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

[Sato]

18 minutes ago, Dario said:

Woaw, already 145 pages for this problem. I'm a Swiss national and after some research it appears that Switzerland has a Double Taxation Agreement with Thailand. Thailand cannot tax us again. Matter resolved.

You should read the DTA between Switzerland and Thailand (I did. You can download the DTA on PDF from a Swiss Government Web Page).

It clearly say's Thailand has tax sovereignty (except on pensions when you worked for the Swiss Governement or on income on real estates property you may have in Switzerland).

On interest rates and dividends you could end up paying tax twice.

You will have to pay tax on interest rates, dividends and capital gains in Thailand on your bank accounts you have in Switzerland. This interest rates and dividends are allready taxed by the Swiss witholding tax of 35%.

This Tax you will have to reclaim at the Swiss RD after you paded the tax in Thailand. To do so, the Thai RD must sign a declaration form from the Swiss RD which the Thai RD may not want to do.

[Klonko]

50 minutes ago, Dario said:

Woaw, already 145 pages for this problem. I'm a Swiss national and after some research it appears that Switzerland has a Double Taxation Agreement with Thailand. Thailand cannot tax us again. Matter resolved.

In the case of Swiss real estate income, respective remittances to Thailand constitute assessable income in Thailand. For tax credits, you have prove to Thai RD that taxes have been paid, but respective requirements are not known, e.g. certified translation of relevant documents.  Probably Swiss taxes must have been assessed, which may take place 1-2 years after Thai taxes are due. You have to pay full taxes first and can only file a tax reclaim with considerable delay. DTA theoretically work but may not be practical.

[Sato]

28 minutes ago, Klonko said:

In the case of Swiss real estate income, respective remittances to Thailand constitute assessable income in Thailand

According to the DTA Switzerland/Thailand Article 6, paragraph 1 are such income (Swiss real estate income) only taxable in Switzerland.

[Sato]

35 minutes ago, Klonko said:

For tax credits

There is no such thing like 'tax credits' in the DTA between Switzerland and Thailand. The tax sovereignty lies eigther 100% by Thailand or Switzerland.

[UKresonant]

The Swiss DTA appears to have a lot of similar wording to the UK DTA, and reading parts of it it could desend into a complex  jurisdictional, impractical credit / reclaim / time miss-match situation. But the announcements that have been suggesting it's not going to be a Problem if your country has a DTA with Thailand hopefully will rely on;-

 

UK-TH Article 23

"(3) In the case of Thailand, United Kingdom tax payable in accordance with this Convention in respect of income from sources within the United Kingdom shall be  allowed as a credit against Thai tax payable in respect of that income. The credit shall not, however, exceed that part of the Thai tax, as computed before the credit is given, which is appropriate to such item of income"

 

CH-TH Article 20

"3. In the case of Thailand, Swiss tax payable in respect of income derived from Switzerland shall be allowed as a credit against Thai tax payable in respect of that income. The credit shall not, however, exceed that part of the Thai tax, as computed before the credit is given, which is appropriate to such item of income."

 

So hopefully it will work that pension income taxed in the UK, and all the value of an individual pension being remitted to Thailand, will be allowed to put the tax deducted at source in the UK as a credit against a Thai Tax Return.  But still how if this works in practice still to be seen.  So being non-resident at the moment, I'm thinking (assuming) I need to isolate fully taxed income in one bank, and only ever plan to send money to Thailand from those accounts which originate from that fully taxed income stream. (as well as creating some small savings pots whilst not resident perhaps). The Thai tax would not be to much once over 65 (on the distant horizon), and the UK state pension kicks in (just over the horizon since they moved it back twice )

 

Edited November 30, 2023 by UKresonant

[Sato]

11 minutes ago, UKresonant said:

The Swiss DTA appears to have a lot of similar wording to the UK DTA, and reading parts of it it could desend into a complex  jurisdictional, impractical credit / reclaim / time miss-match situation. But the announcements that have been suggesting it's not going to be a Problem if your country has a DTA with Thailand hopefully will rely on;-

