thailand's economy doesn't need it to resort to such extreme measures, Yemen, yes, Myanmar, yes, Thailand, not a chance.

[UKresonant]

16 hours ago, Mike Lister said:

I don't understand your question. Every financial instrument or account can have its boundaries clearly defined and separated from anything else that sits in the same pot. You may have old savings, new savings, new interest and other things, all in the same account but the amounts therein can be clearly defined for accounting purposes.

 

It can be clearly defined at the outset, but as time and years moves on it's like it's written on kitchen roll with a sharpie pen .  Investment companies and banks merge, you move things around for best returns and it becomes progressively more difficult to demonstrate the divisions.  Five years ago the Sharply defined savings pots, a number of years budget set aside for future transfer to Thailand,  would be easy to prove but now maybe not so easy.

 

As I'm still in the UK, not currently tax resident in Thailand, I'm thinking that I need to split things up into;-

a)  Pension income that is taxed at source in the UK (and savings pots only from that income if Thai Tax resident). Earned income similarly.

b) Savings from before 2024.

c) Savings that are prior to being tax resident in Thailand.

d) ISA income / interest & State Pension (when it comes) etc that has no tax deducted *as far as practical, not to be remitted to Thailand as it would not generate a tax credit,

But only useful if Thailand retains the >179 day residency and remittance definitions.

[Mike Lister]

4 minutes ago, UKresonant said:

 

It can be clearly defined at the outset, but as time and years moves on it's like it's written on kitchen roll with a sharpie pen .  Investment companies and banks merge, you move things around for best returns and it becomes progressively more difficult to demonstrate the divisions.  Five years ago the Sharply defined savings pots, a number of years budget set aside for future transfer to Thailand,  would be easy to prove but now maybe not so easy.

 

As I'm still in the UK, not currently tax resident in Thailand, I'm thinking that I need to split things up into;-

a)  Pension income that is taxed at source in the UK (and savings pots only from that income if Thai Tax resident). Earned income similarly.

b) Savings from before 2024.

c) Savings that are prior to being tax resident in Thailand.

d) ISA income / interest & State Pension (when it comes) etc that has no tax deducted *as far as practical, not to be remitted to Thailand as it would not generate a tax credit,

But only useful if Thailand retains the >179 day residency and remittance definitions.

Everyone manages their finances differently, for many expats in Thailand a key determinator is the amount of THB they have on hand in country and the source of their pension.

 

I made the decision several years ago to invest in THB and time has shown that was the right thing to do, as a consequence I have several years worth of Baht living expenses on hand and am not dependent on transfers from overseas. 

 

That said, both my UK State Pension and US Social Security are paid directly into my Thai bank account. The US SSc pension is tax exempt in Thailand by virtue of the DTA so that is not an issue as far as Thai tax is concerned. The UK State pension is taxable here but is falls under the threshold for Thai tax which means that also is not an issue for Thai tax. 

 

All that remains are my overseas investment accounts and UK property ownership and rental income. My investment account is contained in a SIPP which means it is not UK taxable, I am able to transfer from the SIPP to my Thai bank account, variable amounts each year that will keep me under the Thai tax threshold (or above, if I'm willing to pay Thai tax). The rental income remains in the UK, that also can be transferred based on my willingness to pay Thai tax in any given year.  When I decide to sell my UK property, the purchase price value will be free of Thai tax because it was earned prior to 1 January 2024. The profit on the property sale will be subject to UK capital gains which means UK tax will have been paid on it hence it also can be transferred. 

 

All those things are ring fenced and separate, each has a clear audit trail and the value of each can be easily established, at any time.

[Klonko]

If funds, which are not constituting assessable income under Thai tax law, are held in segregated accounts, such accounts may still earn interest which constitutes assessable income under Thai tax law if remitted to Thailand, unless Thai RD unexpectedly applies FIFO-accounting.

 

While the interest probably does not result in Thai tax payable, the obligation to file tax returns in Thailand remains in place, possibly requiring certified translation of relevant documents. To get rid of the filing obligation, segregated accounts must not generate any income.

 

However, even if only non assessable income is remitted to Thailand, Thai RD may start an inquiry into the remittances and certified translation of the relevant documents may need to be provided.

 

As of now, the only  way to minimise any hassle with Thai RD is to transfer funds to Thailand while not being tax resident.

 

My hope for generally excluding foreign retirement pensions from assessable income is limited.

