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

[Dogmatix]

On 1/3/2024 at 5:28 AM, Mike Lister said:

Ah, I see the problem I started the ball rolling in my initial post by saying "Direct Taxes" when I intended to say, "PIT" (that has been falling and is 2%. My error in terminology.

 

No, you are still wrong even in your revised statement on both counts.  PIT rose every year from 2001 to 2019 except 2009 (caused by the subprime global recession) and was 9% of total tax revenue in 2021, not 2%.  

 

Look again. PIT is 4th line down item "1100 of individuals". https://stats.oecd.org/Index.aspx?DataSetCode=REVTHA 

[Mike Lister]

6 minutes ago, Dogmatix said:

 

No, you are still wrong even in your revised statement on both counts.  PIT rose every year from 2001 to 2019 except 2009 (caused by the subprime global recession) and was 9% of total tax revenue in 2021, not 2%.  

 

Look again. PIT is 4th line down item "1100 of individuals". https://stats.oecd.org/Index.aspx?DataSetCode=REVTHA 

Go back and read it again, slowly, I'm loosing the will to live with you on this.

 

No wait, I tell you what, I'm wrong, just like I was wrong for filing a tax return in years gone by. So, matter now closed.

 

If anyone else has anything they would like me to admit being wrong about, I admit all instances, I was very wrong and you were right. That feels so much better.

 

Now, I'm off for any appointment so don't bother baiting. Bye.

Edited January 4 by Mike Lister

[Dogmatix]

Some random thoughts.

 

It terms of tracking remittances the RD could either do nothing, at least to start with, and rely self assessment or it could follow up on every remittance in to the banking system which would entail a lot of time and trouble and false leads.  

 

If they do track remittances which seems likely at some point, it would make more sense to set a minimum amount to avoid bothering with all the many small remittances.  An easy way to do this would be set the limit at US$50k which is it the level at which remittances have to be reported to the Bank of Thailand by banks with a declaration from the recipient on the intended use of funds.  Piggy backing on the system already in place would save a lot of extra work for banks but the RD might decide it doesn't care about extra work and set a lower limit.  All Thais are likely to be tax residents but with foreigners they will get a lot of people who are not tax residents, if they set a limit that is too low. 

 

As far as gifts are concerned it has been advised to put "gift" on the remittance advice but I am pretty sure there is no gift category when the recipient has to declare the purpose of the remittance to the Bank of Thailand, if over US$50k.  In this case the recipient should probably tell the BOT it is for living expenses.  

 

[Dogmatix]

4 minutes ago, Mike Lister said:

Go back and read it again, slowly, I'm loosing the will to live with you on this.

 

No wait, I tell you what, I'm wrong, just like I was wrong for filing a tax return in years gone by. So, matter now closed.

 

If anyone else has anything they would like me to admit being wrong about, I admit all instances, I was very wrong and you were right. That feels so much better.

 

Now, I'm off for any appointment so don't bother baiting. Bye.

 

If you didn't make misleading assertions about Thai tax revenue breakdowns that are so far from what the actual data shows, I wouldn't point out your errors. 

[Old Croc]

I don't know if this has been addressed yet, and apologize if so, but the tax subject threads have become too large to search.

Just checked my savings account (K) and find it is now a Business Account.

Implications?

[Mike Lister]

13 minutes ago, Dogmatix said:

 

If you didn't make misleading assertions about Thai tax revenue breakdowns that are so far from what the actual data shows, I wouldn't point out your errors. 

You and cyclist should get married. Ignore list, life is too short, bye

[stat]

11 hours ago, jerrymahoney said:

And just to note as a general 'matter':

 

https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/United-States-Tax-Residency.pdf

@Mike ListerJerry is right on this one, there are a lot of countries that do not use the 180/183 day rule and therefore you can be tax resident in 2 or more countries. Another example: in Germany you are a tax resident if you have an abode in Germany. A garage with water and electricity that you could use to live in is sufficient. Even if you have not spend a second in Germany you are considered a tax resident for the whole year. @Mike Lister

No offense pls abstain from posting on issues where you have not checked the factuality in detail. It comes as a surprise to me that you have worked in the big 4, but my guess is not in a tax consultant role. I know a lot of big 4 audit and consulting partner who do not have a clue about taxes and openly admit it because they work in other fields.

