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

[Etaoin Shrdlu]

5 hours ago, Jingthing said:

Is there any updated info on whether money transferred in that was withdrawn from a US taxable IRA account would be covered by DTA and thus not countable as part of the Thai threshhold calculation?

 

I think this would depend upon timing of the remittance.

 

If one were to withdraw money from an IRA in 2024 and remit it into Thailand in 2024 and were tax resident in Thailand in 2024, then Thailand would have first claim to taxation on the funds. The tax paid to Thailand would be deductible from 2024 US Federal taxes by virtue of the DTA.

 

If the funds were withdrawn from the IRA in 2024 and US Federal taxes were paid on the withdrawal and payment of tax could be proven by virtue of US Federal tax returns filed and 1099 forms, and the funds were remitted in 2025, then I think relief could be claimed under the DTA and any US taxes paid could be credited against Thai tax that might otherwise accrue for the 2025 tax year. But I'll defer to @Jim Gant on this one.

[AreYouGerman]

What is your guy's budget for a Thai accountant? I can hear their finger rubbing already. I imagine it will be anything between 20k to 40k yearly (less depending on actual work but demand by hundred thousands of expats) to just file it even if you are covered by a DTA and you won't have to pay anything in Thailand.

 

Also the new threads will be funny!

 

Before: 'Denied entry because XY'

After: 'Denied leaving because didn't pay taxes'

 

😅

 

[Mike Lister]

1 hour ago, MistyBlue said:

 

On this point, in the 2023/24 PWC booklet (link here: https://www.pwc.com/th/en/tax/thai-tax-booklet-2023.html) on page 2 (their numbering or actual page 10) they have specifically underlined the quote "... a Thai resident" in the context of discussing the new requirements for remitting funds.

 

Happy to be challenged but now my reading of that section in its fullness with the underlined text is that tax is only required when remitting funds in the same year that one is tax resident, if not resident when the funds are remitted (even if they were previously earned and kept offshore when one was resident) then I'm now leaning towards that no tax is due.

 

Thoughts?

Thanks, despite my earlier scepticism, I also am now leaning the same way.

[Mike Lister]

Can everyone say what are their three biggest/top three issues in the don't know/unclear category, please?

[DonniePeverley]

On 9/18/2023 at 4:44 AM, lordgrinz said:

In the USA we are tax residents of the USA no matter where we live, thankfully there is a tax treaty between the USA and Thailand.

 

Wishful thinking. 

[Mike Lister]

4 hours ago, AreYouGerman said:

What is your guy's budget for a Thai accountant? I can hear their finger rubbing already. I imagine it will be anything between 20k to 40k yearly (less depending on actual work but demand by hundred thousands of expats) to just file it even if you are covered by a DTA and you won't have to pay anything in Thailand.

 

Also the new threads will be funny!

 

Before: 'Denied entry because XY'

After: 'Denied leaving because didn't pay taxes'

 

😅

 

I do mine on a spread sheet and arrive at the answer, based on my understanding of the rules, I have income from three countries. I take the numbers down to the District Revenue office and ask them to plug them into their system, which they are always very happy to do, it takes all of ten/fifteen minutes tops. When she's finished she will tell me who owes who how much and we have always agreed first time. She prints off the final page and we're done. Cost, zero.

[Mike Lister]

6 hours ago, AreYouGerman said:

What is your guy's budget for a Thai accountant? I can hear their finger rubbing already. I imagine it will be anything between 20k to 40k yearly (less depending on actual work but demand by hundred thousands of expats) to just file it even if you are covered by a DTA and you won't have to pay anything in Thailand.

 

Also the new threads will be funny!

 

Before: 'Denied entry because XY'

After: 'Denied leaving because didn't pay taxes'

 

😅

 

After thought:

 

If you pay for a Thai accountant to do your tax returns, in most cases you might well be paying for form filling rather than advice, unless your finances are out of the ordinary or unusual.

 

The RD will do the form filling for free.

 

If you're looking for tax advice, questions you can't get answered here or by the Revenue, a tax advisor may be the way to go. Paying a tax advisor to fill forms when you have straight forward and fairly simple and normal finances doesn't seem sensible. But many people will go that route, because of the scare factor and/or because they didn't bother to try and understand the issues. 

[jayboy]

11 hours ago, topt said:

That sort of speaks volumes....

Thanks. I don't suppose you have any more details on this or references I can look at?

