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

[jerrymahoney]

To the above:

 

Textualism is a mode of legal interpretation that focuses on the plain meaning of the text of a legal document.

 

... or from the movie script Seven Days In May:

 

President Jordan Lyman: All right, Colonel. Let's sum it up, shall we? You're suggesting what?

Colonel Martin "Jiggs" Casey: I'm not sure, Mr. President: just some possibilities, what we call, uh "capabilities" in military intelligence...

President Jordan Lyman: You got something against the English language, Colonel?

Colonel Martin "Jiggs" Casey: No, sir.

President Jordan Lyman: Then speak it plainly, if you will

 

 

 

 

[Ricardo]

4 hours ago, tomkenet said:

My plan is prior to 2024 deposit in a savings account back home money to last for 3-4 years in Thailand. 

Let's call this money X which can be remitted taxfree.

 

 

Erm, wouldn't the savings-account possibly generate interest on money-X, said interest arising after 1.1.2024, which would perhaps therefore be taxable here when transferred ? 

 

Maybe see if you can get the saving-account to pass the interest to another (undeclared) account, to be safe ?

[tomkenet]

43 minutes ago, Ricardo said:

 

Erm, wouldn't the savings-account possibly generate interest on money-X, said interest arising after 1.1.2024, which would perhaps therefore be taxable here when transferred ? 

 

Maybe see if you can get the saving-account to pass the interest to another (undeclared) account, to be safe ?

That is right and a good idea. I will try to do that, however, if it is not possible, with deductions it will end up in a very low tax bracket. 

I have to file tax report anyway to get the certificate of residency.

[Ricardo]

1 hour ago, tomkenet said:

I have to file tax report anyway to get the certificate of residency.

 

I didn't need to do that, last time I needed a certificate-of-residency, to apply for a 5-year Thai driving-license, FWIW.

 

Just a slow (IIRC 30-days wait) process at Immigration, which could be turned into next-day service, for a modest (B500 ?) administrative-fee.  

[UKresonant]

2 hours ago, whiteman said:

Just asking I get paid a tax-free pension in New Zealand from a defined benefit plan that I had for over 30 years with AXA. When I first started to pay into it the product said all pensions will in the end be paid to the member Tax free. So I am wondering did Axa pay the tax on the accumulating returns over the 30 years that it earned on my contributions? If so do I pay tax on any money I bring in from the proceeds of this pension?

 

Just now, UKresonant said:

Article 19
Pensions

• 1.Pensions (including government pensions) and annuities paid to a resident of a Contracting State shall be taxable only in that State.

https://www.legislation.govt.nz/regulation/public/1998/0424/latest/whole.html#DLM267900

 

Looks like quite good words to say only in NZ?  If your sure the scheme falls under that article.

 

Reading it again that could mean your taxed where ever you are resident e.g. Tax free in NZ, taxable in Thailand. (If only it said citizen, rather than resident)

Hopefully someone from NZ will comment, that is more familiar with your kind of scheme.

 

[It may be the same problem that I would have with UK ISA's as part of retirement income stream, the dividends or gains are no tax in the UK, but Thailand may treat the income as normal dividends and tax them.  It gets even more complicated as some people have a regular monthly withdrawal amount, as part of their retirement stream, which could be a random mix of from fractional gains losses and dividends and interest, impossible to define on a return]

[tomkenet]

23 minutes ago, Ricardo said:

 

I didn't need to do that, last time I needed a certificate-of-residency, to apply for a 5-year Thai driving-license, FWIW.

 

Just a slow (IIRC 30-days wait) process at Immigration, which could be turned into next-day service, for a modest (B500 ?) administrative-fee.  

What I need is a certificate of residency for tax purposes. R.O.22.

I think it is not the same thing 

[The Cyclist]

12 minutes ago, UKresonant said:

Hopefully someone from NZ will comment, that is more familiar with your kind of scheme.

 

@whiteman

 

Have a read at this from Page 63, New Zealand specific

 

 

Entirely possible to have a tax free pension in NZ, how that would play out in another Country, Thailand for instance, is a kind of throw the bones in the air and see how they land guess.

[UKresonant]

10 hours ago, The Cyclist said:

Or to put it even simpler, if income remitted to Thailand has been taxed at source, it is highly likely that it will not  be taxed again in Thailand.

 

I'm hoping that is how it works in practice, and generally that's what they announced, when they said if you have a DTA it should not be a worry (or something like that. (Theme was that probably most posting here were not their targets)

 

For mere mortals the important compliance is that you have shown you have been taxed somewhere, declared it and Thai RD are maybe due a wee bit of revenue?