 

UK-TH Article 23

"(3) In the case of Thailand, United Kingdom tax payable in accordance with this Convention in respect of income from sources within the United Kingdom shall be  allowed as a credit against Thai tax payable in respect of that income. The credit shall not, however, exceed that part of the Thai tax, as computed before the credit is given, which is appropriate to such item of income"

 

CH-TH Article 20

"3. In the case of Thailand, Swiss tax payable in respect of income derived from Switzerland shall be allowed as a credit against Thai tax payable in respect of that income. The credit shall not, however, exceed that part of the Thai tax, as computed before the credit is given, which is appropriate to such item of income."

 

So hopefully it will work that pension income taxed in the UK, and all the value of an individual pension being remitted to Thailand, will be allowed to put the tax deducted at source in the UK as a credit against a Thai Tax Return.  But still how if this works in practice still to be seen.  So being non-resident at the moment, I'm thinking (assuming) I need to isolate fully taxed income in one bank, and only ever plan to send money to Thailand from those accounts which originate from that fully taxed income stream. (as well as creating some small savings pots whilst not resident perhaps. The Thai tax would not be to much once over 65 (on the distant horizon), and the UK state pension kicks in (just over the horizon since they moved it back twice )

 

You're right !

This is in Article 20, paragraph 3 of the Swiss/Thai DTA:

. In Thailand, the Swiss tax payable on income originating in Switzerland is offset against the Thai tax payable on that income. However, the amount to be credited may not exceed the amount of Thai tax due on such income before the credit is granted

[JimTripper]

2 hours ago, Dario said:

Woaw, already 145 pages for this problem. I'm a Swiss national and after some research it appears that Switzerland has a Double Taxation Agreement with Thailand. Thailand cannot tax us again. Matter resolved.

You may need to prove that on your return though for it to be recognized. So it's not really resolved. You may not have all the documents or Thailand may not understand what you submitted.

Edited November 30, 2023 by JimTripper

[Klonko]

3 hours ago, Sato said:

According to the DTA Switzerland/Thailand Article 6, paragraph 1 are such income (Swiss real estate income) only taxable in Switzerland.

Art.6 I "Income derived by a resident of a Contracting State from immovable property situated in the other Contracting State may be taxed in that other State." stipulates that Switzerland can tax persons domiciled in Tailand on real estate situated in Switzerland. It does not say that Thailand cannot tax respective income. 

 

 

 

[Sato]

11 minutes ago, Klonko said:

It does not say that Thailand cannot tax respective income.

This is correct.

As UKresonant mentioned in his post 3 hours agao, this is covered in articel 20 'avoidance of double taxation' paragraph 3:

In Thailand, the Swiss tax payable on income originating in Switzerland is offset against the Thai tax payable on that income. However, the amount to be credited may not exceed the amount of Thai tax due on such income before the credit is granted.

[UKresonant]

3 hours ago, JimTripper said:

You may need to prove that on your return though for it to be recognized. So it's not really resolved. You may not have all the documents or Thailand may not understand what you submitted.

Yes that is a concern, I have perhaps four different pension sources I'm going to group together, tax deducted clearly shown but perhaps 30 pay advices, UK P60 end of year certs probably useless as the don't align with the Thai Tax year, impractical to start legalising or translating it all, to many bits of paper. Might be possible to download a summary or get a summary cert from UK HMRC. as all these things  (for myself) are taxed at source every month (or immediately if a once off from two other sources). It would perhaps be so much more complicated for folks with dissimilar sources and types of income.

 

Yes I agree it is the further worry of what information the Thai RD shall likely recognise to accept the tax credit / offset validity, as I could only give them equality of information. Will they be reasonably consistent or will it be found to vary substantially office to office, officer to officer (as I've read about on many anxious posts within the  the immigration subject). With the revision of there standing orders will the emphasis of what they require also change from past practice? I'm sure many would like to know in advance of exceeding 179 days, if not resident there, other than in a Tax sense. 

