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

[UKresonant]

Just now, The Cyclist said:

 

You might have noticed, but it is not I who is worried or stressing.

 

Glad to hear that, me neither... 

[Puccini]

The page https://www.rd.go.th/english/63902.html on the website of the RD has a list of forms and documents in English.

 

I had a look at item 4 on that list, Guide to Personal Income Tax Return 2020 (ภ.ง.ด.91). Contrary to the indication on that list, it is not a PDF file but a DOCX file. I scanned it with both Avast! and Malwarebytes and neither found a problem. Just the same, for anyone who avoids Microsoft Word files because they are potentially risky I created the attached PDF file.

 

On page page7 of that Guide, there is this text for foreigners who are non-resident of Thailand for tax purposes:

Quote

...If you stayed in Thailand for less than 180 days in the tax year, you were a non-resident of Thailand for tax purposes. If you derived any income which is subject to Thai personal income tax and you meet the conditions stated in 1., you are required to file this form.

 

The "conditions stated in 1" include the following:

Quote

...You have to file a return on the income that you received if you meet one of the following conditions:
(1) Your total income exceeded 60,000 baht in the tax year.

 

The Guide to Personal Income Tax Return 2022 (ภ.ง.ด.90) has these same texts as the Guide for the form ภ.ง.ด.91. It remains to be seen whether these guides will remain unchanged for the tax return for the year 2014.

 

Both tax return forms as well as the recent RD order ask only for assessable income to be declared. Therefore, if a foreigner concludes that, for example, the pension payments he received and transferred to Thailand are not assessable income for Thailand under the provisions of the DTA agreement between Thailand and another country, he does not have to declare this part of his income and can wait and see what happens. This is my view of it, adoptable by others at their own risk.

[Dogmatix]

5 hours ago, The Cyclist said:

 

The Thai Government from 2022, page 7 explains the income tax debacle

 

https://www.nesdc.go.th/nesdb_en/ewt_dl_link.php?nid=4495&filename=social_dev_report#:~:text=The total number of personal,expenses%2C allowances and donations).

They point out that 3 out 4 workers fall outside the personal income tax system, as only 10.8 million filed tax return forms out of a workforce of 40 million. AFAIK it is considerably worse than that, as the last number of reported income tax payers was only 3.3 million.  I believe the explanation for the variance is the salary withholding tax system. Employers have to deduct tax based on the basic personal allowances and on the assumption the employee will remain in employment for the whole year earning the same wage.  That appears to mean that most of the people filing tax returns are applying for tax refunds.  If you were just over the minimum salary to have withholding tax deducted but had a number of additional allowances like for parents and kids, you need to file a tax return to get a refund of the tax withheld. Similarly if you worked for for the first six months of the tax year, then became unemployed for the rest of the year, your withholding tax will be way too much. 

 

The main problem is that Thai wages are extremely low and probably only about 1 million earn more than 50k a month.  That means that one of the suggested solutions of toughening up the progressive rates (which were up to 60% in the late 80s) will be ineffective in raising significantly more revenue, since the number of people declaring over 5 million a year must be tiny.  However, increasing the top rate to more than 35% would make the reinterpretation more odious than it is already. 

 

Longer term they have to improve competitiveness and productivity, which have long been eroded by incompetent and corrupt governments ignoring key contributors like education,  and get GDP per capita up significantly. Short term the are going to have to raise VAT.

[Dogmatix]

6 hours ago, Mike Lister said:

That is incorrect. The workforce is about 32 million people, the rest are old, very young, in prison, in hospital etc etc. Only 6% of the workforce pays taxes via PAYE equivalent, that doesn't mean the rest don't pay taxes or file a return, they do. Most people work as self employed or as a limited company, my wife works as self employed, for example. She runs a business that turns over in excess of 1 million baht every year and she files a tax return and pays taxes on her profits just as everyone else in a similar situation does.

