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

[sirineou]

The question I have is.

since all of my transfers can be covered under the " only taxed at the source country" im my case US, The do I even need to file a return? because as I understand it , if your income in Thailand is below the "assessable" level you don't need to file a tax return

I would appreciate it if someone could answer this question. 

 

[Mike Lister]

2 minutes ago, sirineou said:

The question I have is.

since all of my transfers can be covered under the " only taxed at the source country" im my case US, The do I even need to file a return? because as I understand it , if your income in Thailand is below the "assessable" level you don't need to file a tax return

I would appreciate it if someone could answer this question. 

 

If all your income is exempt by virtue of a DTA, no, you do not need to file a Thai tax return.

[Jingthing]

16 minutes ago, Mike Lister said:

If all your income is exempt by virtue of a DTA, no, you do not need to file a Thai tax return.

What if you have other (assessible transferred in) income on top of DTA income but the non DTA portion still under the level where it would taxed in Thailand. Still no need to file?

 

 

Edited April 13 by Jingthing

[Mike Lister]

2 minutes ago, Jingthing said:

What if you have other income on top of DTA income but still under the level where it would taxed in Thailand. Still no need to file?

 

A hotly debated topic...by some!

 

The rules as we understand them currently are these:

 

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.

 

If your assessable income exceeds the threshold then yes, according to the rules as we understand them currently, you are required to file. But there is an argument that says, since there is no penalty for not filing when no tax is due, why even bother to file. I imagine you will be more interested in whether that assessable income not only exceeds the threshold but also enters "tax due" territory.

[Jingthing]

11 minutes ago, Mike Lister said:

A hotly debated topic...by some!

 

The rules as we understand them currently are these:

 

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.

 

If your assessable income exceeds the threshold then yes, according to the rules as we understand them currently, you are required to file. But there is an argument that says, since there is no penalty for not filing when no tax is due, why even bother to file. I imagine you will be more interested in whether that assessable income not only exceeds the threshold but also enters "tax due" territory.

Thanks.

What is the accessible income threshold?

 

[Mike Lister]

4 minutes ago, Jingthing said:

Thanks.

What is the accessible income threshold?

 

Tax returns

 

All persons earning income are required to file a tax return no later than 31 March of the following year for hardcopy filing and 8 April for online filing, except for individuals whose income from employment is THB 120,000 or less (for single persons) or THB 220,000 or less (for married persons) and in the case of having income from other sources (with or without employment income) of THB 60,000 or less (for single persons) or THB 120,000 or less (for married persons).

 

https://taxsummaries.pwc.com/thailand/individual/tax-administration

[UKresonant]

Info;-

Section 40 Assessable income is income of the following categories including any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer.

(1) Income derived from employment, whether in the form of salary, wage, per diem, bonus, bounty, gratuity, pension, house rent allowance, monetary value of rent-free residence provided by an employer, payment of debt liability of an employee made by an employer, or any money, property or benefit derived from employment.⁴

⁴R.CT.No.29/2538

 

There is the other sources threshold at 60k THB

But the one for section 40 is 120k THB

[Jingthing]

Is there any updated info on whether money transferred in that was withdrawn from a US taxable IRA account would be covered by DTA and thus not countable as part of the Thai threshhold calculation?

[UKresonant]

Just noticed, and I think it is curious and perhaps something to consider is UK state pension does not appear to fall under Section 40 1), perhaps the US is similar?

 

https://www.rd.go.th/english/37749.html#section40

Section 41 para 2, A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part.

 

[Mike Lister]

16 minutes ago, Jingthing said:

Is there any updated info on whether money transferred in that was withdrawn from a US taxable IRA account would be covered by DTA and thus not countable as part of the Thai threshhold calculation?

I'm sorry, I don't have any information on US tax.

[jayboy]

2 hours 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........

 

Not necessarily.I know of two cases here in Thailand and one in Singapore where the UK tax authority HMRC has agreed NT status so that no tax is withheld from the pension paid in the UK. There are some hoops to jump through to get NT status but the main one is that the pension holder must have spent most of his career abroad, particularly the last twenty years or so of it.I believe visits to the UK have to be minimized so the NT status is not endangered.

[AreYouGerman]

1 hour ago, Mike Lister said:

 

 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.

 

And you conveniently left out offshore investments for your 1% tax calculation and the payment to an accountant to file the income tax in Thailand. What about a pension of 50k Pounds + 50k from offshore investments. It's not a question, don't do the math (as you will just calculate how it fits you). 20-30% tax will be the effective rate.

[Jingthing]

14 minutes ago, Mike Lister said:

I'm sorry, I don't have any information on US tax.

Well, a more basic question.

If a person brings in money that was saved over time (not recently earned) is that of interest to Thai tax?

[AreYouGerman]

2 hours 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........

 

UK says you can be regarded as non-resident and won't be taxed in the UK so I think this was the best example as Germany doesn't allow that and taxes you regardless if you are resident or non-resident.