 

[Metapod]

7 hours ago, Dario said:

Woaw, already 145 pages for this problem. I'm a Swiss national and after some research it appears that Switzerland has a Double Taxation Agreement with Thailand. Thailand cannot tax us again. Matter resolved.

 

That isn't how DTA works. If you are a tax resident with assessable income, you are still going to have to file a tax return in thailand. you wil also need to translate and validate swiss documents, so you are going to have to hire an accountant. this can't be a bog standard thai accountant that deals just with thai tax returns.

 

I'm honestly shocked how financially illiterate everyone here is.

[UKresonant]

38 minutes ago, Metapod said:

 

That isn't how DTA works. If you are a tax resident with assessable income, you are still going to have to file a tax return in thailand. you wil also need to translate and validate swiss documents, so you are going to have to hire an accountant. this can't be a bog standard thai accountant that deals just with thai tax returns.

 

I'm honestly shocked how financially illiterate everyone here is.

 

Financially allergic perhaps , thought they were supposed to be amending the tax return form?

 

Why would everyone have to hire an accountant? 

 

If I send money to a foreign currency account, the ATM translates it, and it is widely  accepted (except for those Scan only places)... 

 

Oh your  making it sound like the less than 179 days situation may prevail again 

[tomkenet]

Not sure if this document has been posted here before.

 

https://www.mazars.co.th/mazarspage/download/1175616/59807824/file/Technical-update-November-2023.pdf

 

Quite interesting 

 

What if Mr A has a savings account from before 2024 holding  16000 thb.

He remits this money, instead of capital gain money realised from selling 80 shares in 2025,  to Thailand in 2026. Still taxable for the year 2026?

Edited December 2, 2023 by tomkenet

[jayboy]

I have a feeling I'm missing something so perhaps someone  could help me out. Consider the following scenario which I will keep as simple as possible -

 

I have a company pension and a UK state pension paid monthly into a Jersey bank account.Up to now I have transferred funds from this source to a Thailand bank account to meet my living expenses.

 

I understand that from 2024 I will be taxed in Thailand on amounts remitted from this source.For reasons I need not go into the company pension is paid - with HMRC approval - to me free of UK tax (so DTA is irrelevant.)

 

But what is stopping me simply accumulating pension in my Jersey account and relying instead on transferring investment funds all accumulated prior to 31.12.23? Does this take me out of the Thai income tax equation?

 

I think I would still have to submit a Thai tax return.All speculation of course but a few may also be in the same boat.

[Mike Lister]

2 minutes ago, jayboy said:

I have a feeling I'm missing something so perhaps someone  could help me out. Consider the following scenario which I will keep as simple as possible -

 

I have a company pension and a UK state pension paid monthly into a Jersey bank account.Up to now I have transferred funds from this source to a Thailand bank account to meet my living expenses.

 

I understand that from 2024 I will be taxed in Thailand on amounts remitted from this source.For reasons I need not go into the company pension is paid - with HMRC approval - to me free of UK tax (so DTA is irrelevant.)

 

But what is stopping me simply accumulating pension in my Jersey account and relying instead on transferring investment funds all accumulated prior to 31.12.23? Does this take me out of the Thai income tax equation?

 

I think I would still have to submit a Thai tax return.All speculation of course but a few may also be in the same boat.

You still have file a return to account for the funds, the source and origin of those funds is not relevant.

[The Cyclist]

26 minutes ago, tomkenet said:

Quite interesting 

 

What if Mr A has a savings account from before 2024 holding  16000 thb.

He remits this money,

 

Mr A would not pay tax on a single remittance of 16,000 Baht ( Anyone sensible would just lift the 16,000 Baht from an ATM )

 

It is highly unlikely that Mr A would pay any tax if he remiited 16,000 Baht every month for the whole tax year.