Edited January 4 by stat

[Mike Lister]

Just now, Mike Lister said:

You and cyclist should get married. Ignore list, life is too short, bye

I've emailed world bank and told them of their errors and asked them to contact you directly.

[stat]

9 hours ago, tomkenet said:

Sorry, i still think this will not change in 2024.

 

Earnings from previous years are remitted taxfree, just like 2023 and before.

 

Earnings from same year are taxable when remitted , just like 2023 and before.

 

What is new in 2024

Thanks for your post! I see your line of reasoning now. However the differences are in my opinion:

 

1. Apparently you will have to file a tax return for 2024 and RD will check and tax your 2024 earnings if remitted to TH. To my knowledge before 2024 there was no (real life) check from RD if you really remitted only gains from previous years.
2. You can no longer remit your 2024 gains in 2025 or later tax free, you have to leave your 2024 gains outside of Thailand forever or not be a tax resident in a given year to remit without being taxed. So if you have 2024 cap gains you will have to pay tax on your gains sometimes in the future (if you remit or cannot prove they have been taxed elsewhere).

Edited January 4 by stat

[UKresonant]

6 hours ago, The Cyclist said:

A simple announcement of ' All pensions  from Countries with a DTA with Thailand are exempt ' Which would come as no surprise if this was announced.

That would be what I would hope for as well! It was implied in the press reporting of the original announcement in Sept, should not be a problem if you have a DTA in force. They would have to add the words 'that have already been taxed' probably.  

[stat]

2 minutes ago, UKresonant said:

That would be what I would hope for as well! It was implied in the press reporting of the original announcement in Sept, should not be a problem if you have a DTA in force. They would have to add the words 'that have already been taxed' probably.  

Why should pensions be exempt if the DTA (GERMAY TH for example) states clearly that the pension should be taxed in Thailand? However TH never bothered to tax the pensions in the past.

[Steve2UK]

7 hours ago, jerrymahoney said:

For 10+ years I received an affidavit from the US Embassy for 65K+ income either at the embassy in Bangkok or on counselor outreach. And for all those years I then received the one-year extension with me physically present in the Immigration office.

 

Neither the US Embassy counselor officials nor any IMM officer in 2 different locations ever suggested there was any Thailand tax obligations related to my stated or proved foreign-sourced income.

This pretty much matches my experience/practice for many years from 2006. For most of those years, I was a] receiving rental income from a property in the UK and b] annually supplying the property agent's rental statements to the (up-country) British Consulate - who duly (for a fat fee) gave me a consul-stamped affidavit showing 65K+ baht income for presentation to Immigration to facilitate retirement visa extensions (in person, natch). In all those years I never exited Thailand. No mention from anyone of tax return filing obligations. Eventually, the British Consulate ditched this 'service' and announced that all future such affidavits could only be issued from the Bangkok embassy -  applied for by/supplied to me in person. As we Brits say "F**k that for a game of soldiers" - and I switched to the 800k baht on deposit route....and still no mention of tax returns from anyone. The years passed and I eventually sold the UK property - wiring the x baht millions of much of the sale proceeds to my Thai bank account and used some to buy a Thai property. Still no mention of filing a Thai tax return........from anyone.

 

I doubt that my retirement experience is particularly exceptional. Granted - those from other countries (and likely still 'trading' stocks etc) may have different mileage.

Edited January 4 by Steve2UK

[Mike Lister]

58 minutes ago, stat said:

@Mike ListerJerry is right on this one, there are a lot of countries that do not use the 180/183 day rule and therefore you can be tax resident in 2 or more countries. Another example: in Germany you are a tax resident if you have an abode in Germany. A garage with water and electricity that you could use to live in is sufficient. Even if you have not spend a second in Germany you are considered a tax resident for the whole year. @Mike Lister

No offense pls abstain from posting on issues where you have not checked the factuality in detail. It comes as a surprise to me that you have worked in the big 4, but my guess is not in a tax consultant role. I know a lot of big 4 audit and consulting partner who do not have a clue about taxes and openly admit it because they work in other fields.

