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

[Klonko]

1 hour ago, JimGant said:

They don't have LIFO either. So, how do you assess what's principal and what's income on a chunk of fungible remittance? Like back in the first world, your competent tax accountant will recommend -- in a gray area situation -- the option that is most favorable to the client. So, under current "non guidance from RD," the competent recommendation is FIFO.

 

 

Nobody knows if TRD will apply FIFO, LIFO, poisoned account or another method, consistent across TRD offices, or leave the choice to you. IMHO only valid recommendation is to keep savings and DTA eligible income on separate non-interest bearing accounts for later tax-free remittance to Thailand. Choosing a specific accounting method now may burn you. 

[Mike Lister]

2 minutes ago, Klonko said:

Nobody knows if TRD will apply FIFO, LIFO, poisoned account or another method, consistent across TRD offices, or leave the choice to you. IMHO only valid recommendation is to keep savings and DTA eligible income on separate non-interest bearing accounts for later tax-free remittance to Thailand. Choosing a specific accounting method now may burn you. 

Sensible, agreed.

[Felton Jarvis]

On 9/21/2023 at 7:52 AM, BritManToo said:

They just want to collect tax from Thais working/earning overseas.

Nothing to do with expats.

Hope you're right. Time will tell. I suppose it's too much to ask to have the whole scenario laid out before they implement it. A clear case of "READY-FIRE-AIM".

[Yumthai]

58 minutes ago, JimGant said:

They don't have LIFO either. So, how do you assess what's principal and what's income on a chunk of fungible remittance? Like back in the first world, your competent tax accountant will recommend -- in a gray area situation -- the option that is most favorable to the client. So, under current "non guidance from RD," the competent recommendation is FIFO.

 

Here's a link "Cryptocurrency Tax and Frequently Asked Questions" from Bitkub.

https://support.bitkub.com/en/support/solutions/articles/151000033321-cryptocurrency-tax-and-frequently-asked-questions

 

There are 2 methods of cost calculation for crypto tax payment:

Method 1: First in - first out method or FIFO

Method 2: Moving average cost method

 

11. Can I choose the tax calculation method by myself or is there a requirement specified by the Revenue Department?

Answer:

You are free to choose the calculation method by yourself from the 2 provided by the Revenue Department. However, in 1 tax year, you will need to use only 1 method for the whole year for calculation. For example, if you used the FIFO method early this year, in the same year, you could use this method only. You would be able to change to the Moving Average Cost in the next year if you wish to change, or you could continue using the FIFO method.

 

What do we learn?

- It's related to crypto but we can assume that RD would recommend the same methods for other income tax calculation.

- RD is aware of and recommends 2 cost calculation methods (and LIFO is not mentioned).

- Taxpayer is free to choose the calculation method between the 2 provided.

 

[stat]

14 minutes ago, Yumthai said:

 

Here's a link "Cryptocurrency Tax and Frequently Asked Questions" from Bitkub.

https://support.bitkub.com/en/support/solutions/articles/151000033321-cryptocurrency-tax-and-frequently-asked-questions

 

There are 2 methods of cost calculation for crypto tax payment:

Method 1: First in - first out method or FIFO

Method 2: Moving average cost method

 

11. Can I choose the tax calculation method by myself or is there a requirement specified by the Revenue Department?

Answer:

You are free to choose the calculation method by yourself from the 2 provided by the Revenue Department. However, in 1 tax year, you will need to use only 1 method for the whole year for calculation. For example, if you used the FIFO method early this year, in the same year, you could use this method only. You would be able to change to the Moving Average Cost in the next year if you wish to change, or you could continue using the FIFO method.

 

What do we learn?

- It's related to crypto but we can assume that RD would recommend the same methods for other income tax calculation.

- RD is aware of and recommends 2 cost calculation methods (and LIFO is not mentioned).

- Taxpayer is free to choose the calculation method between the 2 provided.

 

Great post! Thanks! This is the stuff and info we need!

[CharlieH]

Flame post removed.

[JimGant]

1 hour ago, Mike Lister said:

Who knows, I don't and you don't, so why provide a work around, just because you don't know!

Without definitive guidance from RD, you're forced to choose a financial guide for how to treat remittances. You have to pick something -- agreed? So why not pick FIFO -- if there's no guidance to the contrary -- to give you the tax advantage. As I said in a previous post, the only other country (UK) that addresses remittance accounting uses LIFO, whereby income, not principal, is first in the taxable line up. Thailand may adopt that eventually. But so far, as best we can discern, they haven't figured out they have to come to some decision -- since 'til now, remitting in a later year, avoided having to make such a decision.

