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

[Mike Lister]

51 minutes ago, Sato said:

What Baker MacKenzie write makes sence to me.

Overseas income is in Thailand taxable when you are Tax Resident in Thailand.

But you have to pay the tax just then when you bring the money into Thailand.

Therefore it's logical that it is irrelevant if you are in the year of remittance not a Thai Tax Resident.

Otherwise it would be a loophole to avoid paying taxe's.

 

In addition, I do not belive, that Thai national will be treated differently to foreigner's in this matter.

I do not agree. A Thai citizen is taxable on income where ever and when ever it remitted, they cannot suddenly decide to avoid that reasonability. A foreigner is different, they can sever their relationship with a foreign country at any time and then reinitiate it later.

[Sato]

11 minutes ago, Mike Lister said:

I do not agree. A Thai citizen is taxable on income where ever and when ever it remitted, they cannot suddenly decide to avoid that reasonability. A foreigner is different, they can sever their relationship with a foreign country at any time and then reinitiate it later.

No difference in this matter between Thai and Foreigner. If a Thai or a Foreigner life e.g. in Switzerland, then both have to pay tax in Switzerland for their income during this year.

If this Thai or this Foreigner life another year in Thailand then both have to pay tax in Thailand for their income during this year.

[Mike Lister]

13 minutes ago, Sato said:

No difference in this matter between Thai and Foreigner. If a Thai or a Foreigner life e.g. in Switzerland, then both have to pay tax in Switzerland for their income during this year.

If this Thai or this Foreigner life another year in Thailand then both have to pay tax in Thailand for their income during this year.

But the Thai RD has clearly stated that the income is taxable, only when it is remitted, not when it arises. If income is remitted by a person who is not tax resident they cannot be taxable. A Thai citizen on the other hand cannot escape being tax resident.

[Klonko]

As long as Thailand does only tax remitted income, there will be possibilities to avoid or minimise Thai tax payable and Thailand will remain a tax efficient domicile. In this respect, I am relaxed which detailed rules will be established hopefully before 2025, though I am structuring my remittances for a worst case scenario.

 

Thailand switching to a global income tax in the more distant future with no adaptations to the effective tax rates could be a game changer. While retirees in the low income bracket would probably still not pack and flee because the combination of low living costs, decent infrastructure and moderate taxes remains in place, Thailand would not be attractive to wealthy people anymore. But given that Thailand seems to be interested in wealthy people, I anticipate that a global tax system would not apply the existing marginal 35% tax rate to global income. Other countries applying the global tax system and competing for wealthier foreigners have found ways to offer attractive tax solutions for this clientele.

[Sato]

6 minutes ago, Mike Lister said:

But the Thai RD has clearly stated that the income is taxable, only when it is remitted

Taxable when remitted, yes.

But do you also have to pay the tax even when you are not tax resident in the year of remitttence BUT was in the year of income ?

 

[Sato]

14 minutes ago, Mike Lister said:

A Thai citizen on the other hand cannot escape being tax resident

Why not ?

As a Swiss living in Thailand I'm not a Tax Resident of Switzerland anymore instead I'm now a Tax Resident of Thailand.

And a Thai working in Switzerland is no longer a Tax Resident of Thailand but is a Tax Resident of Switzerland.

[Mike Lister]

7 minutes ago, Sato said:

Taxable when remitted, yes.

But do you also have to pay the tax even when you are not tax resident in the year of remitttence BUT was in the year of income ?

 

Once again, the RD has said it is solely the date of remittance that matters, the date the income arose does not.

[Mike Lister]

3 minutes ago, Sato said:

Why not ?

As a Swiss living in Thailand I'm not a Tax Resident of Switzerland anymore instead I'm now a Tax Resident of Thailand.

And a Thai working in Switzerland is no longer a Tax Resident of Thailand but is a Tax Resident of Switzerland.

Because Thailand taxes its citizens on worldwide earnings, as does the US and other countries.

 

When that Thai who is living in Switzerland, remits their Swiss earnings back to Thailand, they will be regarded as income that must be reported on a Thai tax return but may or may not be assessable, depending on the terms of the DTA between the two countries.

