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

[freeworld]

1 hour ago, TroubleandGrumpy said:

Yes you are right.  180 days from Jan 1 2024 is June 29th 2024.  That is the deadline date ????

 

The revenue code article 41 states this

 

"Any person staying in Thailand for a period or periods aggregating 180 days or more in any tax year shall be deemed a resident of Thailand."

[BE88]

TAT will be happy next year with the increase in tourists.

[Lorry]

3 minutes ago, freeworld said:

The revenue code article 41 states this

 

"Any person staying in Thailand for a period or periods aggregating 180 days or more in any tax year shall be deemed a resident of Thailand."

Thanks for posting this,  I knew I have read "180 days or more" but couldn't find it.

The Revenue Code ("180 days or more") is obviously more binding than the RD website ("over 180 days")

[MeePeeMai]

2 hours ago, Lemsta69 said:

Sorry man but that's 181 complete days. I'm erring on the side of caution and assuming the max. stay is 179 days therefore exit on 27 June 2024 if necessary.

Better book a ticket far in advance as there might be a ton of expats planning to leave on or just before that date!

 

I'm sure the ticket prices in June will be higher also

[stat]

7 hours ago, Lemsta69 said:

That's interesting because both these sources say that you become a tax resident if you stay "180 days or more", not "more than 180 days". 

 

If I have to flee the Kingdom to avoid tax next year I think I'll err on the side of caution and go with max 179 complete days...

 

https://kpmg.com/th/en/home/insights/2023/09/th-tax-news-flash-issue-145.html

 

https://sherrings.com/assessable-income-foreign-sources-thailand.html

 

I would not go 179 days you never know how exactly they count those days. Example plan leaves at 5 mins after midnight was scheduled 2 hours earlier etc.

[Dogmatix]

2 hours ago, retiree said:

The RD's (non-binding, but looks accurate to me) English translation of 41 para 1 and 2 of the actual tax law is given here:  https://www.rd.go.th/english/37749.html#section41   

 

Section 41

A taxpayer who in the previous tax year derived assessable income under Section 40 from an employment, or from business carried on in Thailand, or from business of an employer residing in Thailand, or from a property situated in Thailand shall pay tax in accordance with the provisions of this Part, whether such income is paid within or outside Thailand.

 

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.

(emphasis added)

 

I don't see the second paragraph as waiving prior years' taxes -- it just delays their collection.  The definitive Thai phrase for "in the previous tax year", used in both paragraphs, is: ในปีภาษีที่ล่วงมาแล้ว  , which I think could also be read as "in a previous tax year" or "in previous tax years".   It does not say "the", and neither the Thai nor English say "... only if remitted income was earned in the current year."  (I'm assuming the Thai phrase is not a "term of art", or wording that is always used in legislation to refer to only the prior year.)

 

Now, Baker McKenzie et al have said that the pre-September interpretation was provided by Resolution 2/2528 (1985), which appears to be a type of tax court ruling -- not a piece of legislation.

 

https://insightplus.bakermckenzie.com/bm/tax/thailand-offshore-sourced-income-brought-into-thailand-from-1-january-2024-onward-will-be-subject-to-thai-personal-income-tax/

According to paragraph two of section 41 of the Revenue Code, Thai tax resident individuals, i.e., any person who stays in Thailand for at least 180 days in any calendar year, shall pay Thai personal income tax on the offshore-sourced income when they bring that income into Thailand. The Resolution of the Committee for the Consideration of Legal Issues and Appeals or Petitions of the Revenue Department No. 2/2528, dated 21 February 1985 ("Resolution No. 2/2528") ruled that the offshore-sourced income that was brought into Thailand after the calendar year of receipt was not subject to personal income tax.

 

Can you provide Thai text of Section 41 paragraph 2, or elsewhere in the code, that supports your belief that the original legislation was always intended to apply only to assessible income if remitted in the year it was earned?   Or, can you find something in the text of 2/2528 (which I don't have) that would indicate that this was a term of art, and the legislature did intend to waive taxes on assessible income from earlier years?

