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

[stat]

40 minutes ago, JohnnyBD said:

This thread has changed from a tax information thread into a tax evasion thread.

This is a fine line and it is not up to you (or me) to decide. Sometimes it takes courts ten years to decide which is which. Just google cum/ex Germany.

 

NB: Latin cum not the other sort

Edited May 8 by stat

[Lorry]

4 minutes ago, Mike Teavee said:

As I understand it if you were sent 5Million THB as a Gift by your father then you would 1st assess this as a gift and decide not to declare it on your Tax Return (assuming you filed one). 

 

IF TRD somehow notice this large remittance & decide to audit you, it would be on you to prove that it was a gift which came from your father & not from one of your own overseas account [I use this example as I have exactly the same name & UK address as my father on one of my UK accounts so it would look like I was sending money to myself].

Agreed 100%

 

[stat]

47 minutes ago, Mike Lister said:

That is tax evasion. You can't Gift funds to your landlords account from an overseas account and call it a gift when you're also paying your rent with the same money.

The point being made is that I received the gift beforehand in my overseas account or that my dad is actually paying the rent for HIS rented villa. I am also living in this villa (rent free) and he ocassionally plans to visit HIS rented villa.

 

I fully agree that the landlord has to pay tax on the rental income, though.

[JimGant]

26 minutes ago, Mike Lister said:

OK, so you pay your rent directly to the landlords account from your overseas account, which means your landlord has his assessible income. But the funds never hit your account in Thailand which means you don't have any remittances to declare to Thai tax, how is that not evasion?

Huh? I send remittances of assessable income to my gf; my landlord; the soi dog hospice 😉; my housekeeper; blah blah. Never ever send on nickel to my bank account in Thailand. They're still remittances, all of which I have to determine, for tax purposes, as to whether or not they're assessable income. Matters not that they never passed through any financial account of mine in Thailand.

[JimGant]

1 hour ago, Mike Lister said:

That is tax evasion. You can't Gift funds to your landlords account from an overseas account and call it a gift when you're also paying your rent with the same money.

You can call it a fried banana, as far as taxation implications go. You remit income into Thailand -- it's purpose (as we've scrutinized to absurdity) is not important. You report your assessable income remittances on your tax return -- where nowhere is the purpose of the remittance recorded, thus nowhere to get a tax exemption for a gift purpose. If the landlord you remitted your rental fee to wants to call it a gift, or if you want to call it a gift, makes no never mind to the bottom line of your tax bill. However, the only tax implication is whether or not the landlord calls it a gift, and not actually the income it really is -- and (mis) files his tax return accordingly.

[Lorry]

15 minutes ago, JimGant said:

Huh? I send remittances of assessable income to my gf; my landlord; the soi dog hospice 😉; my housekeeper; blah blah. Never ever send on nickel to my bank account in Thailand. They're still remittances, all of which I have to determine, for tax purposes, as to whether or not they're assessable income. Matters not that they never passed through any financial account of mine in Thailand.

I agree, you have convinced me.

But I am wondering how this would play out:

It would be very easy for the RD just to tax all international remittances arriving in my account. No matter from whom, gifts or not.

I guess it would be more complicated to filter all international remittances arriving in Thailand (including in the accounts of the Soi Dog Foundation) and figure out which ones came from me. There may be several people named Lorry in the world.

So  I could imagine that the RD finds it more practical just to tax all incoming transfers of my account.  Some RD staff have said so, as posted earlier in this thread. 

 

Of course,  it would be very stupid to pay the rent or the baker by international transfer and then not to declare these transfers as income. Could easily happen, though: you buy a condo off plan, wire the money from abroad directly to the developer - I think for many people it's not obvious that they have to declare this money when they file taxes in Thailand

[JimGant]

5 minutes ago, Lorry said:

Of course,  it would be very stupid to pay the rent or the baker by international transfer and then not to declare these transfers as income.

Why? What if it's not income, or if it is income, that it's exempt income via DTA, or exempt because it's pre 2024 income? Or it's loan money you wired from home, to buy that condo. This money is nothing the RD needs to know about. Just keep good records, and hope you're not inconvenienced by a very low probability audit.