 

The work force is reported by the NESDB at 40 million but that includes legal foreign workers.  An article from May 2023 in a source that I cannot link here about targets for tax reform quoted an RD source as saying around 11 million people filed tax returns, of whom around 4 million paid tax.  That includes filings and tax paid via PND 90 and PND 91 tax return forms. PND 90 is for anyone who has income other than or in addition to income from employment subject to withholding tax, including sole proprietorships like your wife doing business in their personal name with no corporate or registered partnership structure. That means that most of the tax returns filed were from people who didn't have to pay tax because their income was too low (which may include a lot of sole proprietors whose deductions took them out of the tax net) and salaried employees seeing refunds of withholding tax. 

[redwood1]

Raising the VAT would painlessly raise billions and trillions of more money overnight.....So if they really needed money this is exactly what they would do.....There is nothing easy or painless about trying to milk retirees out of taxes they in no way should be paying to begin with....

 

So as it stands now they are not interested in raising money....

But

They are interested in milking money from foreigners who should not be paying any tax...

 

And if this was not for farangs they would have said it's not from day #1..

Edited November 8, 2023 by redwood1

[retiree]

Continuing my comment from here:

https://aseannow.com/topic/1306896-thai-government-to-tax-all-income-from-abroad-for-tax-residents-starting-2024/?do=findComment&comment=18485075

 

Recent figures given for tax filers and tax payers (and inferences about the number of tax scofflaws) may be misleading for at least two reasons:

• temporary decline in employment due to Covid-19,
• as I've pointed out previously, the likelihood, based on income distribution, that many non-payers are de minimis scofflaws, whose evasion is on minimally taxed (5%) income that is not worth the cost of collection.  

Consider a Thai taxpayer who: 

• supports his wife, his own parents, and two children, and makes the mandatory contribution to the SS fund (6,300 baht),
• does not deduct provident fund, government pension, life insurance, home loan, or up to 30% of income to invest in RMF or SSF funds.  If he had fewer mouths to feed he could offset his lost "support" deductions through these. 

His tax obligation on an income of 41,000 THB / mo, or 492,000 per year, is zero.  The next 150,000 of income would only be taxed at the lowest marginal rate, 5%.  This is a substantial income in a country whose average wage is 15,400 / mo. 

 

Finally, I'd note that the published estimates of Thailand's tax-evading shadow economy (46.2% here) are based on data the publication itself rates as D "poor" (on a scale of A-E).  It is worse than their C rating: "use with caution."  I would assume that any reliance on such figures is reckless, if not irresponsible.  

https://www.worldeconomics.com/Country-Reviews/Thailand/

 

Pointers to any reputable research and publication on the actual distribution of Thai taxpayers and tax scofflaws would be greatly appreciated.  

 

Edited November 8, 2023 by retiree

[Mike Lister]

7 hours ago, Dogmatix said:

But only 3.3 million out of 70 million Thais pay income tax.  Granted all pay VAT but many foreign tourists pay more VAT during their trips than the average Thai does in a year. The taxation argument doesn't hold water.

 

41 minutes ago, Dogmatix said:

 

The work force is reported by the NESDB at 40 million but that includes legal foreign workers.  An article from May 2023 in a source that I cannot link here about targets for tax reform quoted an RD source as saying around 11 million people filed tax returns, of whom around 4 million paid tax.  That includes filings and tax paid via PND 90 and PND 91 tax return forms. PND 90 is for anyone who has income other than or in addition to income from employment subject to withholding tax, including sole proprietorships like your wife doing business in their personal name with no corporate or registered partnership structure. That means that most of the tax returns filed were from people who didn't have to pay tax because their income was too low (which may include a lot of sole proprietors whose deductions took them out of the tax net) and salaried employees seeing refunds of withholding tax. 

 

I'm not sure what point you're trying to argue here. I wrote that the National Parks are financed out of tax receipts which are paid for by Thai's. You've said that argument doesn't hold water! Direct taxation from employment is only one small part of the tax revenue picture.

 

Total tax revenue in 2022 was 2,147,023.6 million baht which comprised 50% direct and 50% indirect taxes. Virtually all the direct taxes were paid for by Thai's, one third of the indirect taxes comprised VAT that everyone paid for. (see page 58 of the budget linked below). The parks system is paid for out of that revenue, along with income from entrance fees, a majority of which is paid by foreigners and is effectively a tourist tax. 