[Mike Lister]

1 hour ago, AreYouGerman said:

 

And you conveniently left out offshore investments for your 1% tax calculation and the payment to an accountant to file the income tax in Thailand. What about a pension of 50k Pounds + 50k from offshore investments. It's not a question, don't do the math (as you will just calculate how it fits you). 20-30% tax will be the effective rate.

I didn't conveniently leave off anything, I gave you an example based on some of the things you wrote, I'm not going to do your entire tax return for you!.

[Mike Lister]

1 hour ago, Jingthing said:

Well, a more basic question.

If a person brings in money that was saved over time (not recently earned) is that of interest to Thai tax?

If income was earned before 1 January 2024, it is free of Thai tax, savings prior to that date are a good example.. 

[AreYouGerman]

Just now, Mike Lister said:

I didn't conveniently leave off anything, I gave you an example based on some of the things you wrote, I'm not going to do your entire tax return for you!.

 

Hahaha, okay buddy, at least that was funny!

 

Anyway, I will move to the Phillipines and don't have to file income tax but thanks for the offer. 😅

[UKresonant]

56 minutes ago, AreYouGerman said:

 

UK says you can be regarded as non-resident and won't be taxed in the UK so I think this was the best example as Germany doesn't allow that and taxes you regardless if you are resident or non-resident.

Yes that is true, it is not an absolute.

 

Info for others;-

There is a clause that can allow it, depending on what the tax folk decide. But generally if you have been in the  UK most of your life, and have just moved to Thailand, since NT code availability may be difficult to obtain. Almost certainly UK .gov pensions no NT code.

 

Country specific info (search for)Form 'DT-individual' and the associated DT digest 2018

[UKresonant]

6 minutes ago, AreYouGerman said:

 

Hahaha, okay buddy, at least that was funny!

 

Anyway, I will move to the Phillipines and don't have to file income tax but thanks for the offer. 😅

That's probably one of the few in region good options from a tax point of view, especially with the suggested by some, that some want Thailand to perhaps move to Global taxation. UK folks even get their state pensions yearly increases there, where they don't officially in Thailand.

 

Won't you miss the Thai food? 

[Mike Lister]

2 minutes ago, UKresonant said:

That's probably one of the few in region good options from a tax point of view, especially with the suggested by some, that some want Thailand to perhaps move to Global taxation. UK folks even get their state pensions yearly increases there, where they don't officially in Thailand.

 

Won't you miss the Thai food? 

.....and health care, and infrastructure, and transportation, and relative lack of crime/violence. But the beaches are nice and the girls speak better English.

[AreYouGerman]

1 minute ago, UKresonant said:

That's probably one of the few in region good options from a tax point of view, especially with the suggested by some, that some want Thailand to perhaps move to Global taxation. UK folks even get their state pensions yearly increases there, where they don't officially in Thailand.

 

Won't you miss the Thai food? 

 

I would say it's the last remaining option for territorial tax regime for foreigners in the region with a very lenient tourist visa system. Also, dating for aging men is alleged to be easier. We will see about that 😅

 

After getting fed with Thai food for half my life I came to the realization a couple of years ago that I don't like it anymore. Steaks and Sauerkraut and Schnitzel and German home made bread, please!

[AreYouGerman]

9 minutes ago, Mike Lister said:

.....and health care, and infrastructure, and transportation, and relative lack of crime/violence. But the beaches are nice and the girls speak better English.

 

That's why Thailand is asking for a fair share of your money as taxes now. 🤣

 

My main health care is increasing VO2 max and doing 1h cardio every day. Non-vaxxed so I won't drop dead with 35.

 

But correct, Phillipines is allegedly 30 years or so behind of Thailand. That's a positive to me, not a negative, though. Also, in all fairness, a poorer economy is better as it doesn't incentivize anti male behavior.

[topt]

3 hours ago, jayboy said:

Not necessarily.I

That sort of speaks volumes....

3 hours ago, jayboy said:

There are some hoops to jump through to get NT status but the main one is that the pension holder must have spent most of his career abroad, particularly the last twenty years or so of it.I believe visits to the UK have to be minimized so the NT status is not endangered.

Thanks. I don't suppose you have any more details on this or references I can look at?

[topt]

2 hours ago, UKresonant said:

There is a clause that can allow it, depending on what the tax folk decide.

Sorry but maybe the late hour but can you elucidate at all on this? I know there is a way you can forgo your PA and not pay tax on UK divis etc but I thought you still had to pay on rental income irrespective?

 

2 hours ago, UKresonant said:

Country specific info (search for)Form 'DT-individual' and the associated DT digest 2018

This is just DTA digest and for Thailand has been reported many times (by me) showing no relief for private or state pension so not sure of the relevance - other than if trying to claim a credit somewhere?

[Dogmatix]

On 4/12/2024 at 9:41 PM, 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%.
 

 

There is a 15% withholding tax on crypto capital gains but it is not applied because it is impractical to make crypto exchanges deduct withholding tax on gains which they cannot automatically compute.  According to the amendment the taxpayer should use the 15% withheld as a tax credit and pay the difference or get a refund, if their tax rate is more or less than 15%.  It is not clear when or if the withholding tax will be implemented.