Go back and read it again, slowly and carefully this time.

[UKresonant]

18 hours ago, stat said:

Do you have any chance of NOT remitting your pension and using other monies?

Provided basis remains remittance, but it would probably always need some non-resident years.

(This is all hypothetical for me on current plans as the earliest year I could be tax resident is 2027, the main thing is to to start recording taxed income, buffered / saved for later remittance).

It's probably more do-able once over 65 and the additional allowance become available. 

 

[UKresonant]

7 hours ago, The Cyclist said:

 

If that it / was the case. And I have no idea if it is true or false.

 

Then surely it would be down to the RD ( Who you would think should know the rules / tax laws ) to educate those 1000's of expats and retirees, who apparently reclaim money every year, by filling at the RD.

By signing the form, are they not accepting to say it is in accordance with the rules, and the claim was implicitly correct. 

The education aspect sounds like a earning opportunity, out of hours, for RD staff  

[The Cyclist]

48 minutes ago, UKresonant said:

That would be what I would hope for as well! It was implied in the press reporting of the original announcement in Sept, should not be a problem if you have a DTA in force. They would have to add the words 'that have already been taxed' probably.  

 

Yes there was a statement made to that effect.

 

I was more thinking of the potential workload for the RD. Filing and checking all those pensions for no tax money collected.

 

48 minutes ago, stat said:

Why should pensions be exempt if the DTA (GERMAY TH for example) states clearly that the pension should be taxed in Thailand?

 

Is it possible that Germans living in Thailand do not pay tax in Germany on their pensions, and will now have to pay tax in Thailand ?
 

A loophole being closed that allowed people to avoid tax.

 

In the post that you quoted, it was clear the discussion was about pensions that were already taxed in the UK.

[The Cyclist]

3 minutes ago, UKresonant said:

By signing the form, are they not accepting to say it is in accordance with the rules, and the claim was implicitly correct. 

The education aspect sounds like a earning opportunity, out of hours, for RD staff  

 

Never filed a tax return in Thailand, for the reasons I bullet pointed above. So cannot comment on the above, although I would think that if you were subsequently audited and found to be telling little porky pies on the tax return you would be in the brown stuff, signed by the RD ot not 

[UKresonant]

3 hours ago, The Cyclist said:

 

Sure. I'm one of them.

 

Is a pension covered by a DTA classed as ' assessable income ' ?
 

I think not.

Perhaps would agree if a UK government pension  is your sole, remittance source (and you perpetually keep the records to hand), otherwise;- 

 

It may be  an assessable income type , but nothing to pay, to explain a component of multi remittance events?

In the case of a UK Government pension, in the worst case HMRC (conversation in 2018) reckoned you may even have to pay the tax and then get a immediate refund, but even if Thailand Claimed fiscal domicile article 4, priority taxing rights, you would end up with zero tax as covered by the DTA. In that case would it have to be noted on the form? What will they do in practice is yet to be seen.

 

"Article 19 Governmental Services
(2) (a) Any pension paid by the Contracting State or a political subdivision or a local authority thereof to any individual in respect of services of a governmental nature rendered to that State or subdivision or local authority thereof shall be taxable only in that State."

 

Where as other stuff may be 

"Article 23 Elimination of Double Taxation

(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 Cyclist]

10 minutes ago, UKresonant said:

Perhaps would agree if a UK government pension  is your sole, remittance source (and you perpetually keep the records to hand), otherwise;- 

 

Gov pension remitted directly to Thailand,  P60's and Statements of Future Payments in a Nyrex folder. Cross refencing made easy.