 

Now, tell me what it is that doesn't hold water.

 

https://dmcrth.dmcr.go.th/attachment/dw/download.php?WP=rUqjMT04qmqZG22DM7y04TyerPMjBT01qmIZAJ1CM5O0hJatrTDo7o3Q

 

 

[The Cyclist]

1 hour ago, Dogmatix said:

The main problem is that Thai wages are extremely low and probably only about 1 million earn more than 50k a month

 

I will refer you to the post of @retiree

 

6 minutes ago, retiree said:

His tax obligation on an income of 41,000 THB / mo, or 492,000 per year, is zero.  The next 150,000 of income would only taxed at the marginal rate of 5%.  This is a substantial income in a country whose average wage is 15,400 / mo. 

 

If Thailand has an issue with the taxation of the Thai population, it is an issue that the Thais need to address and sort out.

 

Thais and their taxation is really nothing to do with the Topic.

[Mike Lister]

19 minutes ago, redwood1 said:

Raising the VAT would painlessly raise billions and trillions of more money overnight.....So if they really needed money this is exactly what they would do.....There is nothing easy or painless about trying to milk retirees out of taxes they in no way should be paying to begin with....

 

So as it stands now they are not interested in raising money....

But

They are interested in milking money from foreigners who should not be paying any tax...

 

And if this was not for farangs they would have said it's not from day #1..

If you raise VAT you increase the tax burden on the poor, the segment of society least able to afford it. With an average monthly income of circa 15k baht per month, any increase in VAT would impact those people the most.

[redwood1]

16 minutes ago, Mike Lister said:

If you raise VAT you increase the tax burden on the poor, the segment of society least able to afford it. With an average monthly income of circa 15k baht per month, any increase in VAT would impact those people the most.

 

https://taxsummaries.pwc.com/quick-charts/value-added-tax-vat-rates

 

Look at the standard VAT rates around the world.....At 7% Thailand's VAT rate is just about the lowest in the entire world......Thailand has plenty of room to raise the VAT....

 

The poor don't buy much so they would not pay much VAT....And the rich would pay a lot more VAT.....The VAT is a very fair tax...

 

Edited November 8, 2023 by redwood1

[retiree]

1 minute ago, redwood1 said:

The poor don't buy much so they would not pay much VAT....And the rich would pay a lot more VAT.....The VAT is a very fair tax...

 

No comment, really; just wanted to let that sit there.

[redwood1]

1 minute ago, retiree said:

 

No comment, really; just wanted to let that sit there.

 

What ever.....Look at El Salvador 13% VAT and that country is very poor....

[Mike Lister]

1 minute ago, redwood1 said:

 

https://taxsummaries.pwc.com/quick-charts/value-added-tax-vat-rates

 

Look at the standard VAT rates around the world.....At 7% Thailand's VAT rate is just about the lowest in the entire world......Thailand has plenty of room to raise the VAT....

 

The poor don't buy much so they would not pay much VAT....And the rich would pay a lot more VAT.....The VAT is a very fair tax...

The reason the Thai tax tables are stepped is to give the poor a tax break before they begin to pay tax. By raising VAT you effectively eat into that tax break and force them to pay more tax. The first 150k of earnings are tax free for that same reason, to benefit the poor in society and you think it's a good idea to take that tax break away from them, just because they don't buy much....really, I can't believe you or anyone else said that!

 

The fact that Thailand's VAT rate is lower than average is no justification to increase it.

[Dah fahrang]

On 11/6/2023 at 2:50 PM, Ricardo said:

 

Certainly, I've been getting the UK Old-Age-Allowance for a few years now, and have never had a P60 off the DWP  ...  apparently HMRC get the numbers from them direct, presumably linked to your NI-number, so don't need/want a P60 too  ...  and the thought that we customers (aka Old Farts ?) might also find one useful, well why care what we might want ?  

 

That's British customer-service at its finest !  😎

Hi,  UK State Pension recipients. You will never get a P60 from HMRC! Don't hold your breath!

Reason is that the UK State Pension is not taxable. It is considered by HMRC as a state benefit.