[Sato]

8 minutes ago, Mike Lister said:

Because Thailand taxes its citizens on worldwide earnings, as does the US

I did'nt know that (just know that Thailand tax Tax Resident's on worldwide income). Do you have a link to a source ?

[tomkenet]

14 minutes ago, Mike Lister said:

Once again, the RD has said it is solely the date of remittance that matters, the date the income arose does not.

So how do you interpretate Baker MacKenzie clarification about the text "Tax residency status in the year of remittance is irrelevant."

 

 

"Thai personal income tax is based on cash basis - receiving income. A year in which a person receives offshore income is relevant, saying that it must be a year that the person is a Thai tax resident. Whether that person is a Thai tax resident in a year in which he or she actually brings income into Thailand is not relevant."

[Mike Lister]

1 minute ago, Sato said:

I did'nt know that (just know that Thailand tax Tax Resident's on worldwide income). Do you have a link to a source ?

Not without searching, which anyone can do. The fact the RD is now taxing Thai's on over seas earnings when they are remitted, should be adequate proof.

[Puccini]

6 hours ago, Mike Lister said:

The slide presumably refers to  a Thai person or citizen, in which case it is correct, it is not however relevant to non Thai citizens or foreigners.

 

It is ambiguous, but I take it to mean a natural person resident in Thailand for tax purposes, regardless of the persons nationality.

[Mike Lister]

2 minutes ago, tomkenet said:

So how do you interpretate Baker MacKenzie clarification about the text "Tax residency status in the year of remittance is irrelevant."

 

 

"Thai personal income tax is based on cash basis - receiving income. A year in which a person receives offshore income is relevant, saying that it must be a year that the person is a Thai tax resident. Whether that person is a Thai tax resident in a year in which he or she actually brings income into Thailand is not relevant."

"A year in which a person receives offshore income is relevant", The use of the word "receive" is odd, it is neither earned nor remitted so what does it mean? I think it means remitted rather than when the income arose.

 

As for the second part:

 

"Whether that person is a Thai tax resident in a year in which he or she actually brings income into Thailand is not relevant." Once again, a Thai citizen cannot do anything to shed their obligation to Thai tax, because they are a national of Thailand. But foreigners are not nationals and can sever all links with the country easily. In that respect, being tax resident is relevant. If somebody said this was written for Thai's by Thai's in English, that would make sense.

[TravelerEastWest]

5 hours ago, Mike Lister said:

Yes, for Thai nationals but not for non-citizens.

 

Hello, can you please cite a law, regulation, or decree that says Thais are treated differently under Thai law than foreign residents? It would be good information to have.

 

Also, I saw you earlier made a comment that the RD said... please keep in mind without laws behind a statement RD opinions can't be trusted worldwide as a general rule. Usually, they don't employ the best tax accountants or tax attorneys,the large CPA firms and law firms do and you can usually trust the of a RD.

Edited December 4, 2023 by TravelerEastWest

[Mike Lister]

1 minute ago, TravelerEastWest said:

 

Hello, can you please cite a law, regulation, or decree that says Thais are treated differently than foreign residents? It would be good information to have.

It's already been said many times, Thai nationals cannot escape tax obligations to Thailand, any funds remitted to Thailand must be assessed for tax, they can't change that. Foreigners can simply go home and that ends the relationship, there is no longer an obligation to file a return or pay any tax in Thailand. Those things are not laws necessarily, they are the reality of being a national versus a foreigner in Thailand. And please, no more sarcasm, if you have a point to make, make it!

[Mike Lister]

OK, here's a couple of questions:

 

1) Are foreigners who are not tax resident in Thailand, allowed to remit funds here?

 

2) If the answer to (1) above is no, why?

 

3) If the answer to (1) above is yes, is that money potentially taxable, even though the foreigner is not resident or tax resident here?

 

4) If the answer to (3) is yes, why, how and on what basis?

[K2938]

5 hours ago, tomkenet said:

Does this mean a person can be taxed on remittance even he is not a tax resident that year if the money is earned a previous year when he was a tax resident.

That is indeed what the guidance issued so far implies

[TravelerEastWest]

1 hour ago, Mike Lister said:

It's already been said many times, Thai nationals cannot escape tax obligations to Thailand, any funds remitted to Thailand must be assessed for tax, they can't change that. Foreigners can simply go home and that ends the relationship, there is no longer an obligation to file a return or pay any tax in Thailand. Those things are not laws necessarily, they are the reality of being a national versus a foreigner in Thailand. And please, no more sarcasm, if you have a point to make, make it!