[shdmn]

Are there any updates on what is going on with this?  So far it still appears like nobody, not even the local accountants, know what is going on.  Do we have to wait until 2025 tax season before we definitively find out how this is all going to wash out for the 2024 tax year?

[Mike Lister]

3 hours ago, shdmn said:

Are there any updates on what is going on with this?  So far it still appears like nobody, not even the local accountants, know what is going on.  Do we have to wait until 2025 tax season before we definitively find out how this is all going to wash out for the 2024 tax year?

Very possibly.

[Mike Lister]

I have read through the past few pages again and have tried to summarise some very fragmented and at times obscure explanations and make them understandable to everyone. I don't yet claim to have a 100% accurate or complete description but I think I'm nearly there, the following may be subject to change after others have reviewed and commented. 

 

The Tax Implications of Remittances

 

If you receive funds in Thailand, you must determine whether they represent assessable income or not. If they are assessable, you must report them on a tax return, subject to minimum threshold amounts. You are the only person who can do this because you are the only person who knows.

 

Similarly, if you remit funds to Thailand from overseas, to someone other than yourself, you must also determine if those funds are assessable and if they are, declare them on a tax return, subject to threshold amounts. Just because you remit funds to another person in Thailand and the money does not enter your bank account, does not mean those funds escape tax assessment.

 

For example, a remittance from your overseas account, to a Thai property developer, in order to buy property in Thailand, must still be assessed for Thai tax. If that remittance comprises exempt income, it does not need to be declared on a Thai tax return. But if it comprises taxable income, the money must be declared.

 

In a second example, funds that you remit to another person, from overseas, might be intended as a Gift, in which case, you do not need to report that Gift on a Thai tax return. However, the recipient of the Gift, may need to report the Gift and pay Gift Tax on the amount.

 

Along the same lines as the above, if somebody sends you money in Thailand, it may be deemed to be a Gift, which under Gift Tax rules is not assessable here, subject to the amounts involved. The Thai Revenue may require further details of that Gift to ensure it is genuine and not income disguised as a Gift.

 

As an over arching principle, the Thai Revenue does not care what the purpose is of the remitted funds, or their intended use. The Revenue is only interested in the amounts that you declare and what you say the source of those funds was, which you may need to prove, beyond doubt.

 

[dinga]

16 minutes ago, Mike Lister said:

I have read through the past few pages again and have tried to summarise some very fragmented and at times obscure explanations and make them understandable to everyone. I don't yet claim to have a 100% accurate or complete description but I think I'm nearly there, the following may be subject to change after others have reviewed and commented. 

 

The Tax Implications of Remittances

 

If you receive funds in Thailand, you must determine whether they represent assessable income or not. If they are assessable, you must report them on a tax return, subject to minimum threshold amounts. You are the only person who can do this because you are the only person who knows.

 

Similarly, if you remit funds to Thailand from overseas, to someone other than yourself, you must also determine if those funds are assessable and if they are, declare them on a tax return, subject to threshold amounts. Just because you remit funds to another person in Thailand and the money does not enter your bank account, does not mean those funds escape tax assessment.

 

For example, a remittance from your overseas account, to a Thai property developer, in order to buy property in Thailand, must still be assessed for Thai tax. If that remittance comprises exempt income, it does not need to be declared on a Thai tax return. But if it comprises taxable income, the money must be declared.

 

In a second example, funds that you remit to another person, from overseas, might be intended as a Gift, in which case, you do not need to report that Gift on a Thai tax return. However, the recipient of the Gift, may need to report the Gift and pay Gift Tax on the amount.

 

Along the same lines as the above, if somebody sends you money in Thailand, it may be deemed to be a Gift, which under Gift Tax rules is not assessable here, subject to the amounts involved. The Thai Revenue may require further details of that Gift to ensure it is genuine and not income disguised as a Gift.

 

As an over arching principle, the Thai Revenue does not care what the purpose is of the remitted funds, or their intended use. The Revenue is only interested in the amounts that you declare and what you say the source of those funds was, which you may need to prove, beyond doubt.