 

Quote

I don't recommend anything here, only provide information....but you knew that.

 Take a chance. Recommend FIFO. There are folks out there wishing for guidance, not just information.

Edited April 12 by JimGant

[Mike Lister]

25 minutes ago, JimGant said:

Without definitive guidance from RD, you're forced to choose a financial guide for how to treat remittances. You have to pick something -- agreed? So why not pick FIFO -- if's there no guidance to the contrary -- to give you the tax advantage. As I said in a previous post, the only other country (UK) that addresses remittance accounting uses LIFO, whereby income, not principal, is first in the taxable line up. Thailand may adopt that eventually. But so far, as best we can discern, they haven't figured out they have to come to some decision -- since 'til now, remitting in a later year, avoided having to make such a decision.

 

 Take a chance. Recommend FIFO. There are folks out there wishing for guidance, not just information.

Once again, you're missing the point by miles.

 

The solution is to find out the answer, preferably from the TRD, not create a work around because we don't know the answer today.

 

So no, for the very last time, you are in the business of giving advice to US citizens on US taxes, typically on a fee paid basis. I am only interested in gathering and presenting information on the Thai tax system, a system that neither of us is trained in nor qualified to deliver advice on....which is why I don't!

Edited April 12 by Mike Lister

[Mike Lister]

34 minutes ago, Yumthai said:

 

Here's a link "Cryptocurrency Tax and Frequently Asked Questions" from Bitkub.

https://support.bitkub.com/en/support/solutions/articles/151000033321-cryptocurrency-tax-and-frequently-asked-questions

 

There are 2 methods of cost calculation for crypto tax payment:

Method 1: First in - first out method or FIFO

Method 2: Moving average cost method

 

11. Can I choose the tax calculation method by myself or is there a requirement specified by the Revenue Department?

Answer:

You are free to choose the calculation method by yourself from the 2 provided by the Revenue Department. However, in 1 tax year, you will need to use only 1 method for the whole year for calculation. For example, if you used the FIFO method early this year, in the same year, you could use this method only. You would be able to change to the Moving Average Cost in the next year if you wish to change, or you could continue using the FIFO method.

 

What do we learn?

- It's related to crypto but we can assume that RD would recommend the same methods for other income tax calculation.

- RD is aware of and recommends 2 cost calculation methods (and LIFO is not mentioned).

- Taxpayer is free to choose the calculation method between the 2 provided.

 

Thanks for posting that, there are indeed things to be learned from that, some of which you've posted. Another point perhaps is that Bitkub is quite new, can anyone think what other new financial facility has been implemented in the past couple of decades? Concepts such as Capital Gains and Commingled Funds  on the other hand are decades old and have been in use for as long by Thai taxpayers for as long. Are we to believe that no Thai or foreign person has ever repatriated a Capital Gain from overseas that has been subject to tax and that consequently the TRD has never encountered this issue before? I suggest this is very improbable!

 

The point here is that the answer does exist, it's just that we don't know what it is. The other answer is that it makes perfect since to me that the TRD would approve strategies such as FIFO for new instruments, the fact they have never been mentioned in the TRD Code todate, is telling and suggests that possibly, they haven't in the past.

[scottiejohn]

On 4/10/2024 at 1:47 AM, Mike Lister said:

Scottie just doesn't understand,

Do you always insult people in public forums?

PS; BTW Mikey my name is not Scottie!

Edited April 12 by scottiejohn

[Mike Lister]

Just now, scottiejohn said:

Do you always insult people in public forums?

It's not an insult, just a simple statement of fact, you do not understand what's involved in answering the question that you have persistently asked us for repeatedly, despite not proving all the information we requested. And let me ask you for a third time, do you not read your PM's? You haven't read the one I sent you three days ago!

[Mike Lister]

Just now, stat said:

Apparently you fail to understand that every Thai who once filed would have to file, that is apparently not true .

 

Everyone is still waiting for the made up assertion that you claimed to be in the PwC document at first.

I have already said over 9 hours ago that I have looked for it and cannot find it, if I do in the future I will be certain to post it, I don't intend to waste any more time on it. You can keep playing this card if you wish but it's not going anywhere and it will get boring so best move on to something constructive and useful

 

The fact the TRD doesn't follow up to make sure that everyone who has filed previously, files in the following year, doesn't mean the policy doesn't exist, if that is their policy, IF it is. In fact, that would go some way to explaining why in previous years, I and other posters have mentioned that we received blank tax forms from the TRD, the year after we last filed, most often which were discarded without anything bad happening.

[ukrules]

56 minutes ago, stat said:

Great post! Thanks! This is the stuff and info we need!