 

If in practice they end up doing a jobsworth analysis to the last satang, on a potential 20k baht liability, the negative incentive for people to not be here, for 6 month periods, or never coming to be tax resident where they previously had a desire to do so, would potentially provide an offset, though unmeasurable, by the loss of VAT and spend into the economy.  

Still hoping Thailand does not aspire to copy in detail the bad practices of other countries. 

 

[The Cyclist]

15 minutes ago, UKresonant said:

I'm hoping that is how it works in practice, and generally that's what they announced, when they said if you have a DTA it should not be a worry (or something like that. (Theme was that probably most posting here were not their targets)

 

I think that the wording used was " People from a Country with a DTA will be exempt ". The 2 ways that I read that are.

 

1. A blanket exemption if you are a passport holder of a Country with a DTA will be exempt ( But I wouldn't be surprised if people were invited to explain their remittances ) No need to do anything unless summonsed. 

 

2. Get a TIN and annually tax file using the brand spanking new, being prepared paperwork specifically for income covered by DTA's.

 

21 minutes ago, UKresonant said:

If in practice they end up doing a jobsworth analysis to the last satang, on a potential 20k baht liability, the negative incentive for people to not be here, for 6 month periods,

 

I wrote a detailed post last week on this very thing.

 

By limiting my remittance to my Government pension, I will pay somewhere between Zero and a maximum of 80,000 baht.

 

An Emirates return flight alone would cost IRO 50,000 baht

 

A hire car for 6 months would cost IRO 200,000 baht

 

I haven't even bought a pint of milk and a loaf of bread and I would be down somewhere IRO 170,000 baht.

 

Bouncing around SE Asia for 6 months is also going to cost a good bit more than a maximum of 80,000 Baht.

[JackGats]

7 hours ago, beammeup said:

My understanding is that as long as you are out of Thailand for 180 days Y is tax free if remitted.

Of course, since in that case you are not a resident or tax resident in Thailand. The Thais never said they wanted to tax non-residents or consider people who stayed less than 180 days tax residents. In fact when the bomshell came out they specified tourists (= stayers < 180d) had nothing to worry about.

[UKresonant]

Just now, The Cyclist said:

 

I think that the wording used was " People from a Country with a DTA will be exempt ". The 2 ways that I read that are.

 

1. A blanket exemption if you are a passport holder of a Country with a DTA will be exempt ( But I wouldn't be surprised if people were invited to explain their remittances ) No need to do anything unless summonsed. 

 

2. Get a TIN and annually tax file using the brand spanking new, being prepared paperwork specifically for income covered by DTA's.

 

 

I wrote a detailed post last week on this very thing.

 

By limiting my remittance to my Government pension, I will pay somewhere between Zero and a maximum of 80,000 baht.

 

An Emirates return flight alone would cost IRO 50,000 baht

 

A hire car for 6 months would cost IRO 200,000 baht

 

I haven't even bought a pint of milk and a loaf of bread and I would be down somewhere IRO 170,000 baht.

 

Bouncing around SE Asia for 6 months is also going to cost a good bit more than a maximum of 80,000 Baht.

Yes, generally agree, but in my case the flight and car etc are maintained anyway, that's why if they moved from remittance to Global later (as a news article suggested) , it would significantly not work well for myself as they would potentially want tax in Thailand, on UK tax exempt income, which would only be getting expended in the UK! The reverse of the problem the wife would have relative to the UK.

[The Cyclist]

7 minutes ago, UKresonant said:

that's why if they moved from remittance to Global later

 

That potentially would be a whole new ball game, although I am not sure how it would work.

 

Would it mean I would no longer be taxed in the UK, but taxed in Thailand instead ?

 

So I would certainly not fret about Thailand moving to a worldwide tax regime, until I saw the details and nailed down the implications

 

I think people have to bear in mind, this is not about double taxing people, it is about closing loopholes that people have used to avoid paying tax.

[Klonko]

 

1 hour ago, UKresonant said:

...  if they moved from remittance to Global later (as a news article suggested) ,

...

 

56 minutes ago, The Cyclist said:

 

That potentially would be a whole new ball game, although I am not sure how it would work.

 

Would it mean I would no longer be taxed in the UK, but taxed in Thailand instead ?

 

...

Thailand taxing global income should not impact tax obligations in other countries and DTA would hopefully avoid double taxation. However, applying a 35% marginal tax rate to global income above THB 5m would deter the desired wealthy foreigners. If Thailand was to switch to globaI taxation I would expect Thailand to set up beneficial tax schemes for this clientele as it is the case in some other (European) countries with warm climate. Global taxation would most likely not be introduced in the short term. There is global pressure to standardise tax systems and establish minimum tax rates, but countries have been very innovative offering favourable tax schemes to the  targeted corporates and private individuals and circumventing the politically correct global or regional standards.

