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

[Mike Lister]

Does anyone really think that everyone could designate their inbound remittances as Gifts, just to avoid tax forever? As a theoretical paper based exercise, it may pass muster but not once it enters anything like reality. I know it was the weekend but still!! If that were the case, the tax take would fall rather than rise. I don't know how switched on the TRD is but I know they are not stupid.

[CARLO BALDASSARRE]

incorrect.

On 4/29/2024 at 6:17 PM, Mike Teavee said:

Not quite true, DTAs prevent double taxation on Income that is covered in the DTA so any income not covered can be taxed in Thailand even if you've already paid Tax on it in your home country. 

 

Incorrect...

What is the 180 day tax rule in Thailand?

 

 

A person that stays in Thailand for 180 days or more in a tax year shall be considered a tax resident of Thailand for that year, under the Revenue Code. Section 41 of the Revenue Code governs the taxation of foreign source income.14 Feb 2024

After the age of 60 my australian pension is non taxable , therefore maybe seen in thailand as a taxable income from overseas ....we shall see....!!!.

[Mike Lister]

4 minutes ago, CARLO BALDASSARRE said:

incorrect.

Incorrect...

Is there a longer answer?

[dinga]

12 minutes ago, Mike Lister said:

Does anyone really think that everyone could designate their inbound remittances as Gifts, just to avoid tax forever? As a theoretical paper based exercise, it may pass muster but not once it enters anything like reality. I know it was the weekend but still!! If that were the case, the tax take would fall rather than rise. I don't know how switched on the TRD is but I know they are not stupid.

YES - I for one can see how Gifting can be an important plank for those in more modest circumstances (clearly for the uber wealthy and/or very large transfers it's a non-flyer).  Depends on individual circumstances and the structuring but in my view it can potentially address most - if not nearly all - the otherwise adverse outcomes.  As always though, as in all aspects of tax planning, the critical consideration is that great care is needed to minimise any possibility that the TRD may claim a linkage of any gift to a subsequent benefit to the giftee.  Supporting documentation/evidence also being key.      

[Mike Lister]

3 minutes ago, dinga said:

YES - I for one can see how Gifting can be an important plank for those in more modest circumstances (clearly for the uber wealthy and/or very large transfers it's a non-flyer).  Depends on individual circumstances and the structuring but in my view it can potentially address most - if not nearly all - the otherwise adverse outcomes.  As always though, as in all aspects of tax planning, the critical consideration is that great care is needed to minimise any possibility that the TRD may claim a linkage of any gift to a subsequent benefit to the giftee.  Supporting documentation/evidence also being key.      

If that capability was readily available, there's no point in have any discussions about commingled funds or capital gains or even private pension income for that matter. All everyone would have to do is to deposit all their income into a savings account overseas and then remit it here as a gift, job done! All except the first 500k which would cover TEDA of course, that could be their personal spending money whilst the rest goes to the spouse/.child, friend as a Gift, never to be returned in any way of course, cough cough. It's so simple, I'm kicking myself. I'll tear up the tax guide and make a new one that says, "everything's ok, not to worry, just claim all your remittances are gifts". 

[dinga]

3 minutes ago, Mike Lister said:

If that capability was readily available, there's no point in have any discussions about commingled funds or capital gains or even private pension income for that matter. All everyone would have to do is to deposit all their income into a savings account overseas and then remit it here as a gift, job done! All except the first 500k which would cover TEDA of course, that could be their personal spending money whilst the rest goes to the spouse/.child, friend as a Gift, never to be returned in any way of course, cough cough. It's so simple, I'm kicking myself. I'll tear up the tax guide and make a new one that says, "everything's ok, not to worry, just claim all your remittances are gifts". 

Of course, simplicity is rarely a sound solution.  Be dismissive all you want, but in my experience applying a broad brush and sweeping statements in regulatory matters is complete folly (much like expecting the gifting provision to be a panacea for all ills). 

 

As always, what matters are the circumstances and detailed evidentiary support thereof - all of which are applicable to individuals and not universal to all the great unwashed.

 

    

[Mike Lister]

10 minutes ago, dinga said:

Of course, simplicity is rarely a sound solution.  Be dismissive all you want, but in my experience applying a broad brush and sweeping statements in regulatory matters is complete folly (much like expecting the gifting provision to be a panacea for all ills). 