 

That page is full of nonsense and years out of date information.

 

It begins with this

 

Quote

Essential terms and requirements

1. The Revenue Department currently exempts the collection of 15% withholding tax.

 

That's wrong as it's been discontinued as has the VAT exemption between certain dates, it was cancelled completely.

It's hard to find any sources on this because people aren't talking about it much but the occasional announcement comes out that some government ministry has scrapped the VAT completely and the withholding tax.

It's probably more widely reported in the Thai language media than English language which is why it's hard to find this information.

There was also some talk of a 15% capital gain tax on crypto earnings, supposedly instead of income tax on the gains but that's also complete nonsense (not mentioned on that page), it's normal PIT rates all the way which can go to 35%.
 

[Mike Lister]

3 minutes ago, ukrules said:

 

That page is full of nonsense and years out of date information.

 

It begins with this

 

 

That's wrong as it's been discontinued as has the VAT exemption between certain dates, it was cancelled completely.

It's hard to find any sources on this because people aren't talking about it much but the occasional announcement comes out that some government ministry has scrapped the VAT completely and the withholding tax.

It's probably more widely reported in the Thai language media than English language which is why it's hard to find this information.

There was also some talk of a 15% capital gain tax on crypto earnings, supposedly instead of income tax on the gains but that's also complete nonsense (not mentioned on that page), it's normal PIT rates all the way which can go to 35%.
 

Which matches what was picked up and reported in the Simple Tax Guide.

 

58) Crypto transactions inside Thailand are subject to PIT on the gain amount, crypto transactions outside Thailand are charged on the amount brought into Thailand, when it is imported.

[ukrules]

3 minutes ago, Mike Lister said:

Which matches what was picked up and reported in the Simple Tax Guide.

 

58) Crypto transactions inside Thailand are subject to PIT on the gain amount, crypto transactions outside Thailand are charged on the amount brought into Thailand, when it is imported.

 

Yes, it's no different to any other income, they had plans to make it different but for one reason or another they all seem to have been abandoned.

 

I think it would help to have a reduced capital gains tax for crypto but the plans for that have long gone.

 

They're not taxing anything realised and remitted during non resident years, crypto or not.

 

[Sheryl]

Flaming posts and replies to same have been removed

[JimGant]

3 hours ago, Mike Lister said:

I am only interested in gathering and presenting information on the Thai tax system, a system that neither of us is trained in nor qualified to deliver advice on....which is why I don't!

 

3 hours ago, Mike Lister said:

The solution is to find out the answer, preferably from the TRD, not create a work around because we don't know the answer today.

Final question. So, if someone asked you for advice, er information, on how to treat a $15k remittance from an account that had $100k in it in 2023, and since Jan 2024 has had $20k added to it, of monies that the DTA say are the exclusive taxation right of Thailand, like a private pension: Your answer would be:

 

A. FIFO, i.e., monies from 2023, thus not assessable.

B. LIFO, i.e., monies from 2024, thus assessable

C. Go spend the day at RD, looking for someone who even knows what FIFO and LIFO are. When Somchai says he hasn't a clue, feel free to decide which avenue is best for you, namely, FIFO

D. Log onto AN and the Simple Tax Guide. Find out that Somchai's cousin wrote it. Feel free to barf, er use FIFO, in the absence of any advice.

 

[stat]

3 hours ago, ukrules said:

 

That page is full of nonsense and years out of date information.

 

It begins with this

 

 

That's wrong as it's been discontinued as has the VAT exemption between certain dates, it was cancelled completely.

It's hard to find any sources on this because people aren't talking about it much but the occasional announcement comes out that some government ministry has scrapped the VAT completely and the withholding tax.

It's probably more widely reported in the Thai language media than English language which is why it's hard to find this information.

There was also some talk of a 15% capital gain tax on crypto earnings, supposedly instead of income tax on the gains but that's also complete nonsense (not mentioned on that page), it's normal PIT rates all the way which can go to 35%.
 

Thanks for the update and corrections. I am not in this topic so I thought it was helpful and up to date. If one can chose per year Lifo or Fifo that would be great. At least they are familiar with the different accounting mechanisms on the higher echolons of TRD.

Edited April 12 by stat

[Mike Lister]

53 minutes ago, JimGant said:

 

Final question. So, if someone asked you for advice, er information, on how to treat a $15k remittance from an account that had $100k in it in 2023, and since Jan 2024 has had $20k added to it, of monies that the DTA say are the exclusive taxation right of Thailand, like a private pension: Your answer would be:

 

A. FIFO, i.e., monies from 2023, thus not assessable.

B. LIFO, i.e., monies from 2024, thus assessable

C. Go spend the day at RD, looking for someone who even knows what FIFO and LIFO are. When Somchai says he hasn't a clue, feel free to decide which avenue is best for you, namely, FIFO

D. Log onto AN and the Simple Tax Guide. Find out that Somchai's cousin wrote it. Feel free to barf, er use FIFO, in the absence of any advice.