[ukrules]

4 minutes ago, Dogmatix said:

It is not clear when or if the withholding tax will be implemented.

Right, so we're in agreement- there is no withholding tax, not at the moment.

[MistyBlue]

17 hours ago, Mike Lister said:

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.

 

On this point, in the 2023/24 PWC booklet (link here: https://www.pwc.com/th/en/tax/thai-tax-booklet-2023.html) on page 2 (their numbering or actual page 10) they have specifically underlined the quote "... a Thai resident" in the context of discussing the new requirements for remitting funds.

 

Happy to be challenged but now my reading of that section in its fullness with the underlined text is that tax is only required when remitting funds in the same year that one is tax resident, if not resident when the funds are remitted (even if they were previously earned and kept offshore when one was resident) then I'm now leaning towards that no tax is due.

 

Thoughts?

Edited April 13 by MistyBlue
Extra text added to clarify my expression

[UKresonant]

29 minutes ago, topt said:

Sorry but maybe the late hour but can you elucidate at all on this? I know there is a way you can forgo your PA and not pay tax on UK divis etc but I thought you still had to pay on rental income irrespective?

 

This is just DTA digest and for Thailand has been reported many times (by me) showing no relief for private or state pension so not sure of the relevance - other than if trying to claim a credit somewhere?

 

Sorry, the point I was trying to make was more towards the possibilities of a NT tax code so   pensions and the like are not taxed at source in the UK ( recent post context and also compared with Germany, which seems more absolute perhaps  ).

Not sure about rental Income...from memory.

 

https://assets.publishing.service.gov.uk/media/637e192f8fa8f56eabf75e5b/Double_Taxation_Treaty_Relief_Form_DT-Individual.pdf

 

p1

Double Taxation Treaty Relief Application for relief at source from United Kingdom (UK) Income Tax and claim to repayment of UK Income Tax For use by an individual resident of a country with which the UK has a double taxation treaty that provides for relief from UK Income Tax on pensions, purchased annuities, interest or royalties arising in the UK

p3

Part C To apply for relief at source from UK Income Tax, please complete Parts C.1, C.2, C.3 or C.4 as appropriate.

 

p6

Part F

I am beneficially entitled to the income from the sources included in this form or otherwise meet the conditions for relief in the double taxation treaty between the UK and my country of residence...... {comment NOT THAILAND]

 

p7

DT-Individual Notes (from)

2. Purpose of the form DT-Individual Form DT-Individual allows you to apply under the DT treaty between the UK and your country of residence for relief at source from UK Income Tax on pensions, purchased annuities, royalties and interest paid from sources in the UK.

 

p8

Part 😄 Application for relief at source from UK Income Tax As explained in these Notes, the UK’s DT treaties with other countries may provide for: • no UK tax to be withheld from payments of pensions and annuities • no UK tax to be withheld or a reduced rate of UK tax to be withheld, from payments of interest and royalties Give the details asked for in Part C to apply for relief at source from UK Income Tax on future payments of income. Relief at source may be available in cases where HMRC is able to exercise its discretion to issue a notice (under Statutory Instrument 1970 Number 488, as amended). We deal with each application on its merits. Where we cannot agree to allow relief at source or cannot arrange it, you can claim repayment of part or all of the UK tax taken off, as appropriate.

 

p9

Part C.2: Work pensions and purchased annuities Enter details in Part C.2 if you receive a pension or purchased annuity from the UK. Most DT treaties provide for pensions and purchased annuities from the UK to be paid to a resident of the other country without UK tax taken off. The DT Digest gives information about whether relief from UK tax is available and if there are any special rules.

 

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

 

p34 

Column  OTHER PENSIONS / ANNUITIES

As you have said Thailand = "No relief" (Just reclaim in some circumstances)

 

[Etaoin Shrdlu]

5 hours ago, Jingthing said:

Is there any updated info on whether money transferred in that was withdrawn from a US taxable IRA account would be covered by DTA and thus not countable as part of the Thai threshhold calculation?

 

I think this would depend upon timing of the remittance.

 

If one were to withdraw money from an IRA in 2024 and remit it into Thailand in 2024 and were tax resident in Thailand in 2024, then Thailand would have first claim to taxation on the funds. The tax paid to Thailand would be deductible from 2024 US Federal taxes by virtue of the DTA.

 

If the funds were withdrawn from the IRA in 2024 and US Federal taxes were paid on the withdrawal and payment of tax could be proven by virtue of US Federal tax returns filed and 1099 forms, and the funds were remitted in 2025, then I think relief could be claimed under the DTA and any US taxes paid could be credited against Thai tax that might otherwise accrue for the 2025 tax year. But I'll defer to @Jim Gant on this one.

[AreYouGerman]

What is your guy's budget for a Thai accountant? I can hear their finger rubbing already. I imagine it will be anything between 20k to 40k yearly (less depending on actual work but demand by hundred thousands of expats) to just file it even if you are covered by a DTA and you won't have to pay anything in Thailand.

 

Also the new threads will be funny!

 

Before: 'Denied entry because XY'

After: 'Denied leaving because didn't pay taxes'

 

😅