 

As always, what matters are the circumstances and detailed evidentiary support thereof - all of which are applicable to individuals and not universal to all the great unwashed.

 

    

I do not disagree that Gift Tax has a place for certain segments of the population, which I suspect is the wealthier part rather than the less wealthy. The problem is that many will see Gift Tax as a panacea for everyone, which it is not.

[Yumthai]

16 minutes ago, Mike Lister said:

I do not disagree that Gift Tax has a place for certain segments of the population, which I suspect is the wealthier part rather than the less wealthy. The problem is that many will see Gift Tax as a panacea for everyone, which it is not.

On the legal side, why would the gift tax fit for the wealthiest and not for the less wealthy ones? Please elaborate.

As long as gift conditions are met rules are the same for everyone.

Obviously you need someone to gift to, and gifting to an unrelated third-party is not risk-free.

[Mike Lister]

3 minutes ago, Yumthai said:

On the legal side, why would the gift tax fit for the wealthiest and not for the less wealthy ones? Please elaborate.

As long as gift conditions are met rules are the same for everyone.

Obviously you need someone to gift to, and gifting to an unrelated third-party is not risk-free.

What I wrote about this previously is the following:

 

63) "Note: Because Gift Tax is predominantly a domain of the wealthy and depends to a large extent on local practise, there is a shortage of confirmed information on this subject. One field of thought is that Gift Tax cannot be used to escape Thai tax by Gifting untaxed money from overseas. On the other hand, many Western countries, including the UK, do not tax gifts from overseas. Members wishing to exercise this option should seek qualified advice before using this option to Gift untaxed funds".

 

In a country where the balance of wealth is held by a relatively tiny proportion of people, it would be unusual, I imagine, to find Gift Tax being used in the remaining larger segment.  There is no reason why others shouldn't be able to use it, because as you say, the rules are the same for everyone.....at least they should be although my suspicion is they are not. I would expect any sudden and significant use of Gift Tax to come under close scrutiny, as it has in other countries where additional laws have been enacted to prevent abuse. If there is one candidate law that is open to abuse and fraud, it's this one.

[redwood1]

When the government gets serious about going after the 10s of millions of Thais who have never filed taxes once in their life...And when they go after the mega wealthy then we will know they are serious.....

Not to mention the Chinese and Russians who seem to have zero interest in any of this tax nonsense....  

 

Until then I would not worry..... The laughably small retired Expat taxes would barely be a scrap of food at a buffet........

 

 

[UKresonant]

1 hour ago, redwood1 said:

The laughably small retired Expat taxes would barely be a scrap of food at a buffet........

Made me speculatively think of how a (UK) survivours pension, paid to a widow in Thailand, say circa 40k THB p/m would be taxed. Would it get any tax breaks, or just added to their highest tax band rate?

(I think they could get a NT tax code in the UK, if they were in Thailand.)

[Klonko]

As regards tax exempt gifts, I start with the most recent TRD statement known to me (video). Key requirement for tax exemption is traditional support i.e. gift given as moral obligation, regardless if remitted from a foreign or Thai bank account. It may be that support for the spouse is assumed to be a moral obligation without further scrutiny. Remitting money to a child for buying a Ferrari is not a tax exempt gift.

 

Mike is correct that gifts are not a general remedy for tax optimisation. In my case I have been supporting my wife with THB 40k monthly from my Thai account until last year. She used the money for joint expenses, personal expenses and family support. Since this year, I am remitting the equivalent of THB 60k monthly to my wife from my foreign income account. I still contribute more to our joint expenses from my Thai account. There is a risk that the remittances to my wife are not (fully) considered as gift but as her tax assessable income. Worst case THB 34k taxes. However, given the information available, I consider this risk as low and would not expect substantial fines as IMO I have classified the remittances to my wife as gift in good faith. I could remit to my wife from my foreign savings but, as long as TRD does not apply stricter standards, I will keep the savings for future remittances to my Thai account, which protects me from taxes for many years without recourse to a non-Thai tax resident year. Tax planning regularly requires a risk based approach, because the eventual  tax rules are not known.

[bkk6060]

Just had a coffee and this was on the table.