Example: if you are lucky to receive the full basic UK State Pension - about £200 per week, that is about £10,400 a year. It is below the £12,570 2023 HMRC Personal Income Tax Allowance threshold. 

However... your UK State Pension is counted as income. So, if you receive additional UK sourced private pension(s), the UK State Pension of £10,400 is added to whatever ££ you receive from your UK sourced private pension(s).

If the aggregated money from the UK State Pension plus private pension(s) exceeds the 2023 Personal Income Tax Allowance of £12,570, then any/all income you receive above the £12,570 is liable to UK tax at the relevant current tax rates. HMRC, via a 'Notice of Coding' will instruct your private pension provider(s) to deduct tax at source from any amount above £12,570 from your private pension but definitely never from the UK State Pension. Your private pension provider will receive the relevant tax code from HMRC for the tax year, and will deduct tax at the source. It is your private pension provider(s) that must, by law, issue an annual P60, but never HMRC!

 

You may find link this helpful. I was quite astonished by it. If you register to use the UK Government Gateway, you will find both notice of coding and tax deducted information from all your private pension(s). The information goes back several years, and is downloadable. 

https://www.gov.uk/check-income-tax-current-year

[Dogmatix]

45 minutes ago, The Cyclist said:

 

I will refer you to the post of @retiree

 

 

If Thailand has an issue with the taxation of the Thai population, it is an issue that the Thais need to address and sort out.

 

Thais and their taxation is really nothing to do with the Topic.

 

I thought that was exactly what the topic was about. The tax is aimed mainly at Thais and the PM said it is to improve equality.,

[Dogmatix]

45 minutes ago, Mike Lister said:

If you raise VAT you increase the tax burden on the poor, the segment of society least able to afford it. With an average monthly income of circa 15k baht per month, any increase in VAT would impact those people the most.

That is absolutely right but it is very easy to do, hard to avoid and is a very efficient way of increasing the tax take. The current 2 year waiver of the official VAT rate of 10% expires in September 2024.  No legislation is required. Just do nothing and VAT is back to 10%, raising about 250 billion which would be enough to pay for a cut back digital wallet. 

[Mike Lister]

5 minutes ago, Dogmatix said:

That is absolutely right but it is very easy to do, hard to avoid and is a very efficient way of increasing the tax take. The current 2 year waiver of the official VAT rate of 10% expires in September 2024.  No legislation is required. Just do nothing and VAT is back to 10%, raising about 250 billion which would be enough to pay for a cut back digital wallet. 

Conversely, leaving the VAT rate at the current level is an effective way of helping to support the poor who comprise a substantial part of the population. Whether the rate is allowed to revert or whether it is increased, the negative impact is on the poor, government needs to find a different solution for the sake of the poor and for their sake too. Ironically, you want the rate to revert so that it can pay for the digital wallet, which in turn will cause prices to rise, ergo, a double hit on the poor.

Edited November 8, 2023 by Mike Lister

[Dogmatix]

51 minutes ago, Mike Lister said:

 

 

I'm not sure what point you're trying to argue here. I wrote that the National Parks are financed out of tax receipts which are paid for by Thai's. You've said that argument doesn't hold water! Direct taxation from employment is only one small part of the tax revenue picture.

 

Total tax revenue in 2022 was 2,147,023.6 million baht which comprised 50% direct and 50% indirect taxes. Virtually all the direct taxes were paid for by Thai's, one third of the indirect taxes comprised VAT that everyone paid for. (see page 58 of the budget linked below). The parks system is paid for out of that revenue, along with income from entrance fees, a majority of which is paid by foreigners and is effectively a tourist tax. 

 

Now, tell me what it is that doesn't hold water.

 

https://dmcrth.dmcr.go.th/attachment/dw/download.php?WP=rUqjMT04qmqZG22DM7y04TyerPMjBT01qmIZAJ1CM5O0hJatrTDo7o3Q

 

Not that important to the topic but I was trying to refute the traditional dual pricing justification that Thais deserve lower prices because the pay taxes that go towards maintenance of these venues.  A Thai earning 15k a month, if he spends all of that, pays 12,600 a year in VAT. Most Thais don't pay income but do pay VAT. Foreign tourists don't pay Thai income tax but also pay VAT while in Thailand and some may pay more than the average Thai.