 

I'm sorry but I have no first hand knowledge, though I have spoken to a contact.I had noticed on googling that NT status is said by some sources to be related to the UK having a DTA with the country of residence in question.My contact however said that HMRC can give NT status to overseas pensioners (via UK pension provider) if all the conditions are filled, regardless of where the overseas petitioner lives.Basically you have to have had the greater part of your career overseas and not returned to the UK on retirement.You also have to apply at the time of your retirement.My contact said the HMRC were not particularly helpful, almost as if there was an institutional bias not to agree NT status.

[JimGant]

9 hours ago, Etaoin Shrdlu said:

If the funds were withdrawn from the IRA in 2024 and US Federal taxes were paid on the withdrawal and payment of tax could be proven by virtue of US Federal tax returns filed and 1099 forms, and the funds were remitted in 2025, then I think relief could be claimed under the DTA and any US taxes paid could be credited against Thai tax that might otherwise accrue for the 2025 tax year

Kind of tricky when tax years don't coincide due to the remittance angle (but you can always file an amended return to cover a late occurring event, even from another tax year). And presumably the IRA (which may be a rolled-over 401k) was funded many years ago, when you were working. This makes the scenario moot, since that IRA money was earned pre-2024, thus by decree, is not assessable income when remitted (yes, it's US taxed post 2023, but that makes no never mind, since the decree addresses when earned -- and being tax-deferred doesn't taint that.) Having said that, in all situations where both countries get to tax the IRA, Thailand keeps all their taxation -- and the US has to absorb a tax credit of same.

 

And since, presumably your IRA has had some earnings in 2024, we're back to the FIFO, LIFO conundrum. But once again, there's no reason to not give yourself full advantage, in the absence of any guidance. Thus, treat the remittance as pre-2024 assets. But even if you treated all your remittance from post-2023 earnings in your IRA -- unless you're really in a high Thai tax bracket, Thai taxes, if any, will probably be less than your US taxes, and with the tax credit, things will thus be a wash. [And, yes, the saving clause in the DTA says you still have to file a US tax return, even tho' Thailand is given exclusive taxation rights on IRAs.]

 

 

[jayboy]

3 hours ago, Mike Lister said:

After thought:

 

If you pay for a Thai accountant to do your tax returns, in most cases you might well be paying for form filling rather than advice, unless your finances are out of the ordinary or unusual.

 

The RD will do the form filling for free.

 

If you're looking for tax advice, questions you can't get answered here or by the Revenue, a tax advisor may be the way to go. Paying a tax advisor to fill forms when you have straight forward and fairly simple and normal finances doesn't seem sensible. But many people will go that route, because of the scare factor and/or because they didn't bother to try and understand the issues. 

 

You are right but as in immigration matters (the eternal "should I use a lawyer" argument for example) it depends on a number of factors.

 

1.How enjoyable/productive do you find interconnecting with Thai bureaucrats? For some it is a weird turn on.

 

2.In my previous career did I have some expertise (e.g accounting/tax) which makes that interconnection a smooth process?

 

3.How much do I value my time?

 

4.Am I well enough off not to care about expense of delegating an inherently boring task?

 

5.Can I completely trust the organization/person I delegate to?

 

6.What is my boredom threshold?

 

You can immediately see that everyone will be different.One man might find a fun filled session with the RD an exciting way to spend a morning.Another would rather stab himself in then head with a fork or have a more pressing engagement tidying his sock drawer.I will probably follow your example and do it myself.Point 5 is the key consideration in my case.

 

 

Edited April 14 by jayboy

[JimGant]

11 hours ago, MistyBlue said:

Happy to be challenged but now my reading of that section in its fullness with the underlined text is that tax is only required when remitting funds in the same year that one is tax resident, if not resident when the funds are remitted (even if they were previously earned and kept offshore when one was resident) then I'm now leaning towards that no tax is due.

 

Hmmm. My paraphrased reading of the pwc booklet is: A tax resident of Thailand in year X, who has assessable foreign income earned in year X, will have that income subject to Thai taxes, "in any tax year" brought into Thailand.

 

Otherwise, a Thai tax resident for many years, with years and years of non remitted foreign income -- could take a year off to Tahiti, and remit all their stored foreign income, into Thailand, tax free.

 

I doubt the writers of the new guidance, hoping to plug a loophole, would open up an even bigger one..... Of course, maybe there was a secret handshake with the "too rich."