[JimGant]

6 hours ago, CARLO BALDASSARRE said:

After the age of 60 my australian pension is non taxable , therefore maybe seen in thailand as a taxable income from overseas ....we shall see....!!!.

 

The taxation character of a home country's pension remains when subject to a resident country's taxation -- at least in this example from the tech explanation of the UK-US DTA:

 

Quote

However, the State of residence, under subparagraph (b), must exempt from tax any
amount of such pensions or other similar remuneration that would be exempt from tax in the State in which the pension scheme is established if the recipient were a resident of that State. Thus, for example, a distribution from a U.S. "Roth IRA" to a U.K. resident would be exempt from tax in the United Kingdom to the same extent the distribution would be exempt from tax in the United States if it were distributed to a U.S. resident.

https://home.treasury.gov/system/files/131/Treaty-UK-Protocol-TE-7-22-2002.pdf

 This is a 'read between the lines' explanation, as you won't see anything so definitive in the actual treaty. And, since these technical explanations seem to be US generated, probably no such animal for an OZ-Thai tax treaty. But, recent OECD studies to modify their Model tax treaty examples, have introduced just such language as seen in this technical explanation. And this can be found on-line with a little research. Thus, you could have a notebook of why international flavor supports no taxation of Oz tax exempt pensions in Thailand. And Thailand is petitioning to become a OECD member -- doubtful, then, they'd piss on any OECD sanctioned argument.

 

Bottom line: Don't declare your remitted Oz tax exempt pension as assessable income. Always give yourself the benefit of the doubt in gray area tax situations. Thus, in the unlikely event you're ever called in for a chat, your notebook will give your position credence. You might still be taxed -- but certainly no malfeasance to attach a penalty or fine to. Definitely worth the risk. Ask a Chartered Accountant, the Oz version of a US CPA. They'll know what I'm talking about.

 

 

 

 

[Lorry]

13 hours ago, Mike Lister said:

Does anyone really think that everyone could designate their inbound remittances as Gifts, just to avoid tax forever?

Not just "designate" money as a gift.

It really must demonstrably be a gift.

Examples:

 

What many people give to their TGF obviously is a gift.

But a gift to a gf must be customary, see the video.

I would say in Thai culture a gift to one's dek is customary. And even more so at special occasions like her birthday. 

 

More difficult imho is a gift to one's spouse. It could be used for the living expenses of both, husband or wife.  But if e.g. the wife uses the money to buy land in her name (not the land of their common home), it's difficult to argue this was not a gift. 

 

Another situation: the foreigner himself received a gift from his father. If he receives a meager pension and he got a sizable lump sum from his father who sold his house, this can all be proven with bank accounts. 

The foreigner can then remit the gifted money to Thailand,  its not one of the different kinds of income listed in order 161/2566. Same if its an inheritance.

[Mike Lister]

13 minutes ago, Lorry said:

Not just "designate" money as a gift.

It really must demonstrably be a gift.

Examples:

 

What many people give to their TGF obviously is a gift.

But a gift to a gf must be customary, see the video.

I would say in Thai culture a gift to one's dek is customary. And even more so at special occasions like her birthday. 

 

More difficult imho is a gift to one's spouse. It could be used for the living expenses of both, husband or wife.  But if e.g. the wife uses the money to buy land in her name (not the land of their common home), it's difficult to argue this was not a gift. 

 

Another situation: the foreigner himself received a gift from his father. If he receives a meager pension and he got a sizable lump sum from his father who sold his house, this can all be proven with bank accounts. 

The foreigner can then remit the gifted money to Thailand,  its not one of the different kinds of income listed in order 161/2566. Same if its an inheritance.

Once again, some genuine gifts will pass muster, but the concept below, as a general rule, is fantasy .

 

 

[UKresonant]

They do not seem to trawl much for unexplained wealth domestically.

 

But as technology and AI develops further, matching up approximate disparity for further scrutiny is going to be so much more effective.

 

The 'no tax' year after year whilst nearly always in Thailand, I would suspect as much of a flag for scrutiny as a substantial SWIFT transfer. All good if you have the paper trail, maybe.

 

Plenty scope to take the sharp edges off, but if you drop the heavy steel plate on your foot, not fun maybe...