 

HOORAY!!!!  It's taken a very long time but I reckon you've pretty well nailed it.  My only suggestion is that the final sentence really touches upon the criminal burden of proof - which I don't believe is correct.  Rather than "beyond doubt" suggest "to the satisfaction of the TRD" is more accurate.

Edited May 8 by dinga

[Lorry]

48 minutes ago, Mike Lister said:

funds that you remit to another person, from overseas, might be intended as a Gift, in which case, you do not need to report that Gift on a Thai tax return

 

This part is still not correct,  but the rest is a very good summary, and very clear. Thank you. 

 

 

This part should read somehow like this:

 

funds that you remit to another person, from overseas, might be intended as a Gift, but for your own tax declaration this intention does not matter. If the funds you remitted to another person are from your assessable income as listed in RD 161/2566 you have to declare them and you will  have to pay personal income tax for them.

 

The recipient of the Gift, may need to report the Gift and pay Gift Tax on the amount. Gift tax for customary gifts from close relatives is only due if the gift is more than 10m THB (20m for legally married wife, parents or descendants)

 

[Mike Teavee]

7 hours ago, JimGant said:

You can call it a fried banana, as far as taxation implications go. You remit income into Thailand -- it's purpose (as we've scrutinized to absurdity) is not important. You report your assessable income remittances on your tax return -- where nowhere is the purpose of the remittance recorded, thus nowhere to get a tax exemption for a gift purpose. If the landlord you remitted your rental fee to wants to call it a gift, or if you want to call it a gift, makes no never mind to the bottom line of your tax bill. However, the only tax implication is whether or not the landlord calls it a gift, and not actually the income it really is -- and (mis) files his tax return accordingly.

You only report assessable income and as (Legitimate) Gifts are not assessable income, you don't need to get a tax exemption for them as you don't need to report them. 

 

A "Legitimate" Gift is something that you (as the person making the Gift) receive no direct benefit from & your Landlord (as the person receiving the Gift) provides no direct benefits for, so if you're living there then it obviously wouldn't be a "Legitimate" Gift & if not declared would technically be tax evasion on both sides. 

   

Assuming you're not related in anyway to your "Landlord", if you sent them money & don't use their property in anyway (Live, Store your things, Reserve the property for future use etc...) then (technically) they should declare/pay tax on it but you would have nothing to pay/declare as you've not received any benefits from the monies. 

 

Edited May 9 by Mike Teavee

[Mike Lister]

8 minutes ago, Lorry said:

 

This part is still not correct,  but the rest is a very good summary, and very clear. Thank you. 

 

 

This part should read somehow like this:

 

funds that you remit to another person, from overseas, might be intended as a Gift, but for your own tax declaration this intention does not matter. If the funds you remitted to another person are from your assessable income as listed in RD 161/2566 you have to declare them and you will  have to pay personal income tax for them.

 

The recipient of the Gift, may need to report the Gift and pay Gift Tax on the amount. Gift tax for customary gifts from close relatives is only due if the gift is more than 10m THB (20m for legally married wife, parents or descendants)

 

Yes, thanks, I see I didn't go far enough with that.....I'll lift your form of words if I may.

[Lorry]

2 minutes ago, Mike Teavee said:

You only report assessable income and as (Legitimate) Gifts are not assessable income, you don't need to get a tax exemption for them as you don't need to report them. 

 

A "Legitimate" Gift is something that you (as the person making the Gift) receive no direct benefit from & your Landlord (as the person receiving the Gift) provides no direct benefits for, so it obviously wouldn't be a Gift & if not declared would technically be tax evasion on both sides. 

   

Assuming you're not related in anyway to your "Landlord", if you sent them money & don't use their property in anyway (Live, Store your things, Reserve the property for future use etc...) then (technically) they should declare/pay tax on it but you would have nothing to pay/declare as you've not received any benefits from the monies. 

 

Wrong.

 

"(Legitimate) Gifts are not assessable income" - they are not assessable income of the giftee.