My point was that ในปีภาษีที่ล่วงมาแล้ว could mean "in the previous tax year" or "in a previous tax year" because Thai has no definite or indefinite articles.  However, if parliament had intended it to mean taxation of income in prior years going back to the year dot, they would surely have made that clear by saying something saying similar to the wording used in 161/2566 to clarify that it meant in any previous tax year whatsoever. As you know Thai officialese never uses one word when 10 words would better convey the meaning.  In fact, if parliament intended open ended taxation of past earnings, there would have been no need to even mention "previous tax year". They could have just stated that foreign sourced income is taxable. but using the phrase  "in the previous tax year" was logical because it was consistent with local income from the previous tax year that has to be declared in annual tax return forms.

 

I can't find Resolution 2/2528 (1985) but its existence to clarify that the Article 41 only referred to the previous tax doesn't appear to detract from the interpretation that parliament only intended to tax to tax the previous tax year, rather the opposite. At any rate Kittipong makes a good point that principles of taxation dictate that in cases of ambivalence in tax law, tax authorities should make interpretations in favour of tax payers. 

[John Drake]

What I'm gathering from this is that, for the US at least, the small guys getting only social security and maybe an annuity will not have much, if any, of a problem. It's the big spenders at the high end that are going to be put on the rack. Weren't those people the high quality Thailand claimed it was wanting most of all. Did this place just turn into one giant roach motel for the wealthy?

[K2938]

3 minutes ago, Dogmatix said:

My point was that ในปีภาษีที่ล่วงมาแล้ว could mean "in the previous tax year" or "in a previous tax year" because Thai has no definite or indefinite articles.  However, if parliament had intended it to mean taxation of income in prior years going back to the year dot, they would surely have made that clear by saying something saying similar to the wording used in 161/2566 to clarify that it meant in any previous tax year whatsoever. As you know Thai officialese never uses one word when 10 words would better convey the meaning.  In fact, if parliament intended open ended taxation of past earnings, there would have been no need to even mention "previous tax year". They could have just stated that foreign sourced income is taxable. but using the phrase  "in the previous tax year" was logical because it was consistent with local income from the previous tax year that has to be declared in annual tax return forms.

 

I can't find Resolution 2/2528 (1985) but its existence to clarify that the Article 41 only referred to the previous tax doesn't appear to detract from the interpretation that parliament only intended to tax to tax the previous tax year, rather the opposite. At any rate Kittipong makes a good point that principles of taxation dictate that in cases of ambivalence in tax law, tax authorities should make interpretations in favour of tax payers. 

[stat]

1 hour ago, freeworld said:

Fatca is reporting US citizens income from Thailand.

 

CRS is reporting and sharing most other countries (excl USA) financial accounts.

 

All this info is submitted by banks/financial institutions to the countries tax offices who then share the info.

 

You personally do not do anything until asked.

 

I assume somewhere in the world there is a huge central database affiliated with the OECD which allows country by country to access this summary of financial info.

It is send country to country, there is no OECD database. If you tell your UK or US bank you live in Thailand. US or UK sends it to a national database (Bundeszentralamt für Steuern in case you have a German bank). This US database then sends your info to Thailand. I highly doubt they will be able to read and interpret the data correctly. It took the german tax office 3 years to start being able to work with the reports.

Edited October 1, 2023 by stat

[aldriglikvid]

4 hours ago, TroubleandGrumpy said:

They are going to be severely under pressure to 'get more tax money' and theu will be like a nasty IO on steroids.

 

 

What you're saying here are the main bulletpoints of the fear-mongering that has been going on in the last 60 threads back. And I don't argue that indiscriminate random taxation on the spot is impossible, but it's not probable in my base case scenario. The essence of my post was, if Thailand is to enforce the law in the way that most people are presenting it here on the forums, the following is needed: 

- Banks sharing not only year-end balances as per Fatca/CRS standards but sharing all transactions throughout a year

- Flat income tax % on all transactions throughout a year

- Automatic border entry/exit communication with RD (land, sea and air)  

- IF +180 days in country, RD automatically prints a TIN and send it (via mail?). TIN is granted without prior request or underlying documents. 