 

 

I'd answer, sorry, I don't give advice, if you can't find the answer you need in the Simple Tax Guide, try asking somebody at the TRD or go find a tax advisor. That's not just what I would say, it's what I have said and continue to say. Why should I make up an answer when I have no training in Thailand, am not qualified in Thailand and don't fully understand the Thai system, in other countries you could go to jail or get heavily fined for giving answers!

[AreYouGerman]

Imagine you receiving your pension tax-free (not taxed in your home country because you are regarded as non-resident (ex. UK)) and have substantial offshore investments and suddenly you have to pay 20-30% taxes on it and still only get temporary stay. Hahahaha. Yes, massa, where I can transfer my tax.

[Mike Lister]

3 hours ago, JimGant said:

 

Final question. So, if someone asked you for advice, er information, on how to treat a $15k remittance from an account that had $100k in it in 2023, and since Jan 2024 has had $20k added to it, of monies that the DTA say are the exclusive taxation right of Thailand, like a private pension: Your answer would be:

 

A. FIFO, i.e., monies from 2023, thus not assessable.

B. LIFO, i.e., monies from 2024, thus assessable

C. Go spend the day at RD, looking for someone who even knows what FIFO and LIFO are. When Somchai says he hasn't a clue, feel free to decide which avenue is best for you, namely, FIFO

D. Log onto AN and the Simple Tax Guide. Find out that Somchai's cousin wrote it. Feel free to barf, er use FIFO, in the absence of any advice.

 

The other half of my explanation is that, over the past few months, as members have asked me for help and for answers to questions involving US aspects of Thai tax, I have ALWAYS publicly deferred to you and said, poster JimGant is a US CPA and expert in US tax, go speak to Jim. It would be plain stupid for me or anyone else who doesn't have your US qualifications and US experience to answer questions about American tax.

 

That same logic extends to Thai tax, if there are aspects of Thai tax I don't know, I defer to the Revenue or a tax specialist. The fact that you seem to be able to extrapolate and extend US tax law to Thai tax unknowns , is your business, but clearly involves a fair amount of guess work.....don't expect me to do the same or get involved in doing similar. 

[Mike Lister]

And finally, to put the OVERVIEW section to rest: I've changed the overview wording back to what it was before attempts were made to make a couple of posters happy. I think it's a reasonable form of words, as do many others. If and when new reliable sources of information emerge to warrant making a change, we will do so at that time. If anyone thinks it isn't specific enough, please talk to the TRD or a paid tax advisor to obtain greater clarity. This point now removed from the list of unknowns.

 

OVERVIEW OF THE TAX LAW

 

3)   Thai tax laws require Foreigners who reside in Thailand for one or more periods, with at least 180 days in one tax calendar year and who receive income from inside or outside Thailand via:

 

a) Income from employment (wages, salaries, remuneration, etc.) assessable under Section 40 of the Revenue Code;

b) Income from business operations is assessable under Section 40.

c) Passive or property income (interest, dividends, rental income, goodwill, pension, capital gains etc.) based on Article 41 paragraph 2 of the Revenue Code.

 

….…to assess their income for Thai tax and file a tax return, providing the  assessable income threshold has been exceeded. Thai-sourced income is always taxable in Thailand, wherever it is received and regardless of tax residence status. Foreign sourced income is subject to remittance, tax residency and other factors such as terms of a DTA.

 

[Mike Lister]

Regarding the following point from the list of unknowns:

 

L) - income that is earned in a year when the taxpayer is tax resident but not remitted until a year when they are not tax resident, is it later tax assessible in Thailand?

 

I have now read a second report where members have asked the TRD about this point and the answer has been that the money is free of tax. Member @4myr reported the following a few days ago in this thread.

 

 

In years of not being tax resident:

1) In the tax year that a person is not tax resident, you can transfer as much money as you can. You will not pay taxes. This is in accordance with https://www.rd.go.th/english/6045.html.  “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. 

 

The above seems to add weight to the idea that funds remitted whilst not tax resident, are free of Thai tax but it doesn't tell us what the situation is if they were earned whilst the person was tax resident also. I think it is clear that funds earned and remitted whilst not Thai tax resident, are free of Thai tax, the above takes us one step closer to  closing the gap in our understanding.