[The Cyclist]

17 minutes ago, Klonko said:

If Thailand was to switch to globaI taxation I would expect Thailand to set up beneficial tax schemes for this clientele as it is the case in some other (European) countries with warm climate.

 

Sure, the UK also has such a scheme where you can pay a flat rate ( Think it starts at £30k a year ) and goes up incrementally depending on how much your global income is.

 

The current UK PM's wife was a beneficiary of such a scheme until it was outed and caused an uproar.

 

No doubt Thailand would also adopt such a scheme.

[stat]

3 hours ago, Klonko said:

 

 

Thailand taxing global income should not impact tax obligations in other countries and DTA would hopefully avoid double taxation. However, applying a 35% marginal tax rate to global income above THB 5m would deter the desired wealthy foreigners. If Thailand was to switch to globaI taxation I would expect Thailand to set up beneficial tax schemes for this clientele as it is the case in some other (European) countries with warm climate. Global taxation would most likely not be introduced in the short term. There is global pressure to standardise tax systems and establish minimum tax rates, but countries have been very innovative offering favourable tax schemes to the  targeted corporates and private individuals and circumventing the politically correct global or regional standards.

There is no pressure to establish global minimum PERSONAL TAX! You are confusing corporate and individual income taxes.

[Klonko]

1 hour ago, stat said:

There is no pressure to establish global minimum PERSONAL TAX! You are confusing corporate and individual income taxes.

There is political pressure to have the rich pay a minimum amount of taxes and not to use legal structures to reduce their tax rate below many taxpayers'. Such ideas emerged from the U.S. which have a habit to persuade other countries to follow up. It is not a written number yet like 15%, but I dare to say that there is a common view that the tax rate should not be lower anywhere for private persons and could be implemented globally in the longer term. Global taxation is one step towards a minimum tax and is likely to be applied everywhere as many tax consultants say now. As I said, many countries will deliberately create loopholes to attract targeted clienteles and I hope that 10 years from now I will not pay more than  15% tax in Thailand. It also is likely to become increasingly difficult to avoid any tax domicile. There are countries which may determine as domicile the country with the closest relationship irrespective of nights spent.

 

I can adapt to even the worst case scenarios of the upcoming changes to Thai RD practice, but paying a marginal tax rate of 35% or more while preserving my wealth would have a material impact on my living standard, and I am afraid fleeing to another country will not solve the problem and/or lower my quality of life.

[JimTripper]

Does it appear as if I care about money when drinks are on the house?

[mlkik]

Maybe this thread should be merged with the canabis thread as I think some of the stoners are less paranoid.

[ukrules]

9 hours ago, The Cyclist said:

Bouncing around SE Asia for 6 months is also going to cost a good bit more than a maximum of 80,000 Baht.

Yeah, it would only be worth doing the non resident thing in a year where you plan on liquidating and bringing in many millions of Baht on which there is no tax paid.

 

Not paying any tax is more common than people tend to believe, for example you sell that family house you bought 40 years ago and end up with 500k pounds - you're not paying any tax on that and if you're tax resident in Thailand during that year then good luck with that!

 

[jerrymahoney]

18 hours ago, JimGant said:

Instead, an immediate pay annuity from the US would logically be treated just like private pensions, IRAs, etc addressed in para 1, namely, Thailand has first taxation rights.

Revision to Thailand-US DTA Article 20:

 

Paragraph 3: Annuities. See Paragraph 1.

[mogoso]

Those U S citizens should note that Social Security is exempt from taxation under the Double Tax agreement it is listed as such. I'm not sure about VA `Disability as its not listed and not taxed in the US. It's an award from the US for disabled vets.

[Guavaman]

1 hour ago, jerrymahoney said:

Thailand-US DTA Article 20:

 

Paragraph 3: Annuities. See Paragraph 1.

Department of the Treasury Technical Explanation of the Convention between the United States and Thailand which was signed on November 26, 1996. https://www.irs.gov/pub/irs-trty/thaitech.pdf

 

Article 20 (Pensions and Social Security Payments)

Article 20 deals with the taxation of private (i.e., non-government) pensions, annuities, social security, and similar benefits.

 

Paragraph 1

Paragraph 1 provides that private pensions and other similar remuneration paid in consideration of past employment are generally taxable only in the residence State of the recipient.

 

Note regarding life insurance annuities in Thailand:

 

Section 42 The assessable income of the following categories shall be exempt for the purpose of income tax calculation:

(13) Compensation against wrongful acts, amount derived from insurance or from funeral assistance scheme.