[retiree]

1 hour ago, Mike Lister said:

...really, I can't believe you or anyone else said that!

 

But Louis, chéri.  It is a très, très fair tax!  Do they not pity the poor baker?  If we have no money, who will buy his cakes? 

Edited November 8, 2023 by retiree

[Dogmatix]

2 minutes ago, Mike Lister said:

Conversely, leaving the VAT rate at the current level is an effective way of helping to support the poor who comprise a substantial part of the population. Whether the rate is allowed to revert or whether it is increased, the negative impact is on the poor, government needs to find a different solution for the sake of the poor and for their sake too. Ironically, you want the rate to revert so that it can pay for the digital wallet, which in turn will cause prices to rise, ergo, a double hit on the poor.

 

I agree totally but I think it is inevitable that someone will bite the bullet in the not too distant future and let VAT revert to 10%. Other ways of funding the digital wallet will also impact the poor indirectly.  Borrowing to fund it is not free and has an impact, particularly with govt debt already over 60% of GDP.  Cutting other welfare schemes impacts those poor citizens who get cut, eg those turning 60 who are not going to get the old age allowance.  Disingenuously allowing it to partially fund itself through incremental VAT receipts, assuming a 3x multiplier effect when a multiplier of less than 1 is more likely will also result in more govt debt to plug the shortfall. Basically it is bad project because there is no good way to fund it and it will generate a much lower multiplier effect than claimed by the government. 

[retiree]

1 hour ago, Mike Lister said:

....really, I can't believe you or anyone else said that!

 

And, of course, Anatole France, almost exactly 100 years later:  The law, in its majestic equality, requires both the rich and the poor to pay a very fair tax, and forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.

[Terek]

2 hours ago, retiree said:

 

And, of course, Anatole France, almost exactly 100 years later:  The law, in its majestic equality, requires both the rich and the poor to pay a very fair tax, and forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.

Biggest inequality in existing taxation system is obstacles preventing poor to become rich, all progressive tax system is scam made by rich to keep poor poor.

[DonniePeverley]

 

At the risk of wafting through 132 pages .... can anyone give me an updated summary as to what is going on ?

[JimTripper]

8 hours ago, The Cyclist said:

You might have noticed, but it is not I who is worried or stressing.

yes it is!

 

 

[redwood1]

4 hours ago, DonniePeverley said:

 

At the risk of wafting through 132 pages .... can anyone give me an updated summary as to what is going on ?

 

This thread is mostly for tax chit-chat....

Since there is a lack of info....

 

With most all the posters against the tax but a few posters who post repeatedly here, seem determined to poo poo on any and all anti-tax arguments no matter how valid and correct the anti-tax points are.......................

 

So here is your update..... 

Edited November 8, 2023 by redwood1

[Mike Lister]

8 hours ago, Dogmatix said:

 

I agree totally but I think it is inevitable that someone will bite the bullet in the not too distant future and let VAT revert to 10%. Other ways of funding the digital wallet will also impact the poor indirectly.  Borrowing to fund it is not free and has an impact, particularly with govt debt already over 60% of GDP.  Cutting other welfare schemes impacts those poor citizens who get cut, eg those turning 60 who are not going to get the old age allowance.  Disingenuously allowing it to partially fund itself through incremental VAT receipts, assuming a 3x multiplier effect when a multiplier of less than 1 is more likely will also result in more govt debt to plug the shortfall. Basically it is bad project because there is no good way to fund it and it will generate a much lower multiplier effect than claimed by the government. 

All agreed, especially that the wallet is a very bad project, I'm unclear why the PM doesn't realise that. It's one thing to use it as an election promise to get into office but it's something else entirely not to break that promise. I mean really, who ever heard of politicians keeping their promises, whatever next!

 

Government debt at 60% is quite low by comparison to other countries. my concern is they might use that as a reason to borrow more which would be so misguided.

 

Also agreed, increasing VAT would solve the debt and the multiplier issues but it's a short term fix. Eventually, the cost of support programs to the poor will outweigh any savings.