 

I am not being sacrastic but very realistic. You have not cited any laws - sorry I am a retired tax guy and some of what you ay is good and some is somewhat less than useful and accurate - no need to take offense - this is serious business we are talking about at least for me it is. But that is OK this thread is just for bouncing thoughts and ideas around.

 

As for Thai nationals not escaping tax obligations they can leave Thailand just as foreigners can and any existing tax liens are hard to collect same as with a foreigner.

 

To be very clear the law is equally for Thais and foreigners who are tax residents which is what we are talking about. Unless you have laws that say otherwise and then I will say thank you for the update. Tax laws tend to be complicated and to think that any non native speaker of Thai or the rare talented foreigner with a very high level of Thai understand Thai laws is unrealistic. To trust that RD officials both understand and explain things correctly to you is not realistic. 

[MistyBlue]

6 hours ago, Mike Lister said:

7 hours ago, Sato said:

Expand  

I do not agree. A Thai citizen is taxable on income where ever and when ever it remitted, they cannot suddenly decide to avoid that reasonability. A foreigner is different, they can sever their relationship with a foreign country at any time and then reinitiate it later.

You seem to be presenting this in your posts as a matter of fact but I think what you have written is incorrect.  I decided to check the revenue department's website and can find no distinction between thai citizenship and foreigners in relation to tax residence status.  This is what the RD states and it makes no distinction: 

1.  Taxable Person.  Taxpayers are classified into “resident” and “non-resident”. “Resident” means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however, subject to tax only on income from sources in Thailand."

 

If you think there is a distinction between Thais and foreigners in relation to tax residence then I'm happy to be corrected, but please provide source and quotes.

 

For the wider question of whether remitting funds in a year when not tax resident in Thailand, that were earned in a year when was a resident I think there are still uncertainties and this point is still not clear (to me anyway).  Indeed I think you make strong arguments why they wouldn't be taxed and hope you are right but (in my opinion not fact) there is still conflict and a potential loophole between the revenue code and the recent order on this point which will only be resolved through either further clear clarification from the RD department, or through what happens in practice in 2025, or through tax advice from one of the established tax advisories, or through a test case before a court.

Edited December 4, 2023 by MistyBlue

[cleanac]

For people who have made a lot on crypto, what are you doing with regards to the tax rules next year?

Is there anybody here who has seen an accountant about it, and has some advice to share?

At the moment, it seems like the options are:

• Sell a chunk this month, before the new tax rules kick in.
• Take it on the chin, lose 15%
• Do something creative with tax loopholes
• Take a loan on AAVE to get cash into Thailand this tax year without actually selling
• Move to another country

I use it for living expenses and plan to buy property in the next couple of years, losing 15% will suck. I don't want to sell a lot right now if I can avoid it. Anyone have any better options/advice/ideas?

 

 

crypto bitcoin ethereum BTC ETH cryptocurrency

Edited December 4, 2023 by cleanac

[UKresonant]

Just now, MistyBlue said:

You seem to be presenting this in your posts as a matter of fact but I think what you have written is incorrect.  I decided to check the revenue department's website and can find no distinction between thai citizenship and foreigners in relation to tax residence status.  This is what the RD states and it makes no distinction: 

1.  Taxable Person.  Taxpayers are classified into “resident” and “non-resident”. “Resident” means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however, subject to tax only on income from sources in Thailand."

 

If you think there is a distinction between Thais and foreigners in relation to tax residence then I'm happy to be corrected, but please provide source and quotes.

 

For the wider question of whether remitting funds in a year when not tax resident in Thailand, that were earned in a year when was a resident I think there are still uncertainties and this point is still not clear (to me anyway).  Indeed I think you make strong arguments why they wouldn't be taxed and hope you are right but (in my opinion not fact) there is still conflict and a potential loophole between the revenue code and the recent order on this point which will only be resolved through either further clear clarification from the RD department or through what happens in practice in 2025 or through a test case before a court.