 

Thai life insurance annuity payments are exempt from income tax. I cannot find any reference to offshore life insurance annuities. 

 

Annuity Insurance

If you have purchased annuity life insurance before retirement, by the time it comes to receive a retirement pension, this amount will also be tax-exempt. Returns are tax-free and insurance premiums are tax-deductible. (Microsoft translator)

https://www.batcbkk.com/%E0%B9%80%E0%B8%81%E0%B8%A9%E0%B8%B5%E0%B8%A2%E0%B8%93%E0%B8%AA%E0%B8%B3%E0%B8%A3%E0%B8%B2%E0%B8%8D-%E0%B8%A3%E0%B8%B2%E0%B8%A2%E0%B9%84%E0%B8%94%E0%B9%89%E0%B8%AB%E0%B8%A5%E0%B8%B1%E0%B8%87/

[jerrymahoney]

Since the US-Thailand DTA was signed into force by President Bill Clinton, I guess we can also have a debate whether "That depends on what the meaning of 'is' is."

[The Cyclist]

5 hours ago, ukrules said:

Yeah, it would only be worth doing the non resident thing in a year where you plan on liquidating and bringing in many millions of Baht on which there is no tax paid.

 

Thankfully, by luck rather than design ( and the wise advice of an older guy ) the bulk of my money was remitted between 2009 and 2019.

 

What will be coming in from the 01 Jan is more than enough to live on and any big ticket items will be gatting paid from the FCA.

 

On that note. My 1st remittance od 2024 will hit my bank on the 03 Jan, it will be interesting to see if the much vaunted 15% withholding tax will be applied or whether I will be instructed to present my butt to the bank with a TIN.

 

I'm guessing neither will happen, which will be sad news for the doomers & gloomers.

 

5 hours ago, ukrules said:

Not paying any tax is more common than people tend to believe,

 

Sure, some estimates are as high as 200 Billion a year for individuals and at least double that for Corporations

[bugger bognor]

The Thai tourist tax has just been shelved after 2 years of unsuccessful implementation! Pray tell me if they couldn't sort that as I predicted they wouldn't or couldn't! How the hell are they going to implement and enforce these already existing regulations ? 

[Ricardo]

47 minutes ago, The Cyclist said:

 

On that note. My 1st remittance od 2024 will hit my bank on the 03 Jan, it will be interesting to see if the much vaunted 15% withholding tax will be applied or whether I will be instructed to present my butt to the bank with a TIN.

 

 

Isn't the 15% witholding-tax only levied on interest earned/paid by the bank ?   

 

I hadn't heard, but am open to correction, that it would also apply to transfers-in.

[Mike Lister]

14 minutes ago, Ricardo said:

 

Isn't the 15% witholding-tax only levied on interest earned/paid by the bank ?   

 

I hadn't heard, but am open to correction, that it would also apply to transfers-in.

That's not how the tax system works, transfers are not taxed at source, they are potentially taxed via tax return that is filed long after the transfer is made.

[The Cyclist]

22 minutes ago, Ricardo said:

 

Isn't the 15% witholding-tax only levied on interest earned/paid by the bank ?   

 

I hadn't heard, but am open to correction, that it would also apply to transfers-in.

 

Probably Ricardo, non of my Accounts in Thailand are interest bearing, so I have no idea how that actually works.

 

It was a pointer towards the many people on the thread who have wailed that banks could withhold 15% of remittances, and / or, require people to go and get a TIN starting 01 Jan 2024.

[Mike Lister]

The banks will probably not demand you get a TIN. Tax is deducted from Interest at source, it's only if you want to recover that tax that a TIN is required. And the RD is quite happy if you decide not to recover that tax.

[Ricardo]

1 hour ago, The Cyclist said:

 

Probably Ricardo, non of my Accounts in Thailand are interest bearing, so I have no idea how that actually works.

 

It was a pointer towards the many people on the thread who have wailed that banks could withhold 15% of remittances, and / or, require people to go and get a TIN starting 01 Jan 2024.

 

How it usually works, when the bank update my own savings-account passbooks, they show entries for interest-earned and tax-deducted, on the trivial sums involved.  I've never bothered to get a TIN, or file a self-assessment return, to reclaim the tax  ...  life's too short already.  

 

As you say, I don't yet see that principle being extended to automatically deduct 15% from all remittances received by individual expat tax-residents, in the current proposals  ...  but who knows what the future holds, with a mildly-socialist impoverished-government anxious to fund its promised-agenda ?

 

Confuscious might have said, if contributing to this thread, "May you live in interesting, but less-taxing, times !"  

 

ps  Apologies Mike, I was typing as you posted, you're correct IMO