[Mike Lister]

4 hours ago, Terek said:

Biggest inequality in existing taxation system is obstacles preventing poor to become rich, all progressive tax system is scam made by rich to keep poor poor.

What obstacles, for example, plese?

 

My observations are that the tax system here heavily favors the poor in several areas, for example: 

 

1) the average monthly wage is around Baht 15,000 per month which is Baht 180k per year. The combination of the 60k per allowance and the 150k zero tax band means anyone on the average national salary, avoids ALL personal income tax. By comparison, the mean average wage in the UK is 33k Pounds per year, that's nearly three times the personal allowance hence around 20k Pounds is taxed at 20%.

 

2) The self employed are allowed to take a standard deduction of 60% of the value of their sales as the value of their costs (until recently it was 70%). No receipts are necessary, just take the deduction. If they turnover 1 million baht in sales each year, 600k is excluded as costs which means initial assessable income is 400k. Deduct from that 400k the usual allowances such as 60k each for husband and wife and child for personal care allowances, mortgage interest costs, social security costs, health/life insurance costs, etc etc and then apply the 150K zero rated tax band, the effect is the self employed earning 1 million per year, pay virtually no tax, despite having sales of 1 million per year and an income that is almost 6 times the national average, 

[Mike Lister]

1 hour ago, redwood1 said:

 

This thread is mostly for tax chit-chat....

Since there is a lack of info....

 

With most all the posters against the tax but a few posters who post repeatedly here, seem determined to poo poo on any and all anti-tax arguments no matter how valid and correct the anti-tax points are.......................

 

So here is your update..... 

Don't cry.

[The Cyclist]

15 hours ago, Dogmatix said:

 

I thought that was exactly what the topic was about. The tax is aimed mainly at Thais and the PM said it is to improve equality.,

 

The topic is about a change that will occur on 01 Jan 2024 that may, or may not  have an impact on foreigners residing in Thailand.

 

It is absolutely nothing to do with the Thais internal income tax system, VAT, or any other internal indirect taxation.

 

Sure, this change will mostly effect  richer Thais who have various assets overseas, who have been using a loophole to avoid taxation. It will also effect foreigners in Thailand who have been using loopholes to avoid taxation.

 

You really think that this is aimed at improving equality ?
 

Quote

This ensures a fair and consistent taxation of foreign income and aligns with Thailand’s commitment to enhancing tax compliance and revenue collection.

 

I would argue that it is nothing to do with equality, and Thailand would not have introduced it, without outside pressure ( OECD ? )

[Terek]

9 hours ago, Mike Lister said:

What obstacles, for example, plese?

 

My observations are that the tax system here heavily favors the poor in several areas, for example: 

 

1) the average monthly wage is around Baht 15,000 per month which is Baht 180k per year. The combination of the 60k per allowance and the 150k zero tax band means anyone on the average national salary, avoids ALL personal income tax. By comparison, the mean average wage in the UK is 33k Pounds per year, that's nearly three times the personal allowance hence around 20k Pounds is taxed at 20%.

 

2) The self employed are allowed to take a standard deduction of 60% of the value of their sales as the value of their costs (until recently it was 70%). No receipts are necessary, just take the deduction. If they turnover 1 million baht in sales each year, 600k is excluded as costs which means initial assessable income is 400k. Deduct from that 400k the usual allowances such as 60k each for husband and wife and child for personal care allowances, mortgage interest costs, social security costs, health/life insurance costs, etc etc and then apply the 150K zero rated tax band, the effect is the self employed earning 1 million per year, pay virtually no tax, despite having sales of 1 million per year and an income that is almost 6 times the national average, 

Exactly these obstacles, all system with it's rates are aimed for not prosperity but to keeping poor in these miserable profit amounts and kill any desire to earn more. All this system is rigged in favour or already rich people who pays mostly small capital gains tax. Rates should be fixed for everyone with some big zero tax allowance. But I  would go even further and dismantle all personal income tax altogether and focus on different taxes, because it's too much hassle for everyone, a lot of people are waisting their time on all it, including all the consulting  business, instead of doing some real productive job.

Edited November 9, 2023 by Terek