But they can come from assessable income of the gifter,  and this has to be declared.

 

Look at it from a purely domestic perspective,  everything inside Thailand:

Mr Gifter works very hard for a Thai company, has a decent salary and made 5m last year. All salary. He has to pay taxes for these 5m.

He decides to gift these 5m to his daughter, Ms Giftee,  as a wedding gift on her wedding day. He still has to pay personal income tax for the 5m. Ms Giftee doesn't have to pay gift tax, though.

 

Gifting your money to someone else does not ease YOUR tax burdrn

 

[Lorry]

3 minutes ago, Mike Lister said:

Yes, thanks, I see I didn't go far enough with that.....I'll lift your form of words if I may.

Sure, but try to make it proper English. I am not good at that

[Mike Lister]

OK, here's version II, perhaps others can review and see if it is accurate, complete and easily understandable.

 

The Tax Implications of Remittances

 

If you receive funds in Thailand, you must determine whether they represent assessable income or not. If they are assessable, you must report them on a tax return, subject to minimum threshold amounts. You are the only person who can do this because you are the only person who knows.

 

Similarly, if you remit funds to Thailand from overseas, to someone other than yourself, you must also determine if those funds are assessable and if they are, declare them on a tax return, subject to threshold amounts. Just because you remit funds to another person in Thailand and the money does not enter your bank account, does not mean those funds escape tax assessment.

 

For example, a remittance from your overseas account, to a Thai property developer, in order to buy property in Thailand, must still be assessed for Thai tax. If that remittance comprises exempt income, it does not need to be declared on a Thai tax return. But if it comprises taxable income, the money must be declared.

 

In a second example, funds that you remit to another person, from overseas, might be intended as a Gift, but for your own tax declaration this intention does not matter. If the funds you remitted to another person are from your assessable income as listed in RD 161/2566 you have to declare them and you will  have to pay personal income tax on them.

 

The recipient of the Gift, may also need to report the Gift and pay Gift Tax on the amount. Gift tax for customary gifts from close relatives is only due if the gift is more than 10m THB (20m for legally married wife, parents or descendants)

 

Along the same lines as the above, if somebody sends you money in Thailand, it may be deemed to be a Gift, which under Gift Tax rules is not assessable here, subject to the amounts involved. The Thai Revenue may require further details of that Gift to ensure it is genuine and not income disguised as a Gift.

 

As an over arching principle, the Thai Revenue does not care what the purpose is of the remitted funds, or their intended use. The Revenue is only interested in the amounts that you declare and what you say the source of those funds was, which you may need to prove, beyond doubt.

 

 

[Mike Teavee]

24 minutes ago, Lorry said:

 

This part is still not correct,  but the rest is a very good summary, and very clear. Thank you. 

 

 

This part should read somehow like this:

 

funds that you remit to another person, from overseas, might be intended as a Gift, but for your own tax declaration this intention does not matter. If the funds you remitted to another person are from your assessable income as listed in RD 161/2566 you have to declare them and you will  have to pay personal income tax for them.

 

The recipient of the Gift, may need to report the Gift and pay Gift Tax on the amount. Gift tax for customary gifts from close relatives is only due if the gift is more than 10m THB (20m for legally married wife, parents or descendants)

 

I disagree slightly with this part...

 

If you make a legitimate gift (one you receive no benefits from) to anybody then you do not need to declare it on your Tax Return but they would need to file it on theirs if they/the gift doesn't fall into one of the eligible categories (E.g. I send my mate 1 Million THB because I'm a nice guy). 

 

Edited May 9 by Mike Teavee

[Lorry]

I still wonder what the RD will make of all of this in practice. 

 

Remittances from abroad to other people than yourself are not that easy to survey, people might intentionally (tax evasion) or not (if they just don't realise they must pay tax on gifts to their kids) not declare them, and it could all become a big mess.

But I guess some things are easy for the RD:

- scan remittances to property developers

- scan remittances to wife and children of foreigners

 

I wonder how the UK handles non-doms. I would suspect surveillance in the UK is much more perfect than here,  but I may be wrong.