- Access to international card issuers banks and requesting Mastercard and Visa transaction details breaking all banking standards developed since WW2 

- Flat income tax % on aforementioned Visa and Mastercard transactions

- Banks in Europe, MENA, Singapore and the US sharing capital gains, transaction details and dividends to Thailand RD in an elaborate new system 

Everything implemented 4 months from now. 

 

Yes, of course I'm overdoing it here - but hopefully you get the point: it will take a long time before this is implemented. If you have a very cynical view of Thailand, you might buy into the idea that RD personell will bang on your door demanding QR payment on the spot. Personally, I'm not in that camp. 

 

I stand my ground and saying that the first transition years will almost only be 1) "chasing the big fish" via LARGE transactions from self reporting banks (similar to KYC reporting) and 2) Self declaring income that is rightly to be taxed 

 

 

IF I'm being flat taxed on all international transfers in to Thailand this coming February, I'm willing to repost this very post and give you all a "you were right!" 

 

Edited October 1, 2023 by aldriglikvid

[redwood1]

18 minutes ago, John Drake said:

What I'm gathering from this is that, for the US at least, the small guys getting only social security and maybe an annuity will not have much, if any, of a problem. It's the big spenders at the high end that are going to be put on the rack. Weren't those people the high quality Thailand claimed it was wanting most of all. Did this place just turn into one giant roach motel for the wealthy?

Yes for years on end...There has been a endless flood of press releases about how Thailand wants RICH RICH RICH very well to do expats......And the expats on a modest buget need to be shown the door.......And this tax would just hammer their precious RICH expats......lol

[jerrymahoney]

30 minutes ago, John Drake said:

What I'm gathering from this is that, for the US at least, the small guys getting only social security and maybe an annuity will not have much, if any, of a problem. It's the big spenders at the high end that are going to be put on the rack. Weren't those people the high quality Thailand claimed it was wanting most of all. Did this place just turn into one giant roach motel for the wealthy?

I agree. Just to note, however, that the "big spenders at the high end" are the ones who will be able to afford the big-time tax lawyers/accountants to deal with all this stuff in the most favorable manner.

[John Drake]

16 minutes ago, jerrymahoney said:

I agree. Just to note, however, that the "big spenders at the high end" are the ones who will be able to afford the big-time tax lawyers/accountants to deal with all this stuff in the most favorable manner.

And they can always come back and get the low end guys by ramping up the 800K in the bank to 1.2 or more and then taxing that when you bring it in.

[spidermike007]

2 hours ago, Jingthing said:

You've been out of the loop.

There is international sharing. If you don’t tell them they'll know you're lying.  Brave new world. 

 

Who do uou suppose provides this information? Employers? The IRS? The treasury department? Our banks around the world? Or Google? And who compensates them for this billion dollar task? 

[spidermike007]

1 hour ago, freeworld said:

The revenue code article 41 states this

 

"Any person staying in Thailand for a period or periods aggregating 180 days or more in any tax year shall be deemed a resident of Thailand."

OK, fair enough, we pay tax and we are granted a residency permit. No need to visit immigration anymore. Fair is fair. 

[Dogmatix]

Of interest to some may be this translation of an explanation of orders that can be issued relating to the Revenue Code that have a lesser forces than Acts of Parliament or Royal Decrees from the itax website https://www.itax.in.th/pedia/ประมวลรัษ

 

1. Announcement from the Director-General of the Revenue Department
2. Revenue Department orders
3. Ministry announcement
4. Ministry regulations
5. Decision of the Tax Commission
6. Supreme Court judgment  , etc.