[Klonko]

Assuming pre-Thai tax residence savings of EUR 1m generate EUR 50k annual income and remitting  EUR 50k = THB 1.9m every year. TRD has not confirmed the applicable accounting method(s) for traditional savings. Applying FIFO, no assessable income and no tax due for 20 years. Hurray, but good luck if TRD will not accept FIFO and taxes are due. In my situation I would love FIFO, but I will never risk it given the current state of information.

[Mike Lister]

2 minutes ago, Klonko said:

Assuming pre-Thai tax residence savings of EUR 1m generate EUR 50k annual income and remitting  EUR 50k = THB 1.9m every year. TRD has not confirmed the applicable accounting method(s) for traditional savings. Applying FIFO, no assessable income and no tax due for 20 years. Hurray, but good luck if TRD will not accept FIFO and taxes are due. In my situation I would love FIFO, but I will never risk it given the current state of information.

In that situation I would be inclined to baseline the funds as at 1 January 2024 because anything earned prior to that date is free of Thai tax. I would then try to ensure that any income/interest earned on that amount, was paid away into a separate account, thus leaving the base capital amount unarguably free of tax. TBH that would be a reasonable tax mitigation practise to adopt in any country.

[Klonko]

1 hour ago, Mike Lister said:

In that situation I would be inclined to baseline the funds as at 1 January 2024 because anything earned prior to that date is free of Thai tax. I would then try to ensure that any income/interest earned on that amount, was paid away into a separate account, thus leaving the base capital amount unarguably free of tax. TBH that would be a reasonable tax mitigation practise to adopt in any country.

This was also my initial thought, but not (cost) efficient for my actively managed investment portfolio. I now work with funds remitted to Thailand in my non-Thai tax resident 2023, funds on a foreign non-interest bearing account, gifts to my wife and the possibility of DTA eligible income, ensuring a favourable tax situation for many years.

[Mike Lister]

23 minutes ago, Klonko said:

This was also my initial thought, but not (cost) efficient for my actively managed investment portfolio. I now work with funds remitted to Thailand in my non-Thai tax resident 2023, funds on a foreign non-interest bearing account, gifts to my wife and the possibility of DTA eligible income, ensuring a favourable tax situation for many years.

I understand it's not cost efficient from an investment portfolio standpoint. As I've grown older, I've migrated more of my investments from actively managed funds, into bonds. That reduces my risk of capital loss and also requires much less management on my part. Today I'm split almost 50/50 between equities funds and fixed income, the income from the latter being paid away separately. That gives me 50% of my investment portfolio that I can transfer free of tax, should the need ever arise.

[topt]

12 hours ago, AreYouGerman said:

Imagine you receiving your pension tax-free (not taxed in your home country because you are regarded as non-resident (ex. UK))

Not a good example as even if non resident in the UK if you are being paid a pension there, and your total income is above the tax free allowance,  you will still be taxed on that amount. I know this unfortunately for a fact........

[Mike Lister]

13 hours ago, AreYouGerman said:

Imagine you receiving your pension tax-free (not taxed in your home country because you are regarded as non-resident (ex. UK)) and have substantial offshore investments and suddenly you have to pay 20-30% taxes on it and still only get temporary stay. Hahahaha. Yes, massa, where I can transfer my tax.

 

 If a person was receiving their state pension tax free in the UK, and I do receive mine tax free because its on the old scale, it will amount to under 12,750 Pounds which is the limit of the Personal Allowance. Remitting that pension to Thailand will mean the remitter is able to claim the following TEDA (Thai deductions et al):

 

60k Personal allowance

190k over age 65 allowance

100k for 50% of pension payments (max 100k)

150k zero rated Thai tax band.

 

All of those things total 500k and can be increased depending on individual circumstances, eg married, children, Thai insurance products etc.

 

500k at 45 baht per Pound is around 11,115 Pounds, that means the first 11,115 Pounds of remitted funds will be free of tax, the difference between that amount and the 12,750 will be taxed, potentially, at 5%.

 

So, 20% or 40% tax? No, maybe an effective tax rate of under 1% but I didn't think it was worth doing the math.

Edited April 13 by Mike Lister

[UKresonant]

40 minutes ago, topt said:

Not a good example as even if non resident in the UK if you are being paid a pension there, and your total income is above the tax free allowance,  you will still be taxed on that amount. I know this unfortunately for a fact........

Yes, and additionally the suggestion that not taxed as not resident, suggests other than state pension. Most UK private pensions would normally  retain tax at source in the UK even if a NoTax at source was claimed whilst being resident of Thailand. 

Can't get an NT code for State Pension, and no relief available.

 

(As I understand it, excepting the discretion clause).