[topt]

1 hour ago, jayboy said:

 

I'm sorry but I have no first hand knowledge, though I have spoken to a contact.I had noticed on googling that NT status is said by some sources to be related to the UK having a DTA with the country of residence in question.My contact however said that HMRC can give NT status to overseas pensioners (via UK pension provider) if all the conditions are filled, regardless of where the overseas petitioner lives.Basically you have to have had the greater part of your career overseas and not returned to the UK on retirement.You also have to apply at the time of your retirement.My contact said the HMRC were not particularly helpful, almost as if there was an institutional bias not to agree NT status.

Thanks for replying back. Appreciated.

[Klonko]

10 hours ago, Mike Lister said:

Can everyone say what are their three biggest/top three issues in the don't know/unclear category, please?

(1) Accounting method  for commingled funds (no clue at all). (2) Gifts from untaxed foreign income (though I feel rather comfortable with my modus operandi). (3) Tax filing if no taxes due (bureaucratic hassle).

 

For 

Edited April 14 by Klonko

[Yumthai]

22 minutes ago, JimGant said:

Hmmm. My paraphrased reading of the pwc booklet is: A tax resident of Thailand in year X, who has assessable foreign income earned in year X, will have that income subject to Thai taxes, "in any tax year" brought into Thailand.

That statement implies you are tax resident while bringing foreign-sourced income in any tax year (while being tax resident) into Thailand. 

 

[James105]

24 minutes ago, JimGant said:

 

Hmmm. My paraphrased reading of the pwc booklet is: A tax resident of Thailand in year X, who has assessable foreign income earned in year X, will have that income subject to Thai taxes, "in any tax year" brought into Thailand.

 

Otherwise, a Thai tax resident for many years, with years and years of non remitted foreign income -- could take a year off to Tahiti, and remit all their stored foreign income, into Thailand, tax free.

 

I doubt the writers of the new guidance, hoping to plug a loophole, would open up an even bigger one..... Of course, maybe there was a secret handshake with the "too rich."

 

That is literally my plan (except swap Tahiti for Europe and 1 year for 6 months).  Unless they do announce closure of this seemingly obvious loophole I do intend to take full advantage of it.   Before committing to such flagrant legal tax avoidance I am hoping this does get clarified. 

[JohnnyBD]

10 hours ago, Mike Lister said:

Can everyone say what are their three biggest/top three issues in the don't know/unclear category, please?

Yes, I have question. Under Royal Decree 743, it appears to indicate that LTR visa holders will NOT have to pay income tax on any assessable income remitted into Thailand in the following year after it was earned. I also could read this as applying to 2024 only, since all pre-2024 monies are not taxable as per TRD guidance. The Decree doesn't specifically state it's for every year going forward. What are your thoughts on this and do you know if there's any other guidance on this issue? I would not want to switch to a LTR visa, and then find out later it was just a 1-year tax exemption. Thanks...

 

Section 5 Income tax under Part 2 of Chapter 3 in Title 2 of the Revenue Code shall be exempted for a foreigner categorised as Wealthy Global Citizen, Wealthy Pensioner, or Work from-Thailand Professional who is granted a Long-Term Resident Visa under immigration law for assessable income under section 40 of the Revenue Code derived in the previous tax year from an employment, or from business carried on abroad, or from a property situated abroad, and brought into Thailand

[JohnnyBD]

10 hours ago, Mike Lister said:

Can everyone say what are their three biggest/top three issues in the don't know/unclear category, please?

Will Roth IRA distributions be treated as assessable income? In my case, all contributions & conversions are pre-2024 and have already been taxed. The order of distributions as per the IRS is; contributions first, conversions 2nd & earnings last.

[matta01]

 

 

Quote

Can everyone say what are their three biggest/top three issues in the don't know/unclear category, please?

 

 

a. The time:
     In Thailand, the declaration must be made in the first quarter of the year. The figures (such as how much tax people have paid on their income in their home country) are only available in the third quarter.

b. The documents:
Which documents must be presented and will be accepted as proof that one has already paid tax in one's home country? What if they are only available in the third quarter?

c. If you transfer money to Thailand, to your Thai wife's account in Thailand (you are not required to have a bank account) is this money considered a gift?