Note: The Revenue Department's orders, which T.P. stands for "general," have the status of subsidiary laws in which the Revenue Department uses higher legal authority to enforce on a general basis, unlike the Revenue Department orders that P. is abbreviated from. "Practice" which is only a guideline for the work of the revenue officers. It is not directly enforced on the public

 

RD Order P. 161/2566 is indeed just a directive to RD staff and is not directly enforceable on the public, as pointed out by Acharn Kittipong of Baker McKenzie in his Krungthep Thurakit article.  It seems most peculiar that a major tax law change is announced first in a directive to staff only with only just over 3 months notice for taxpayers to comply with it after 38 years, despite the fact that they are not legally bound by it. The implication is that RD staff will illegally enforce it anyway without any supporting legislation.  Acts of Parliament and Royal Decrees require a notice period of at least 90 days after announcement in the Royal Gazette before they can take effect.  And yet taxpayers are only indirectly given notice via a directive to staff of a major tax law change after 38 years with no legally binding legislation.  For a PM and finance minister from Pheua Thai, a party that prides itself on upholding democracy and democratic principles, to support this arbitrary style of imposing illegal changes to long standing laws rather than going through proper parliamentary procedures is nothing short of extraordinary.

Edited October 1, 2023 by Dogmatix

[spidermike007]

2 minutes ago, Dogmatix said:

Of interest to some may be this explanation of orders that can be issued relating to the Revenue Code that have a lesser forces than Acts of Parliament or Royal Decrees from the itaw website https://www.itax.in.th/pedia/ประมวลรัษ

1. Announcement from the Director-General of the Revenue Department
2. Revenue Department orders
3. Ministry announcement
4. Ministry regulations
5. Decision of the Tax Commission
6. Supreme Court judgment  , etc.

Note: The Revenue Department's orders, which T.P. stands for "general," have the status of subsidiary laws in which the Revenue Department uses higher legal authority to enforce on a general basis, unlike the Revenue Department orders that P. is abbreviated from. "Practice" which is only a guideline for the work of the revenue officers. It is not directly enforced on the public

 

RD Order P. 161/2566 is indeed just a directive to RD staff and is not directly enforceable on the public, as pointed out by Acharn Kittipong of Baker McKenzie in his Krungthep Thurakit article.  It seems most peculiar that a major tax law change is announced first in a directive to staff only with only just over 3 months notice for taxpayers to comply with it after 38 years, despite the fact that they are not legally bound by it. The implication is that RD staff will illegally enforce it anyway without any supporting legislation.  Acts of Parliament and Royal Decrees require a notice period of at least 90 days after announcement in the Royal Gazette before they can take effect.  And yet taxpayers are only indirectly given notice via a directive to staff of a major tax law change after 38 years with no legally binding legislation.  For a PM and finance minister from Pheua Thai, a party that prides itself on upholding democracy and democratic principles, to support this arbitrary style of imposing illegal changes to long standing laws rather than going through proper parliamentary procedures is nothing short of extraordinary.

For a PM and finance minister from Pheua Thai, a party that prides itself on upholding democracy. Cute. If only. Remember, they stole an election, and appointed an unelected PM. 

[jerrymahoney]

18 minutes ago, John Drake said:

And they can always come back and get the low end guys by ramping up the 800K in the bank to 1.2 or more and then taxing that when you bring it in.

At this point on page 64 of the topic I will key in the late Donald Rumsfeld from 2002:

 

Reports that say that something hasn't happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tends to be the difficult ones.

 

https://en.wikipedia.org/wiki/There_are_unknown_unknowns

 

 

[Dogmatix]

8 minutes ago, spidermike007 said:

Who do uou suppose provides this information? Employers? The IRS? The treasury department? Our banks around the world? Or Google? And who compensates them for this billion dollar task? 

CRS (Common Reporting Standards) has been in place in most developed countries since 2018 and in Thailand only since 2023. It is a an agreement that banks and other financial service providers (mainly stockbrokers) will provide information to other jurisdictions on their tax residents.  Since Thailand joined this year it is eligible to be sent information on any tax residents that have accounts in any of the other signatory countries and vice versa. The information provided year end balances and any payments received during the year. It is something the financial service provider are obliged to do by their national laws at their own expense.  In the case of FATCA, which is imposed unilaterally by the US under threats, this has become so burdensome that many financial services providers have responded by axing all American owned accounts, eg Thai asset management companies and many Swiss private banks.  However, CRS is an international agreement and companies don't have the option to axe foreign accounts for that.