 

I am led to believe that you only have to file a Thai tax return if you have ' assessable income ' I am also led to believe ( but I could be wrong ) that income that is covered by a DTA is not classed as ' assessable income '

 

12 minutes ago, UKresonant said:

Where as other stuff may be 

 

Agreed, which is why my private pension ( until I get official clarification ) is. now sent to my UK bank.
 

I am still working on the assumption ( Until the Thai Gov / RD says otherwise ) income that is already taxed in your home Country will not be re-taxed in Thailand.

 

Although people might have to get TIN's and file ' Nil ' tax returns.

[Lorry]

9 hours ago, The Cyclist said:

Is it possible that Germans living in Thailand do not pay tax in Germany on their pensions, and will now have to pay tax in Thailand ?

Yes, possibe, I know some Germans do this

[Mike Lister]

10 hours ago, UKresonant said:

By signing the form, are they not accepting to say it is in accordance with the rules, and the claim was implicitly correct. 

The education aspect sounds like a earning opportunity, out of hours, for RD staff  

When the tax payer signs the form they are verifying that it is true and correct, it says that......correct includes that the form is complete and that there are no omissions.

[Mike Lister]

12 hours ago, stat said:

@Mike ListerJerry is right on this one, there are a lot of countries that do not use the 180/183 day rule and therefore you can be tax resident in 2 or more countries. Another example: in Germany you are a tax resident if you have an abode in Germany. A garage with water and electricity that you could use to live in is sufficient. Even if you have not spend a second in Germany you are considered a tax resident for the whole year. @Mike Lister

No offense pls abstain from posting on issues where you have not checked the factuality in detail. It comes as a surprise to me that you have worked in the big 4, but my guess is not in a tax consultant role. I know a lot of big 4 audit and consulting partner who do not have a clue about taxes and openly admit it because they work in other fields.

Jerry was indeed correct, as are you for a change when you mention not all countries use the 180/183 day rule.

 

However, my earlier most was not discussing the US, Germany or other countries, my post was discussing two very specific countries, the UK and Thailand, in an attempt to explain one particular posters tax issues. What I wrote was:

 

"As a general rule, it is not possible to be tax resident in the UK and Thailand, in the same tax year." 

 

My earlier post then went on to acknowledge the existence of the HMRC Ties Rules and their complexity but purposely did not go into detail because there was no need.

 

Please don't attempt to correct the posts of others and admonish posters, until after you have read thoroughly what has been written and completely understood everything, otherwise you come across as not competent and that is not a desirable trait of a "tax expert". And please don't try to second guess what my career background might have been or comment on it, because it is not relevant, nor are remarks of a personal nature permitted under forum guidelines. Thanks

 

 

[UKresonant]

13 hours ago, stat said:

in Germany you are a tax resident if you have an abode in Germany. A garage with water and electricity that you could use to live in is sufficient. Even if you have not spend a second in Germany you are considered a tax resident for the whole year.

 

If that was the UK rule, I could sleep beside my old Motorcycles  

 

 

The UK rules tax manual is a bit like  like paper mache 

RDRM12630 - Residence: The SRT: Temporary non-residence: Treaty non-residence

An individual will be Treaty non-resident at any time if, at that time, they fall to be regarded as resident in a country outside the UK for the purposes of double taxation agreements, having effect at that time.

An individual will be Treaty resident in the UK if, at the time, they fall to be regarded as resident in the UK for the purposes of double taxation arrangements having effect at that time.

[The Cyclist]

5 hours ago, Lorry said:

Yes, possibe, I know some Germans do this

 

Thought that be the case. Although why a certain poster thinks that what happens in Germany happens throughout the rest of the World is beyond me.