[stat]

13 hours ago, redwood1 said:

When the government gets serious about going after the 10s of millions of Thais who have never filed taxes once in their life...And when they go after the mega wealthy then we will know they are serious.....

Not to mention the Chinese and Russians who seem to have zero interest in any of this tax nonsense....  

 

Until then I would not worry..... The laughably small retired Expat taxes would barely be a scrap of food at a buffet........

 

 

Maybe you only know small retired Expats but there are others with 5M USD in the bank; I know quite a lot.

[stat]

1 hour ago, Mike Lister said:

Once again, some genuine gifts will pass muster, but the concept below, as a general rule, is fantasy .

 

 

Another post from you where you do not explain why exactly gifts are not working when coming from close relatives.

[redwood1]

1 hour ago, stat said:

Maybe you only know small retired Expats but there are others with 5M USD in the bank; I know quite a lot.

 

The point of my post was, That compared to the 10s of millions of Thais who dont file taxes and the mega wealthy any money they might hope to extract from expats would only be a drop in the bucket....

 

The more well off expats would just get a LTR visa and not have to pay 1 baht in taxes ever for the rest of their life....

 

Which would only leave the expats of more modest means who budget and watch their spending much more closely so they can lead a decent life living off their pension and savings and maybe a few small modest investments....

 

This so called income tax will not tax the rich expats at all but will pick over the bones of those expats with the least amount of money to spare, who watch their spending and budget..

 

That is if this poorly thought out mess ever goes anywhere, which is very doubtful...

[Lorry]

1 hour ago, stat said:

Another post from you where you do not explain why exactly gifts are not working when coming from close relatives.

I think (just guessing, I admit) what won't work is what has been mentioned most often in this thread:

Gifting money to one's Thai wife and then living off this money (it has even been suggested that she could "gift back").

That assumes the RD are imbeciles (I don't think they are) or they don't take this whole thing seriously (a possibilty, imho)

[Mike Lister]

I don't know how many times it must be repeated or whether the statement is unclear or ambiguous, so let me say it once again, as clearly as I can...........Gift Tax will work where genuine gifts to relatives are involved, but it is highly unlikely to be robust where the gift is intended to be a work around, is not genuine and involves non-relatives. Anyone who thinks that as a blanket statement, the average person, "can live without tax in TH by receiving gifts and not paying in TH", is not being realistic. The problem with this concept is that others will read these statements and see them as approval to use Gift Tax as a way to avoid tax and get caught out. Some people may not have the highest opinion of the TRD but they are not going to be stupid or ignorant and will have seen all the "workarounds" before.

[ThaiPauly]

Hi Mike

 

Personally I think u are doing a fantastic job ....but some (like me) find it difficult to understand  and it wouldn't matter who was in your place, it's still a lot of hard work for you.

 

Can you just clarify 2 things for me please?

If I don't bring any capital into LOS in 2024 I will have no need to file?

 

Secondly ,does this still apply to rental income?

My rental income is approx the same as my pension income and one of the tax companies said that I would be liable for around 100,000 baht a year in tax.

 

How do I separate this out as it appears that I would have to file a report every 6 months for that money and annually  for the remainder.?

 

It's all very confusing for most of us, but I will use my savings I was saving for medical care to last a year and purchase Thai Insurance to cover it, and of course receive an allowance for this when I do file.

 

Thanks for doing a splendid job Mike and I apologize if any of these questions were previously asked

[Mike Lister]

1 hour ago, ThaiPauly said:

Hi Mike

 

Personally I think u are doing a fantastic job ....but some (like me) find it difficult to understand  and it wouldn't matter who was in your place, it's still a lot of hard work for you.

 

Can you just clarify 2 things for me please?

If I don't bring any capital into LOS in 2024 I will have no need to file?

 

Secondly ,does this still apply to rental income?

My rental income is approx the same as my pension income and one of the tax companies said that I would be liable for around 100,000 baht a year in tax.

 

How do I separate this out as it appears that I would have to file a report every 6 months for that money and annually  for the remainder.?

 

It's all very confusing for most of us, but I will use my savings I was saving for medical care to last a year and purchase Thai Insurance to cover it, and of course receive an allowance for this when I do file.