[DonniePeverley]

I have seen this all play out in India. 

 

You are going to be taxed. All this talk of arrangements between countries will mean nothing. 

 

In India they are taking the money out at source in your bank accounts. 

[DonniePeverley]

Yeah i was in India. In Goa. Expats were saying the same thing. "Nah we have arragements, etc" - but they just took it at source at the bank. 

 

There's alot of wishful thinking going on here that is bordering on full on denial.

 

Go research what happened in India. 

Edited December 2, 2023 by DonniePeverley

[RupertIII]

51 minutes ago, tomkenet said:

Not sure if this document has been posted here before.

 

https://www.mazars.co.th/mazarspage/download/1175616/59807824/file/Technical-update-November-2023.pdf

 

Quite interesting 

 

What if Mr A has a savings account from before 2024 holding  16000 thb.

He remits this money, instead of capital gain money realised from selling 80 shares in 2025,  to Thailand in 2026. Still taxable for the year 2026?

So they will not be taxing unrealised capital gains, that's a relief - excuse the pun!

Edited December 2, 2023 by RupertIII

[tomkenet]

12 minutes ago, The Cyclist said:

 

Mr A would not pay tax on a single remittance of 16,000 Baht ( Anyone sensible would just lift the 16,000 Baht from an ATM )

 

It is highly unlikely that Mr A would pay any tax if he remiited 16,000 Baht every month for the whole tax year.

I think the numbers Mazars uses are too low to make sense , but remember this are just examples to show the principle. Add a zero or to to the numbers to make them more realistic.

[tomkenet]

What if Mr A has a savings account from before 2024 holding  16000 thb. The interest is 1000 thb a year, so in 2026 the account holds 18.000 thb.

He remits this 16.000 thb from the savings account  to Thailand in 2026. (Not from the account that holds the 16.000 capital gains from 2025) What is taxable income for the year 2026?

 

0 thb

2.000thb or

16.000 thb

[DonniePeverley]

On 11/30/2023 at 8:18 AM, Dario said:

Woaw, already 145 pages for this problem. I'm a Swiss national and after some research it appears that Switzerland has a Double Taxation Agreement with Thailand. Thailand cannot tax us again. Matter resolved.

 

 

It's not resolved. Wait and see. 

 

Same folk in India were saying the same thing. And they got hit. 

[Dogmatix]

Some up dated advisories in the light of P 162/2566 from BM, EY and SCB for interest.  

 

The BM document is just in slide form.  One slide gives the idea of using an offshore company to remit a "genuine loan" to the company's 100% owner who is tax resident in Thailand.  It says this is not assessable but doesn't define "genuine loan".

 

SCB reiterates the point from the Prachachart Thurakit article that a RD source said they want to amend the Revenue Code to tax all foreign source income in the year it arises, regardless of whether remitted to Thailand or not. I guess that is where we are headed eventually and a future MFP government with plans for enhanced welfare funded by an iniquitous wealth tax and other new taxes would probably make that more likely. 

Baker McKenzie 24 Nov 2023.pdf EY 28_Nov_2023[1].pdf

[TroubleandGrumpy]

On 11/30/2023 at 10:50 PM, Metapod said:

 

That isn't how DTA works. If you are a tax resident with assessable income, you are still going to have to file a tax return in thailand. you wil also need to translate and validate swiss documents, so you are going to have to hire an accountant. this can't be a bog standard thai accountant that deals just with thai tax returns.

 

I'm honestly shocked how financially illiterate everyone here is.

Mate - just do not argue with them - there are more cognitively dissonant people here than at a rabid political rallly in USA.

You will be wasting your time - just like I have, so many times. 

Post advice - but dont 'over' defend it. 

[Mike Lister]

On 11/30/2023 at 10:50 PM, Metapod said:

 

That isn't how DTA works. If you are a tax resident with assessable income, you are still going to have to file a tax return in thailand. you wil also need to translate and validate swiss documents, so you are going to have to hire an accountant. this can't be a bog standard thai accountant that deals just with thai tax returns.