Edited November 25, 2023 by Klonko

[Presnock]

On 9/18/2023 at 9:57 AM, 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.

I have checked with a tax advisory group re pensions being taxed - if a US citizen the country having a tax agreement could still tax the pension but then the US IRS would lower one's tax equal to that taken out by the Thais.  I also saw one responder that the tax rate in Thailand would be on any income including pension over 150K US dollars as the very basic tax table so most folks here probably don't get a pension of over 150K USD annually.  I do not know what the Thai govt will do, all I can do is wait and then decide what I am going to do.  If they do begin taxing every ex-pat pension or otherwise, then I do think they are going to kill the goose-laying the gold eggs.  But as we all are well aware, TIT

 

[Krit]

We now know that offshore income earned in 2023 and earlier will not be subject to personal income taxation when brought into Thailand in 2024 or later.

 

One more link to confirm this:

https://www.lexology.com/library/detail.aspx?g=017cd161-512b-4f56-94d3-3f942a23fc4d

 

A hypothetical scenario: Let’s assume that a Thai tax resident has a foreign brokerage account and has bought Apple stock for $60,000 a few years ago. The value of that investment is now $100,000. It looks like it would make sense to sell the shares in 2023 to realise a non-taxable profit of $40,000. The whole amount can then be brought into Thailand in 2024 tax free. Correct?

 

If this investment is only sold in 2024 and remitted to Thailand, the profit of $40,000 would be taxable as capital gains in 2024.

 

Now let’s assume that the investment is sold in 2023 but the proceeds are left on a bank account abroad. The bank pays 4% interest and no withholding tax is deducted. For clarity, the account will not have any other transactions. By January 2025 the balance would have grown to $104,000, of which $100,000 is old capital from 2023 and $4,000 taxable income from 2024. A sum $100,000 is then remitted to Thailand, leaving $4,000 abroad.

 

Is this amount of $100,000 considered to be

a) entirely tax-free capital from 2023,

b) $96,000 tax-free capital from 2023 + $4,000 taxable interest income from 2024, or

c) 96.15% (100/104) tax-free capital and 3.85% (4/104) taxable income?

 

 

 

 

 

[beammeup]

7 minutes ago, Krit said:

We now know that offshore income earned in 2023 and earlier will not be subject to personal income taxation when brought into Thailand in 2024 or later.

 

One more link to confirm this:

https://www.lexology.com/library/detail.aspx?g=017cd161-512b-4f56-94d3-3f942a23fc4d

 

A hypothetical scenario: Let’s assume that a Thai tax resident has a foreign brokerage account and has bought Apple stock for $60,000 a few years ago. The value of that investment is now $100,000. It looks like it would make sense to sell the shares in 2023 to realise a non-taxable profit of $40,000. The whole amount can then be brought into Thailand in 2024 tax free. Correct?

 

If this investment is only sold in 2024 and remitted to Thailand, the profit of $40,000 would be taxable as capital gains in 2024.

 

Now let’s assume that the investment is sold in 2023 but the proceeds are left on a bank account abroad. The bank pays 4% interest and no withholding tax is deducted. For clarity, the account will not have any other transactions. By January 2025 the balance would have grown to $104,000, of which $100,000 is old capital from 2023 and $4,000 taxable income from 2024. A sum $100,000 is then remitted to Thailand, leaving $4,000 abroad.

 

Is this amount of $100,000 considered to be

a) entirely tax-free capital from 2023,

b) $96,000 tax-free capital from 2023 + $4,000 taxable interest income from 2024, or

c) 96.15% (100/104) tax-free capital and 3.85% (4/104) taxable income?

 

 

 

 

 

This is pretty much the question I was asking earlier, although more thoroughly laid out. You better hope they have some very smart people working at the RD, and that they are all on the same page. Bottom line is that we need much more clarity. Like quickly!!

[The Cyclist]

141 pages and 4200 posts in to this thread and this needs reposted

 

Quote

Also exempt will be those who have been taxed in a foreign country that has a standing Double Tax Agreement with Thailand.

 

Printed on the very day that the initial announcement was made.

 

If you are from a Country that has a DTA with Thailand, you will be exempt if that income has already been taxed in your home Country.

 

Possibly why I wasn't slapped in handcuffs and my gonads wired to a 12 volt battery, and interrogated about TIN's and filing tax returns last Friday, both at the bank and immigration.