 

[Mike Teavee]

11 minutes ago, Lorry said:

Wrong.

 

"(Legitimate) Gifts are not assessable income" - they are not assessable income of the giftee.

But they can come from assessable income of the gifter,  and this has to be declared.

 

Look at it from a purely domestic perspective,  everything inside Thailand:

Mr Gifter works very hard for a Thai company, has a decent salary and made 5m last year. All salary. He has to pay taxes for these 5m.

He decides to gift these 5m to his daughter, Ms Giftee,  as a wedding gift on her wedding day. He still has to pay personal income tax for the 5m. Ms Giftee doesn't have to pay gift tax, though.

 

Gifting your money to someone else does not ease YOUR tax burdrn

 

 

Firstly, we are talking about tax on remitted income (not domestic) but in your example Mr Gifter does have to pay Tax on his Income (& would probably do so under PAYE) but when he gifts the post tax monies to his daughter as a wedding present he does not need to pay tax on it again.

 

If Mr Gifter was working for 6 months overseas (still Tax Resident in Thailand) & remitted 5Million as a wedding present to his daughter then he'd have no tax to pay on it (or need to declare it), nor would she. However, if he were to remit the money to his landlord to pay for his rent then he & his landlord would need to declare/pay tax on it.   

Edited May 9 by Mike Teavee

[Lorry]

9 minutes ago, Mike Teavee said:

 

Firstly, we are talking about tax on remitted income (not domestic) but in your example Mr Gifter does have to pay Tax on his Income (& would probably do so under PAYE) but when he gifts the post tax monies to his daughter as a wedding present he does not need to pay tax on it again.

 

If Mr Gifter was working for 6 months overseas (still Tax Resident in Thailand) & remitted 5Million as a wedding present to his daughter then he'd have no tax to pay on it (or need to declare it), nor would she. However, if he were to remit the money to his landlord to pay for his rent then he & his landlord would need to pay tax on it.   

If JimGant and Etaoin are right,  then you are wrong.

I now am convinced they are right,  see the discussion of the last pages. 

 

I must admit, that even the RD guy in Klonko's video seems to muddle through these things and not clearly differentiate the different scenarios. 

He sounds a lot like you. But what he says is not clear at all.

What Somchai, the tax inspector,  will do is anyone's guess 

Edited May 9 by Lorry

[Mike Lister]

9 minutes ago, Lorry said:

I still wonder what the RD will make of all of this in practice. 

 

Remittances from abroad to other people than yourself are not that easy to survey, people might intentionally (tax evasion) or not (if they just don't realise they must pay tax on gifts to their kids) not declare them, and it could all become a big mess.

But I guess some things are easy for the RD:

- scan remittances to property developers

- scan remittances to wife and children of foreigners

 

I wonder how the UK handles non-doms. I would suspect surveillance in the UK is much more perfect than here,  but I may be wrong.

 

The developer has a bank account too and he will undergo audits, similarly, the bank will have records that it passes along to the TRD. On your end there's the Land Office part where evidence the funds need to be seen. It's possible to wash those funds and hide them but it's not impossible to be found out either. Perhaps that's why the TRD penalties are so draconian, to compensate for the lack of foolproof processes.

[gk10012001]

so i transfer money into Thailand.  Some will be part of my social security , some will be part from one of my ROTH tax free IRA withdrawals, some may be part of withdrawals from my Pre Taxed Traditional IRA account, and some could be dividends and interest from my regular brokerage account.  So in general I have income from four different sources as I retire this year.  And all those monies end up in my checking account from which I then make transfers to Thailand.  Some of the monies are tax free (municipal bonds and from my ROTH IRA), others are taxable or partly taxable in the USA.  Some of the social security monies are not taxed depending on certain things.  So how the heck are the Thai authorities going to tell me to handle that from a Thailand perspective?  Would they really try and tax monies that are legitimately not taxed in the USA?  And how are the Thai authorities even going to know how much money a person transfers into Thailand?  Do an audit and detain an expat until they comply to their satisfaction?  In general the Thais will not be able to access an Expat's home country tax records.