 

I'm honestly shocked how financially illiterate everyone here is.

Umm, I think in the first instance, the tax payer has to file a return and make a financial statement regarding their income and the tax they believe is due on it. That is after all what a tax return is, in any country. For that to happen, only the filer needs to understand the detail hence there is no need to translate documents or to obtain specialist assistance, unless the filer doesn't actually understand how to file a simple tax return which I think is unlikely.

 

The second step depends on whether the RD accepts the return and gives it a check and pass, if they do, that's all the effort that is required. The problem, potentially, is when the RD decides they don't like the return and they think there is a reason to challenge it. Factors that might cause that to happen include very large amounts or a history of unusual financial affairs, I imagine. Personally, I don't see the RD challenging very many farang pensioners over their monthly pension  payments, they are primarily interested in much bigger fish plus don't you think they understand the language issues involved!

[TroubleandGrumpy]

On 11/30/2023 at 10:50 PM, Metapod said:

 

That isn't how DTA works. If you are a tax resident with assessable income, you are still going to have to file a tax return in thailand. you wil also need to translate and validate swiss documents, so you are going to have to hire an accountant. this can't be a bog standard thai accountant that deals just with thai tax returns.

 

I'm honestly shocked how financially illiterate everyone here is.

Mate - just do not argue with them - there are more cognitively dissonant people here than at a rabid political rallly in USA.

You will be wasting your time - just like I have, so many times. 

Post advice - but dont 'over' defend it. 

[Dogmatix]

31 minutes ago, TroubleandGrumpy said:

Mate - just do not argue with them - there are more cognitively dissonant people here than at a rabid political rallly in USA.

You will be wasting your time - just like I have, so many times. 

Post advice - but dont 'over' defend it. 

You can always file a case in the Central Tax Court, if you disagree with the RD and the amount at stake is worth paying lawyers for several years and you can have the tax plus penalties and interest available in case you lose the case.  You might a precedent that would be helpful to others, if Thai courts didn't have a habit of ignoring precedents.

[TroubleandGrumpy]

Thai RD tax guide from 2023 in English - 080966Ins94.pdf (rd.go.th)

 

1. The Thai RD has no idea what any money remitted into Thailand is from. They will/can know, but they do not know what it is from - pensions, savings, investments, drugs, whatever.  It is up to the person receiving the money to advise them what the source of that money was - either by doing a tax return, or by answering their enquiries as to why you received X Million Baht from overseas in 2024, 2025, 2026, etc., but you did not lodge a tax return. 

2. The Thai taxation system is an 'honour syetem' - you do not have to lodge a tax return if you or accountant determine that you have no income taxes payable.  However, if you are later found/decided to be wrong - you could be severely financially 'punished', and you could also be subject to detention, jail, deportation, etc.  This is not the Immigration Dept - there are no 'agents' and no 'payments' and the punishments can be severe.

3. Until 1 January 2024, any money brought into Thailand that was technically 'taxable', but had been earned prior to 2024, was not subjected to income tax - it was exempted. Only 'taxable income' brought into Thailand in the year it was earned, was taxable. Many wealthy Thai tax residents used this exemption to invest overseas, and then brig back the profist a few years later tax exempt.  That is the rule that has been changed - but that change 'technically' means that all money remitted into Thailand is taxable - because - refer to paragraph 1. 

Until the Thai RD provides their full list of clarifications of what is taxable and what is is exempted, then we only know that 'technically' all money remitted into Thailand is 'taxable'.  It is not until the Thai RD provides those clarifications and exemptions, then we will all know what is taxable, what is not, and therefore what each of us will decide to do.  