For the wider question of whether remitting funds in a year when not tax resident in Thailand

 

Yes, as time moves on, it would be a problem if you were a tourist for 10 years and had remitted millions of Baht (and probably spent most, you become resident over 179 Days in year 11 and they wanted tax on it. .

 

I would think they would want to keep the 180 day rule, anticipate people bringing money into the country is still a good thing? Think of someone being over in the region, staying  a couple of months in a few places, then looking at In country extension  financial requirements, and anticipating being taxed on that money going forward and all the other examples. I don't think most Thais would be looking to go out the country for 6 months very often to use that option.

Glass half full? might scare away small golden eggs  they would perhaps get VAT on, and then potentially zero. But that may be only viewed from our context, not for the folks they are saying they are targeting. 

"either further clear clarification from the RD department or through what happens in practice in 2025 or through a test case before a court."   It would narrow it down a bit at least.

 

[Mike Lister]

4 hours ago, TravelerEastWest said:

 

Hello, can you please cite a law, regulation, or decree that says Thais are treated differently under Thai law than foreign residents? It would be good information to have.

 

Also, I saw you earlier made a comment that the RD said... please keep in mind without laws behind a statement RD opinions can't be trusted worldwide as a general rule. Usually, they don't employ the best tax accountants or tax attorneys,the large CPA firms and law firms do and you can usually trust the of a RD.

I never said that, you are mistaken.

[Mike Lister]

2 hours ago, TravelerEastWest said:

 

I am not being sacrastic but very realistic. You have not cited any laws - sorry I am a retired tax guy and some of what you ay is good and some is somewhat less than useful and accurate - no need to take offense - this is serious business we are talking about at least for me it is. But that is OK this thread is just for bouncing thoughts and ideas around.

 

As for Thai nationals not escaping tax obligations they can leave Thailand just as foreigners can and any existing tax liens are hard to collect same as with a foreigner.

 

To be very clear the law is equally for Thais and foreigners who are tax residents which is what we are talking about. Unless you have laws that say otherwise and then I will say thank you for the update. Tax laws tend to be complicated and to think that any non native speaker of Thai or the rare talented foreigner with a very high level of Thai understand Thai laws is unrealistic. To trust that RD officials both understand and explain things correctly to you is not realistic. 

You haven't answered my questions, too difficult?

[Mike Lister]

1 hour ago, MistyBlue said:

You seem to be presenting this in your posts as a matter of fact but I think what you have written is incorrect.  I decided to check the revenue department's website and can find no distinction between thai citizenship and foreigners in relation to tax residence status.  This is what the RD states and it makes no distinction: 

1.  Taxable Person.  Taxpayers are classified into “resident” and “non-resident”. “Resident” means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however, subject to tax only on income from sources in Thailand."

 

If you think there is a distinction between Thais and foreigners in relation to tax residence then I'm happy to be corrected, but please provide source and quotes.

 

For the wider question of whether remitting funds in a year when not tax resident in Thailand, that were earned in a year when was a resident I think there are still uncertainties and this point is still not clear (to me anyway).  Indeed I think you make strong arguments why they wouldn't be taxed and hope you are right but (in my opinion not fact) there is still conflict and a potential loophole between the revenue code and the recent order on this point which will only be resolved through either further clear clarification from the RD department, or through what happens in practice in 2025, or through tax advice from one of the established tax advisories, or through a test case before a court.

That's because it is simple fact. A foreigner can sever all ties with Thailand, simply by getting on a plane, a Thai national cannot. It is not that there are two different sets of laws, there aren't, it's just that one group, foreigners, are able to manage things differently.

 

Try answering the four questions I asked earlier and [perhaps you'll realise that.

[MistyBlue]

9 minutes ago, Mike Lister said:

That's because it is simple fact. A foreigner can sever all ties with Thailand, simply by getting on a plane, a Thai national cannot. It is not that there are two different sets of laws, there aren't, it's just that one group, foreigners, are able to manage things differently.

 

Try answering the four questions I asked earlier and [perhaps you'll realise that.

I'm sorry but I respectfully put it to you that you presenting an opinion,  not a fact.

 

Your earlier questions bear no relation to tax residency.  That is already set out in the Thai RD website and that point seems fairly clear.

[Lorry]

14 hours ago, Krit said:

Thank you for kindly correcting me. I was momentarily confused by the Baker McKenzie presentation that was linked here earlier:

 

So, what does "Tax residency status in the year of remittance is irrelevant. " mean?