 

[Etaoin Shrdlu]

47 minutes ago, JimGant said:

Kind of tricky when tax years don't coincide due to the remittance angle (but you can always file an amended return to cover a late occurring event, even from another tax year). And presumably the IRA (which may be a rolled-over 401k) was funded many years ago, when you were working. This makes the scenario moot, since that IRA money was earned pre-2024, thus by decree, is not assessable income when remitted (yes, it's US taxed post 2023, but that makes no never mind, since the decree addresses when earned -- and being tax-deferred doesn't taint that.) Having said that, in all situations where both countries get to tax the IRA, Thailand keeps all their taxation -- and the US has to absorb a tax credit of same.

 

And since, presumably your IRA has had some earnings in 2024, we're back to the FIFO, LIFO conundrum. But once again, there's no reason to not give yourself full advantage, in the absence of any guidance. Thus, treat the remittance as pre-2024 assets. But even if you treated all your remittance from post-2023 earnings in your IRA -- unless you're really in a high Thai tax bracket, Thai taxes, if any, will probably be less than your US taxes, and with the tax credit, things will thus be a wash. [And, yes, the saving clause in the DTA says you still have to file a US tax return, even tho' Thailand is given exclusive taxation rights on IRAs.]

 

 

 

Thanks, Jim.

 

If I understand your post correctly, you're stating that only the portion of an IRA that represents actual post-2023 earnings would be taxable if brought into Thailand? This of course brings us the LIFO/FIFO issue as you state.

 

How does taxation of remitted IRA distributions compare with remittances of defined benefit plan distributions? I think the RD has stated that an IRA is a self-directed pension and would be taxed the same as a traditional defined benefit plan. In other words, the entire distribution would be assessable income. Or am I wrong on this?

 

 

 

 

 

 

 

[topt]

12 hours ago, UKresonant said:

As you have said Thailand = "No relief" (Just reclaim in some circumstances)

Thanks for the detailed reply.

Having read through the first link I have come to the conclusion, that for me personally, there seems to be little point in trying to obtain an NT code......

[JimGant]

1 hour ago, Yumthai said:

That statement implies you are tax resident while bringing foreign-sourced income in any tax year (while being tax resident) into Thailand. 

Yeah, they would need to add a rule about having to file a tax return, even tho' not a resident in the year foreign assessable income is remitted. Maybe something along the lines of the US 1040-NR (Non Resident) tax filing.

[Mike Lister]

2 hours ago, jayboy said:

 

You are right but as in immigration matters (the eternal "should I use a lawyer" argument for example) it depends on a number of factors.

 

1.How enjoyable/productive do you find interconnecting with Thai bureaucrats? For some it is a weird turn on.

 

2.In my previous career did I have some expertise (e.g accounting/tax) which makes that interconnection a smooth process?

 

3.How much do I value my time?

 

4.Am I well enough off not to care about expense of delegating an inherently boring task?

 

5.Can I completely trust the organization/person I delegate to?

 

6.What is my boredom threshold?

 

You can immediately see that everyone will be different.One man might find a fun filled session with the RD an exciting way to spend a morning.Another would rather stab himself in then head with a fork or have a more pressing engagement tidying his sock drawer.I will probably follow your example and do it myself.Point 5 is the key consideration in my case.

 

 

I like that, you are of course quite correct.

[Mike Lister]

1 hour ago, matta01 said:

 

 

 

 

a. The time:
     In Thailand, the declaration must be made in the first quarter of the year. The figures (such as how much tax people have paid on their income in their home country) are only available in the third quarter.

b. The documents:
Which documents must be presented and will be accepted as proof that one has already paid tax in one's home country? What if they are only available in the third quarter?

c. If you transfer money to Thailand, to your Thai wife's account in Thailand (you are not required to have a bank account) is this money considered a gift?

 

Re. a) The UK tax year ends 5 April, the last date for filing Thai tax is five days prior, I think that is close enough to where that wont be a massive problem.

 

Re. b) no documents are required, UNLESS you are audited, so figure on what, 1:100 maybe?

 

Re c) almost certainly yes it is.

[Mike Lister]

1 hour ago, JohnnyBD said:

Yes, I have question. Under Royal Decree 743, it appears to indicate that LTR visa holders will NOT have to pay income tax on any assessable income remitted into Thailand in the following year after it was earned. I also could read this as applying to 2024 only, since all pre-2024 monies are not taxable as per TRD guidance. The Decree doesn't specifically state it's for every year going forward. What are your thoughts on this and do you know if there's any other guidance on this issue? I would not want to switch to a LTR visa, and then find out later it was just a 1-year tax exemption. Thanks...