 

The Thai RD, being under pressure to increase tax revenue in permanently sluggish economic conditions due to appalling Thai economic management, took an opportunist view that it could use CRS as a means to increase revenue, while blaming it on international pressure. 

[Dogmatix]

9 minutes ago, spidermike007 said:

For a PM and finance minister from Pheua Thai, a party that prides itself on upholding democracy. Cute. If only. Remember, they stole an election, and appointed an unelected PM. 

 That means they should work overtime to re-establish their pro-democracy principles.    

[retiree]

1 hour ago, Dogmatix said:

if parliament had intended it to mean taxation of income in prior years going back to the year dot

Not to the year "dot," but rather for the years the individual was a Thai tax resident and had assessable income.

 

> ... they surely would have made that clear by saying ... As you know Thai officialese never uses one word when 10 words ...

I am reluctant to tell native speakers of another language how they should write, and I do not know how many words they prefer to use. 

 

> if parliament intended open ended taxation of past earnings, there would have been no need to even mention "previous tax year".

I believe a parallel construction was used in both paragraphs to indicate a) when and where the work was done, and b) when and where any income was received. 

 

> They could have just stated that foreign sourced income is taxable. but using the phrase "in the previous tax year"

We might just as reasonably say that if Parliament had intend to either a) only include current year income remitted in the current year, or b) explicitly exclude all prior years' income, they would'a could'a should'a stated that.

 

> Resolution 2/2528 (1985) ... clarify that the Article 41 only referred to the previous tax doesn't appear to detract from the interpretation that parliament only intended to tax to tax the previous tax year

We will only know this if we can look at the text of 2/2528 and/or the arguments that prompted it.  I assume that in the mid-80's a taxpayer argued one way, the RD argued the other, and the taxpayer won.  But we don't know why.

 

Re Kittipong's more general argument, I think this will be resolved when a large Thai taxpayer takes the RD to court, and argues that individuals and companies have entered long-term contracts, and engaged in long-term tax planning, on the basis of a long-established interpretation, and that it would cause unjust harm to undue the 2/2528 ruling. 

 

That said, I have zero knowledge of the weight of administrative ruling precedents (such as 2/2528) in Thai law, and of whether or not they may occasionally be overturned,  as with US stare decisis precedents.   The phrase unjust harm sure sounds like a winner, but it might not carry legal weight in cases like this. 

 

I do assume, though, that if this year's RD ruling is denied, and if the government is serious about this issue, that Parliament can and will vote to modify the tax code, as governments around the world do all the time.  

 

PS:  Thanks, Dogmatix, for posting the link to the itax website just now, and thanks even more so for the Kittipong article the other day.  And I am with you -- it's all Lalisa's fault. 

Edited October 1, 2023 by retiree

[mokwit]

1 hour ago, aldriglikvid said:

if Thailand is to enforce the law in the way that most people are presenting it here on the forums, the following is needed: 

- Banks sharing not only year-end balances as per Fatca/CRS standards but sharing all transactions throughout a year

- Flat income tax % on all transactions throughout a year

- Automatic border entry/exit communication with RD (land, sea and air)  

- IF +180 days in country, RD automatically prints a TIN and send it (via mail?). TIN is granted without prior request or underlying documents. 

- Access to international card issuers banks and requesting Mastercard and Visa transaction details breaking all banking standards developed since WW2 

- Flat income tax % on aforementioned Visa and Mastercard transactions

- Banks in Europe, MENA, Singapore and the US sharing capital gains, transaction details and dividends to Thailand RD in an elaborate new system 

Everything implemented 4 months from now. 

...or they just could require you have proof of all taxes paid in order to leave as they did before. likewise make it a condition of one year extension.

 

They are far more likely to push the responsibility onto us.  They will come up with a number which it is up to us to disprove - like they did before and can do now.

Edited October 1, 2023 by mokwit

[aldriglikvid]

1 minute ago, mokwit said:

...or they just could require you have proof of all taxes paid in order to leave as they did before. likewise make it a condition of one year extension.

 

They are far more likely to push the responsibility onto us.  They will come up with a number which it is up to us to disprove - like they did before and can do now.