Edited May 9 by gk10012001

[Surasak]

On 9/18/2023 at 9:57 AM, connda said:

Eventually someone is going to write, "Does that mean farang's pension income too."

Short answer would probably be "No," at least for those countries with bilateral tax agreements with Thailand.  If you're paying income tax in your home countries, then Thailand has no claim to tax the income twice.

I feel sure everyone knows, given the slightest chance, these people would have the shirt off your back and think nothing of the suffering that would cause.

[Mike Lister]

2 minutes ago, gk10012001 said:

so i transfer money into Thailand.  Some will be part of my social security , some will be part from one of my ROTH tax free IRA withdrawals, some may be part of withdrawals from my Pre Taxed Traditional IRA account, and some could be dividends and interest from my regular brokerage account.  So in general I have income from four different sources as I retire this year.  And all those monies end up in my checking account from which I then make transfers to Thailand.  Some of the monies are tax free (municipal bonds and from my ROTH IRA), others are taxable or partly taxable in the USA.  Some of the social security monies are not taxed depending on certain things.  So how the heck are the Thai authorities going to tell me to handle that from a Thailand perspective?  Would they really try and tax monies that are legitimately not taxed in the USA?  And how are the Thai authorities even going to know how much money a person transfers into Thailand?  Do an audit and detain an expat until they comply to their satisfaction?  In general the Thais will not be able to access an Expat's home country tax records.

The simple answer is, you are going to tell them, it's down to you to know how much you are remitting, from each source and whether they are assessible or not. Nobody else can do that, only you.

 

What you describe is commingled funds, that's where funds from several different sources end up in the same account. You have two choices, either keep excellent records and supportive documentation, or, keep excellent records and documentation and demingle those feeder funds, into their own accounts.

[gk10012001]

1 minute ago, Mike Lister said:

The simple answer is, you are going to tell them, it's down to you to know how much you are remitting, from each source and whether they are assessible or not. Nobody else can do that, only you.

 

What you describe is commingled funds, that's where funds from several different sources end up in the same account. You have two choices, either keep excellent records and supportive documentation, or, keep excellent records and documentation and demingle those feeder funds, into their own accounts.

 So what is the definition of "assessible?  Who decides?

[Mike Lister]

5 minutes ago, Surasak said:

I feel sure everyone knows, given the slightest chance, these people would have the shirt off your back and think nothing of the suffering that would cause.

Nonsense!

[Mike Lister]

Just now, gk10012001 said:

 So what is the definition of "assessible?  Who decides?

You do, according to the tax rules.

[Mike Lister]

2 minutes ago, gk10012001 said:

 So what is the definition of "assessible?  Who decides?

Time to do some reading!

 

 

[Mike Teavee]

4 minutes ago, Lorry said:

If JimGant and Etaoin are right,  then you are wrong.

I now am convinced they are right,  see the discussion of the last pages. 

 

I must admit, that even the RD guy in Klonko's video seems to muddle through these things and not clearly differentiate the different scenarios. 

He sounds a lot like you. But what he says is not clear at all.

What Somchai, the tax inspector,  will do is anyone's guess 

Obviously you're free to believe whoever/whatever you like but the only ruling on Gift Tax I'm aware of was where Thaksin's wife was sentenced to 3 years for Tax evasion, part of which (IIRC approx. 15Million Baht) was a gift to their daughter as a wedding present (The fact that they argued this proves that there is an argument to be made that you can Gift money to relatives)

https://www.reuters.com/article/idUSSP223799/

 

 

And before you argue "But she was found guilty"...

1. I've read [can't find it now] that the TRD argument was that the gift was made 2 years after the wedding, so in their eyes wasn't a legitimate wedding present.
2. This was one small (IIRC approx. 3%) part of an overall charge of 546 Million Baht Tax evasion 
3. Her conviction was overturned on appeal (Though I wouldn't read too much into this fact 🙂)

https://www.sandiegouniontribune.com/sdut-appeals-court-clears-thaksins-ex-wife-in-tax-case-2011aug24-story.html