 

Thanks for doing a splendid job Mike and I apologize if any of these questions were previously asked

If you don't remit any funds to Thailand, there is no need to file a tax return, the threshold for filing a return is 120k or 220k pa, depending on your income.

 

Yes, it does appear to apply to rental income also but the rules are different, based on how much you remit when. 

 

"Rental income from overseas property owned by foreigners who are tax resident in Thailand is not liable to Thai tax on that income, as long as that income is not remitted to Thailand. If however that rental income is remitted, an interim tax return PND 94, must be filed if the total remitted within the first six months of the year, exceeds 60,000 baht. “A half-year personal income tax return or PND. 94 is the income tax filing of an individual whose income from January to June exceeds 60,000 baht”.

 

As you can see from the above, the timing of the remittance depends on whether one or two tax returns are required each year, it will behoove you to remit funds only from months seven onwards, if possible, so as to avoid the need for the second return.

 

You say you've been told that you will pay 100k Thai tax on your rental income but without knowing the numbers, I can't comment. Your total income, including rental income, will be combined and taxed at Personal Income tax rates, assuming your pension is not a government pension that is exempt under treaty (which I don't believe it is). You will be eligible for tax deductions and allowances (or TEDA as they are known) of at least 500k baht per year, perhaps slightly more if you are legally married or pay for Thai health/life insurance or have eligible Thai investments.

 

You will also be able to offset overseas tax paid on the remittance, against any Thai tax that is due. Reading between the lines, I imagine you already pay UK tax so the Thai tax bill may be, lower than you have been told. Unfortunately, our understanding at present is that using that offset will mean invoking the Dual Tax Agreement which means paperwork, plus there is a timing issue since the UK tax year doesn't align with the Thai tax year. The other downside is that any overage in Thailand will result in a tax credit rather than a refund which cannot be carried forward. 

 

Once again, without knowing the numbers it's impossible for me to be more precise. It might be however that given the scale of your income that you would be advised to use a Thai tax CPA for precise guidance.

 

I hope that helps.

[TroubleandGrumpy]

20 hours ago, bkk6060 said:

Just had a coffee and this was on the table.

The bloke who runs this business is a grif***, and is one of those scaring Expats to use their services by stating that Govt Pensions are taxable in Thailand.  Certainly investment returns after Jan 1 2024, and rental money, and salary are proabably taxable income, but Govt Pensions are another issue altogether and are still in the TRD and Thai Govt 'undecided' basket, with regards to the implementation of this new rule. 

[Mike Lister]

22 minutes ago, TroubleandGrumpy said:

The bloke who runs this business is a grif***, and is one of those scaring Expats to use their services by stating that Govt Pensions are taxable in Thailand.  Certainly investment returns after Jan 1 2024, and rental money, and salary are proabably taxable income, but Govt Pensions are another issue altogether and are still in the TRD and Thai Govt 'undecided' basket, with regards to the implementation of this new rule. 

Which country's government pension? They haven't said that about UK gov pensions.

[JimGant]

10 hours ago, Mike Lister said:

Gift Tax will work where genuine gifts to relatives are involved, but it is highly unlikely to be robust where the gift is intended to be a work around, is not genuine and involves non-relatives.

Let's get our eyes back on the ball -- tho' it appears they never were on the ball....

 

First of all, the Thai gift tax has nothing to do with the source of the gift -- or whether or not it's a domestic transfer or an international transfer. Thai 'income tax on a gift' is just a tax on gift amounts over 10M (using as an example a friend as the recipient), which the recipient has to self-assess and is responsible for filing the related tax return. The sender can just be using the friend as an intermediary for receiving his (the sender's) money. Thus, no gift implied, no gift tax due (and in all cases, no tax question for the sender to ponder). The sender just shows up and collects from his friend, if being used as an intermediary. Again, the money could have been a domestic or international transfer. In both cases, there's a separate, completely unrelated question -- was that money subject to income tax (and, if so, have such taxes been paid). Or, for international transfers, were those transfers assessable for Thai tax purposes -- a question completely divorced for what those funds are later used for, be that a gift, a loan, daily expenditures, whatever.

 

Yes, when I send a Wise of SWIFT transfer, they ask the purpose. But if I say "gift," this has no significance for anyone in Thailand -- it's to let the US IRS know that I might be subject to a US gift tax.