My plan, while waiting, is to bring forward any remittances I can, before end December 2023 (anything brought into Thailand in 2023 is not technically taxable). Then in 2024, I will only bring into Thailand what is absolutely necessary, while I wait to see how things go.  If I have to pay income taxes to Thailand on money I bring into Thailand to spend in Thailand (unless a very small amount) we will be leaving Thailand.  If I do not, then we will stay. 

There are several countries nearby that are far more 'friendly' to Expats - including those that only tax money made by Expats in their country - not money brought into the country by Expats. Obviously that would be stupid to stop Expats, who have come to live in your country, bringing money into your country to spend in your country - and on that money they spend they pay all 'point of sale taxes' (VAT). This IMO is where hopefully the Thai RD will realise they need to fix this problem, and will figure out how how to solve it. They are after those Tax Residents that have been sending money overseas to invest, and then bringing money back and paying no taxes on the profits made on that money.  The vast majority of Expats dont send money overseas - we only bring money into Thailand. 

[Mike Lister]

1 minute ago, TroubleandGrumpy said:

Thai RD tax guide from 2023 in English - 080966Ins94.pdf (rd.go.th)

 

1. The Thai RD has no idea what any money remitted into Thailand is from. They will/can know, but they do not know what it is from - pensions, savings, investments, drugs, whatever.  It is up to the person receiving the money to advise them what the source of that money was - either by doing a tax return, or by answering their enquiries as to why you received X Million Baht from overseas in 2024, 2025, 2026, etc., but you did not lodge a tax return. 

2. The Thai taxation system is an 'honour syetem' - you do not have to lodge a tax return if you or accountant determine that you have no income taxes payable.  However, if you are later found/decided to be wrong - you could be severely financially 'punished', and you could also be subject to detention, jail, deportation, etc.  This is not the Immigration Dept - there are no 'agents' and no 'payments' and the punishments can be severe.

3. Until 1 January 2024, any money brought into Thailand that was technically 'taxable', but had been earned prior to 2024, was not subjected to income tax - it was exempted. Only 'taxable income' brought into Thailand in the year it was earned, was taxable. Many wealthy Thai tax residents used this exemption to invest overseas, and then brig back the profist a few years later tax exempt.  That is the rule that has been changed - but that change 'technically' means that all money remitted into Thailand is taxable - because - refer to paragraph 1. 

Until the Thai RD provides their full list of clarifications of what is taxable and what is is exempted, then we only know that 'technically' all money remitted into Thailand is 'taxable'.  It is not until the Thai RD provides those clarifications and exemptions, then we will all know what is taxable, what is not, and therefore what each of us will decide to do.  

My plan, while waiting, is to bring forward any remittances I can, before end December 2023 (anything brought into Thailand in 2023 is not technically taxable). Then in 2024, I will only bring into Thailand what is absolutely necessary, while I wait to see how things go.  If I have to pay income taxes to Thailand on money I bring into Thailand to spend in Thailand (unless a very small amount) we will be leaving Thailand.  If I do not, then we will stay. 

There are several countries nearby that are far more 'friendly' to Expats - including those that only tax money made by Expats in their country - not money brought into the country by Expats. Obviously that would be stupid to stop Expats, who have come to live in your country, bringing money into your country to spend in your country - and on that money they spend they pay all 'point of sale taxes' (VAT). This IMO is where hopefully the Thai RD will realise they need to fix this problem, and will figure out how how to solve it. They are after those Tax Residents that have been sending money overseas to invest, and then bringing money back and paying no taxes on the profits made on that money.  The vast majority of Expats dont send money overseas - we only bring money into Thailand. 

Yes.....we agree, there is a god after all.  :))

[tomkenet]

11 minutes ago, TroubleandGrumpy said:

plan, while waiting, is to bring forward any remittances I can, before end December 2023 (anything brought into Thailand in 2023 is not technically taxable). Then in 2024, I will only bring into Thailand what is absolutely necessary

Remittance in 2023 of income earned in 2023 is certainly taxable. It you wait until beginning of 2024 it will not be taxable.  Thats at least my understanding.