 

 

 

 

[JimGant]

16 hours ago, The Cyclist said:

 

I am led to believe that you only have to file a Thai tax return if you have ' assessable income ' I am also led to believe ( but I could be wrong ) that income that is covered by a DTA is not classed as ' assessable income '

 

Well, yes and no. If a DTA says your gov't pension is not taxable by Thailand, but only by your home country -- then, yes, your gov't pension is not assessable income for Thai tax purposes. However, if the DTA says Thailand has exclusive taxation rights on private pensions (which the US DTA clearly states), then that would be assessable income -- IF (under the old rules) it is remitted in year earned. Under the new (proposed) rules, all pre-Jan 1, 2024 earnings are not assessable income - if remitted to Thailand after 31 Dec 2023. Which says you'd best open a new bank account for your 2024 and later earnings -- and do your wire transfers from your pre-2024 bank account -- not that they'll ever have the resources to efficiently investigate transfer sources.

 

 

[Jingthing]

7 minutes ago, JimGant said:

 

Well, yes and no. If a DTA says your gov't pension is not taxable by Thailand, but only by your home country -- then, yes, your gov't pension is not assessable income for Thai tax purposes. However, if the DTA says Thailand has exclusive taxation rights on private pensions (which the US DTA clearly states), then that would be assessable income -- IF (under the old rules) it is remitted in year earned. Under the new (proposed) rules, all pre-Jan 1, 2024 earnings are not assessable income - if remitted to Thailand after 31 Dec 2023. Which says you'd best open a new bank account for your 2024 and later earnings -- and do your wire transfers from your pre-2024 bank account -- not that they'll ever have the resources to efficiently investigate transfer sources.

 

 

Trying to read between the lines am I correct in thinking that it's your strong opinion that US social security will not be taxed by Thailand after being transferred to Thailand?

[JimGant]

9 minutes ago, Jingthing said:

Trying to read between the lines am I correct in thinking that it's your strong opinion that US social security will not be taxed by Thailand after being transferred to Thailand?

 

Not sure what lines you're reading between, but on Social Security, the Thai-US DTA couldn't be any clearer. The following from the Technical Explanation of that treaty, Article 20:

 

Quote

....payments made by one of the Contracting States as a social security benefit or similar public pension to a resident of the other Contracting State or to a citizen of the United States will be taxable only in the Contracting State making the payment. This paragraph applies to social security beneficiaries whether they have contributed to the system as private sector or government employees.

 

Thailand's not about to break any tax treaty, as it gives them (in the US case) an actual advantage in what monies they have taxation rights over, like private pensions, IRAs, 401ks, annuities, et al. There are methods to tweak existing treaties. But tweaking the Social Security exclusion would make no sense -- nor would the US buy into it.

[Jingthing]

6 minutes ago, JimGant said:

 

Not sure what lines you're reading between, but on Social Security, the Thai-US DTA couldn't be any clearer. The following from the Technical Explanation of that treaty, Article 20:

 

 

Thailand's not about to break any tax treaty, as it gives them (in the US case) an actual advantage in what monies they have taxation rights over, like private pensions, IRAs, 401ks, annuities, et al. There are methods to tweak existing treaties. But tweaking the Social Security exclusion would make no sense -- nor would the US buy into it.

Thanks. Interesting. 

How about this example. 

A US person transfers in 30k usd in a year.

His social security is 20k and the rest of the 30k being 10k from an IRA.

So the American only has to worry about the 10k, correct?

[jerrymahoney]

33 minutes ago, JimGant said:

Thailand's not about to break any tax treaty, as it gives them (in the US case) an actual advantage in what monies they have taxation rights over, like private pensions, IRAs, 401ks, annuities, et al.

Just to note that private pensions, IRAs, 401ks, et al. are addressed in the US-Thailand DTA Article 20 Paragraph 1.

 

Annuities are separately addressed in Article 20 Paragraph 3.

Edited January 5 by jerrymahoney

[The Cyclist]

33 minutes ago, JimGant said:

Well, yes and no. If a DTA says your gov't pension is not taxable by Thailand, but only by your home country -- then, yes, your gov't pension is not assessable income for Thai tax purposes.

 

I am quite clear on the UK - Thai DTA regarding Government pensions and other pensions.

 

What I was not clear on ( But was led to believe ) was that my Government Pension  was not classed as ' assessable income ' and therefore no annual Thai Tax filing was required.