I am very confused now.

 

I don't think it makes a difference whether a tax resident in Thailand is Thai or foreigner. 

 

What some people write here is: if you receive income abroad in a year you are tax resident, and you then remit this money to Thailand in a year you are not a tax resident,  in this case you have to pay taxes for this money in the year you remit it to Thailand even you are not a tax resident. 

 

This leads to the consequence that you may be liable for taxes in a year even if you weren't in Thailand at all.

Mike has given an example. 

 

I find this absurd,  even if I understand the logic. This problem has been discussed earlier in this thread,  I attach 2 early posts which convinced me that tax residency in the year of remittance IS relevant.

Obviously, Baker McKenzie is not convinced.

 

Edited December 4, 2023 by Lorry

[ChrisP24]

1 minute ago, Lorry said:

So, what does "Tax residency status in the year of remittance is irrelevant. " mean?

 

 I take it to mean that if you were a tax resident last year but not one this year, that you still have to pay tax on last year's income.  Even if you pay last year's tax during this current year.

[Hans99]

17 hours ago, K2938 said:

Currently undefined, but likely

 

OK, then if ATM withdrawals and credit card charges (drawn from an overseas bank) are likely to qualify as "remitted", then it would seem that pretty much everyone reading this forum needs to get into the habit of keeping their ATM withdrawal slips and credit card charge slips (since those numbers will be needed to fill out one's tax return lawfully).  Are we all on the same page here?

Edited December 4, 2023 by Hans99

[UKresonant]

Anyway, I'll share my thoughts on where I think I need to go, with a slight financial tweak in home country, as a current non-resident preparing for the possibility of filing a Thai Tax return in future years (>2026 at least, and will get some sugar free popcorn for first half of 2025). Always expecting to also be Tax resident in the UK, as well as Thailand additionally  sometimes.

 

I think there is a need  to not mingle these source categories to allow a trail history, in order of preference for sending to Thailand;-

 

Group one

Savings from before 2024 (increasingly difficult to ringfence with paper trail)

Group two 

Four Pensions all taxed at source in the UK, (one GOV. Taxed in the UK only), so the will all generate and demonstrate tax paid that can be used for credit relief against for the amount of tax actually paid in the paid in the UK.  Thailand RD do not have a specific form for noting the expected credit relief so far, info this end just says to write to them?? Hope that becomes clearer.

 

"Go by the treaty"* Article 23 of the UK-Thailand DTA "(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".  [the digest has No Relief against the non-Government pensions column but this is because there is not a specific mention in the treaty as note 4.Treaty does not include an article dealing with Non-Government pensions. Also, no relief for State Pension or ‘trivial commutation lump sum]

*HMRC Technician, today.

 

Group Three

Savings from taxed income whilst non-resident including remitted to Thailand. 

 

Group Four

Misc. wee bits and pieces (minor not worth defining)

 

Group  Five

a) ISA Dividends, they would be treated as normal dividends if remitted to Thailand as the Tax free UK wrapper is ignored.  (though all created from taxed income, this is effectively another minor pension, that at least one UK chancellor was promoting as retired income provision in the past. not for a DTA consideration it perhaps isn't)

b) State Pension no tax deducted (when it comes). 

c) Other Dividends or interest.

Noting b) and c) have potential to show more tax within Group Two, but trivial.

 

So on a scale of Group One most likely to remit to Thailand, to Group Five least likely! So I will try and keep the different groups isolated for future potential questioning  . A little project to get on with, but the questions could totally change again. May or not make things easier, in an ideal situation perhaps. 

 

UK DTA and Digest links

https://assets.publishing.service.gov.uk/media/5a80bddc40f0b623026953eb/uk-thailand-dtc180281_-_in_force.pdf

https://assets.publishing.service.gov.uk/media/5b05425fed915d1317445ed2/DT_Digest_April_2018.pdf

[Mike Lister]

1 hour ago, MistyBlue said:

I'm sorry but I respectfully put it to you that you presenting an opinion,  not a fact.

 

Your earlier questions bear no relation to tax residency.  That is already set out in the Thai RD website and that point seems fairly clear.

For the last time, answer the four questions.