 

So, again, there is no Thai tax angle on gifts for the sender -- only the recipient might have some tax obligation. The determination of assessable income is completely unrelated to the eventual use of that income.

[TroubleandGrumpy]

10 minutes ago, Mike Lister said:

Which country's government pension? They haven't said that about UK gov pensions.

There are DTAs where govt pensions are exempt and there are others where it is unclear, but as pointed out in that interview with the local TRD staff, they do not even look at DTAs and dont know anything about them. Also, the word 'pension' in the income tax section is not definitive as it refers to those being paid a 'pension' (a regular payment as a form of salary.

The issue of Govt Pensions and whether they will be classified as taxable income is still unclear, and will remain that way until the day the TRD provides details and states that Govt Pensions are taxable income or not. Also the TRD will have to clarify if they are taxable, what is the rocess when they are exempted under an applicable DTA, and what if they have already been subjected to taxation in the home country. 

 

You can agree or disagree with whatever any tax consultant states, but until the TRD clarifies the Govt ensions situation in detail (like other countries have who are also imlpementing this taxation change), then it is not certain if it will be taxable income in Thailand.

[Mike Lister]

25 minutes ago, JimGant said:

Let's get our eyes back on the ball -- tho' it appears they never were on the ball....

 

First of all, the Thai gift tax has nothing to do with the source of the gift -- or whether or not it's a domestic transfer or an international transfer. Thai 'income tax on a gift' is just a tax on gift amounts over 10M (using as an example a friend as the recipient), which the recipient has to self-assess and is responsible for filing the related tax return. The sender can just be using the friend as an intermediary for receiving his (the sender's) money. Thus, no gift implied, no gift tax due (and in all cases, no tax question for the sender to ponder). The sender just shows up and collects from his friend, if being used as an intermediary. Again, the money could have been a domestic or international transfer. In both cases, there's a separate, completely unrelated question -- was that money subject to income tax (and, if so, have such taxes been paid). Or, for international transfers, were those transfers assessable for Thai tax purposes -- a question completely divorced for what those funds are later used for, be that a gift, a loan, daily expenditures, whatever.

 

Yes, when I send a Wise of SWIFT transfer, they ask the purpose. But if I say "gift," this has no significance for anyone in Thailand -- it's to let the US IRS know that I might be subject to a US gift tax.

 

So, again, there is no Thai tax angle on gifts for the sender -- only the recipient might have some tax obligation. The determination of assessable income is completely unrelated to the eventual use of that income.

I do not agree that Thai Gift Tax has nothing to do with the source of the gift, if that source is attempting to avoid Thai tax by claiming the remittance was a Gift to another, when in reality it was intended to be returned to the gifter. That has been the clear intention of posters thus far when discussing Gift Tax, to use it as a vehicle to circumvent PIT on remittances. If you don't agree, that's OK too, we can agree to disagree on this issue.

[Mike Lister]

1 minute ago, TroubleandGrumpy said:

There are DTAs where govt pensions are exempt and there are others where it is unclear, but as pointed out in that interview with the local TRD staff, they do not even look at DTAs and dont know anything about them. Also, the word 'pension' in the income tax section is not definitive as it refers to those being paid a 'pension' (a regular payment as a form of salary.

The issue of Govt Pensions and whether they will be classified as taxable income is still unclear, and will remain that way until the day the TRD provides details and states that Govt Pensions are taxable income or not. Also the TRD will have to clarify if they are taxable, what is the rocess when they are exempted under an applicable DTA, and what if they have already been subjected to taxation in the home country. 

 

You can agree or disagree with whatever any tax consultant states, but until the TRD clarifies the Govt ensions situation in detail (like other countries have who are also imlpementing this taxation change), then it is not certain if it will be taxable income in Thailand.

"is one of those scaring Expats to use their services by stating that Govt Pensions are taxable in Thailand". 

 

"The issue of Govt Pensions and whether they will be classified as taxable income is still unclear".

 

I don't agree with either of the above statements. The issue of whether or not UK government pensions are taxable in Thailand is perfectly clear, they are not. 

 

In the video I watched, it was said that UK government pensions are not taxable here so I don't believe he is scaring anyone into believing something that's untrue, apart from perhaps you.