 

Section 5 Income tax under Part 2 of Chapter 3 in Title 2 of the Revenue Code shall be exempted for a foreigner categorised as Wealthy Global Citizen, Wealthy Pensioner, or Work from-Thailand Professional who is granted a Long-Term Resident Visa under immigration law for assessable income under section 40 of the Revenue Code derived in the previous tax year from an employment, or from business carried on abroad, or from a property situated abroad, and brought into Thailand

My personal interpretation is that the exemption applies to every year going forward, not just a single year.

 

I'm not aware of additional guidance on this but I will look.

[JimGant]

46 minutes ago, Etaoin Shrdlu said:

I think the RD has stated that an IRA is a self-directed pension and would be taxed the same as a traditional defined benefit plan. In other words, the entire distribution would be assessable income

Only if that entire distribution was sent to Thailand. But if you filter your IRA distribution through an account with other, co-mingled inputs, from which you do your Wise transfer -- then you need some pretty creative accounting, to parse which funds are the oldest, and thus, under FIFO, are pre-2024 funds. Obviously, RD needs to address this co-mingling problem. But, meanwhile, you can take advantage of the vacuum to give yourself full advantage. Unless they can present some order we're not aware of, that would override your FIFO, what jeopardy could you possibly be subject to.....?

[Yumthai]

1 hour ago, JimGant said:

Yeah, they would need to add a rule about having to file a tax return, even tho' not a resident in the year foreign assessable income is remitted. Maybe something along the lines of the US 1040-NR (Non Resident) tax filing.

 

Except that US 1040-NR is related to Income Effectively Connected With U.S. Trade or Business (i.e. local income).

 

AFAIK non-residents for tax purposes worldwide are (potentially) taxed on local-sourced income only.

Is there any country that taxes its non-residents on foreign-sourced remittances? If Thailand is trying to do that, it would be a premiere.

 

 

[gamb00ler]

4 hours ago, JohnnyBD said:

Will Roth IRA distributions be treated as assessable income? In my case, all contributions & conversions are pre-2024 and have already been taxed. The order of distributions as per the IRS is; contributions first, conversions 2nd & earnings last.

I think the most logical assumption is that TRD does and will not care about the US tax status of any funds/assets in an expat's possession at the end of 2023.  All those funds will be treated as accumulated savings or investment capital and will not ever be subject to Thai tax (barring further law/regulation changes).  In other words your Roth/IRA/401K accounts in the eyes of TRD would be the same as regular savings accounts.

 

I agree with @JimGant 's position that expats should be able to use FIFO ordering of funds that are remitted to Thailand.  FIFO also seems like the easiest from an accessability tracking standpoint.

Edited April 14 by gamb00ler
capital instead of capitol

[gamb00ler]

2 hours ago, JimGant said:

But if you filter your IRA distribution through an account with other, co-mingled inputs, from which you do your Wise transfer -- then you need some pretty creative accounting, to parse which funds are the oldest, and thus, under FIFO, are pre-2024 funds

It is definitely possible to track every $'s pedigree ... but I've completely lost interest in solving Gordian Knot type problems.

 

It would probably be harder to explain to TRD than it would be to track the funds.

[Mike Lister]

1 hour ago, gamb00ler said:

I think the most logical assumption is that TRD does and will not care about the US tax status of any funds/assets in an expat's possession at the end of 2023.  All those funds will be treated as accumulated savings or investment capital and will not ever be subject to Thai tax (barring further law/regulation changes).  In other words your Roth/IRA/401K accounts in the eyes of TRD would be the same as regular savings accounts.

 

I agree with @JimGant 's position that expats should be able to use FIFO ordering of funds that are remitted to Thailand.  FIFO also seems like the easiest from an accessability tracking standpoint.

Is that "should be able to" as in it's probably allowable, or is it "should be" as in it is deserved? Not trying to be pedantic, just trying to understand what's intended.

[gamb00ler]

8 minutes ago, Mike Lister said:

Is that "should be able to" as in it's probably allowable, or is it "should be" as in it is deserved? Not trying to be pedantic, just trying to understand what's intended.

I tend to use the phrase "may be able to" for your first interpretation.  My intent was to say expats deserve to be able to use FIFO as it is preferable and so far TRD has not issued guidance on the matter.