1) Yes, and if that's the case it means they will honor the DTA's (which they are trying to communicate now already, but is downvoted here in the forums). Non issue for 95% in this thread. Probably a issue for those evading tax entirely. 

 

2) How was it before? Genuinely asking. 

 

3) I sincerely doubt that Thailand will implement that Banks will be forced to declare all transactions to RD. It will be completely unprecedented, on a global scale. (remember, they way RD "back home" knows your income is because it's reported by your employer, pensionhub or self reported). I just don't know what info IM will base their indiscriminate/random number on. And honestly, I don't see many examples here either. 

[redwood1]

10 minutes ago, mokwit said:

...or they just could require you have proof of all taxes paid in order to leave as they did before. likewise make it a condition of one year extension.

 

They are far more likely to push the responsibility onto us.  They will come up with a number which it is up to us to disprove - like they did before and can do now.

Well good.....If they will not let me leave without paying......I will not pay and just not leave....lol

[mokwit]

11 minutes ago, redwood1 said:

Well good.....If they will not let me leave without paying......I will not pay and just not leave....lol

Big question is what visa are you on if the RD stops you leaving e.g. you were here on NON O multiple that has to be re obtained overseas?

 

With the criminal justice system the court gives you paperwork which you then take to Immigration (apparently).

[aldriglikvid]

4 minutes ago, mokwit said:

Big question is what visa are you on if the RD stops you leaving e.g. you were here on NON O multiple that has to be re obtained overseas?

 

If the RTP would begin chasing western retirees over undeclared, but most certainly correctly taxed back home, pensions Thailand would instigate a diplomatic scandal, of global proportions. Again: possible but not probable. 

Edited October 1, 2023 by aldriglikvid

[homeseeker]

32 minutes ago, mokwit said:

...or they just could require you have proof of all taxes paid in order to leave as they did before. likewise make it a condition of one year extension.

 

They are far more likely to push the responsibility onto us.  They will come up with a number which it is up to us to disprove - like they did before and can do now.

If I apply for a 1 year extension (retirement) that does not mean I will be in Thailand for the next 180 days. Only that my visa is over 180 days. But I agree they will try to grab more money from us and they will do anything to achieve that end, whether legal, or moral or fair.

 

[Dogmatix]

1 hour ago, retiree said:

Not to the year "dot," but rather for the years the individual was a Thai tax resident and had assessable income.

 

> ... they surely would have made that clear by saying ... As you know Thai officialese never uses one word when 10 words ...

I am reluctant to tell native speakers of another language how they should write, and I do not know how many words they prefer to use. 

 

Your points are well made and I will not go through all of them. Much is still unknown, particularly the text and circumstances of 2/2528 which I have so far searched for in Thai in vain.  I am not sure if Section 41 dates back to the original Revenue Code of 1938 or was added later but we can imagine that foreign sourced income was not a very important consideration when it was drafted and that few countries had notions of global taxation then either.  Also we need to take into account that Thai parliaments often draft legislation with deliberate ambiguity to allow varying interpretations. 

 

Re the points above.  For some who have been tax residents for decades your interpretation is effectively the year dot.  Also for Thais, who are the intended targets, it is from whenever they started earning foreign source income. 

 

I have read Thai laws in the original extensively and the impression I get is that, since Thai is not a very precise language, the drafters will often use lengthy phraseology to make sure only one meaning is possible, if they want to be precise. That is why I surmised that the drafters of Section 41 didn't mean any previous tax years because they could have added wording to make that abundantly clear but didn't. I admit that is not conclusive but for me it is a weight of probability.

Edited October 1, 2023 by Dogmatix

[Puccini]

3 hours ago, Dogmatix said:

...I can't find Resolution 2/2528...

This seems to be it:

 

https://www.rd.go.th/2578.html

[Dogmatix]

29 minutes ago, Puccini said:

This seems to be it:

 

https://www.rd.go.th/2578.html

No. That is resolution 7/2528 (not 2/2528) regarding taxation of interest paid to foreign bank branches by their head offices overseas.