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

[paddypower]

23 hours ago, TroubleandGrumpy said:

 

If you were employed by a business, or own a business, or recived 'taxable income', it is compulsory to lodge a tax return in Thailand if your taxable income was over 120K Baht PA.

The interpretation and implementation ofg Thai tax laws are very 'fluid' depending on how the Thai RD are instructed. The recent change that led to this Post and lots of media reports, was an instruction from the Thai RD to change their previous interpretation of the tax laws.  

correct, but do you mean 120k annually, after personal deductions etc? right? 

[Mike Lister]

14 minutes ago, paddypower said:

correct, but do you mean 120k annually, after personal deductions etc? right? 

No, gross earnings. 

[jerrymahoney]

44 minutes ago, paddypower said:

Thanks - I will try to read that publication. But,  a quick question? is there a broad definition of  'income from work/business/property' . If pension income is not specified in the definition, then why are we discussing it?

Section 40 Assessable income is income of the following categories including any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer.

 

(3) Fee of goodwill, copyright or any other rights, annuity or annual payment of income derived from a will, any other juristic act, or court decision.

 

https://www.rd.go.th/english/37749.html

[Enzian]

So if I stay over 180 days. My residential rental property in the US month to month generates a free cash flow over and above expenses, though that money is only tangentially related to what my year end US tax return will say is my taxable income for the year (because of depreciation write-offs, etc., etc.), and it's that declaration that I will definitely pay US taxes on in the next calendar year. But during the current year my manager transfers some of that cash flow from the main business account to my Thai bank for my living expenses. (He's also transferring my SS monies that accumulate, but that alone is seldom enough.) Technically I haven't paid US tax on that transferred money yet, though normally I will. 

So is that money from the business what Thailand may want to tax? And how would that play out? And when will we know? And how do I/we proceed until we know? And after we know?

 

 

[dontpanic]

So what would happen in this situation. 

 

You have all your finance dealings in Dubai and your taxes have been assessed and deemed to be 0% (still possible to get 0% even with the new corporate tax) because they have been assessed and deemed 0% would this then mean that there would be no tax to pay in Thailand? I had a look at the dta with Thailand and UAE, pages and pages of headaches but I did find a few bits of info that would suggest that if you have your business interests there (all your financial dealings) then that would go towards UAE having priority over Thailand. Also you need to be in country for 90 days within a calendar year and this gives you tax residency there. If you where to live the remainder of the year in Thailand you would obviously be classed as tax resident in Thailand also. But because all your finances are in Dubai this would give Dubai the right over any taxes? Which have been deemed 0% and "assessed"

 

I'm sure people who have been used to 0% from UAE from which they get their money, dividends, interest savings etc from would not be willing to go to the strongest tax bracket in Thai tax because of this half sentence change in the tax law. 

 

This is such bs, I've just confused myself with that I've written ffs! Anyway I hope someone gets what I trying to say 😤

[JimTripper]

54 minutes ago, Enzian said:

So if I stay over 180 days. My residential rental property in the US month to month generates a free cash flow over and above expenses, though that money is only tangentially related to what my year end US tax return will say is my taxable income for the year (because of depreciation write-offs, etc., etc.), and it's that declaration that I will definitely pay US taxes on in the next calendar year. But during the current year my manager transfers some of that cash flow from the main business account to my Thai bank for my living expenses. (He's also transferring my SS monies that accumulate, but that alone is seldom enough.) Technically I haven't paid US tax on that transferred money yet, though normally I will. 

So is that money from the business what Thailand may want to tax? And how would that play out? And when will we know? And how do I/we proceed until we know? And after we know?

you file once a year in both countries for the prior year

 

you get a final net income on the usa return after all calculations and deductions etc, that is taxed

 

when you file the thai return you list all remitted money into thailand and if it's less then your usa net taxed income it gets deducted and you owe nothing

 

you may need to file one countries return early depending on the filing due date, but since it's for the prior year you have all the needed financial info to file since you can complete both returns anytime after the end of the filing year

 

hopefully you don't need to do estimated tax payments or something in the usa so you have a true amount on the end of year return for both countries

 

guessing 🤷🏻‍♂️

Edited October 30, 2023 by JimTripper

[TroubleandGrumpy]

57 minutes ago, paddypower said:

correct, but do you mean 120k annually, after personal deductions etc? right? 

 

That is not my read of the Thai RD guidline - but it could be correct in how the Thai RD actually acts:

 

Section 56 Every taxpayer except a minor or a person adjudged incompetent or quasi-incompetent shall, on or before the last day of March every year, file to the official appointed by the Minister a tax return reporting the assessable income received in the preceding tax year in the form prescribed by the Director-General, if such person-

(1) has no spouse and has the assessable income of the preceding tax year exceeds 60,000 baht,

(2) has no spouse and has the assessable income of the preceding tax year under only Section 40 (1) exceeds 120,000 baht,

(3) has a spouse and the assessable income of the preceding tax year exceeds 120,000 baht, or

(4) has a spouse and the assessable income of the preceding tax year under only Section 40 (1) exceeds 220,000 baht.

 

That 60K figure I think is 'lost in translation' as 150K is the tax free threshold.

Section 40 is all about Assesable Income.

Chapter 3 Income Tax | The Revenue Department (English Site) (rd.go.th)

 

All Thai Laws (Tax, Immigration, etc etc) and the Thai RD Guidelines, are very 'interpretable'.  The reason is because the Thai Legal System (Courts) are not based on what we call 'Common Law' and they do not base their rulings on past 'Precedents'.  Unlike our systems which are very rigid and defined, with rulings going back hundreds of years, the Thai legal system is basically a case by case situation.  Perhaps I have not explained that enough before, when trying to explain to some posters that 'those words do not mean what you think they mean'.  That is the reason why in Thailand any Immigration Officer or Policeman can make a decision - within certain limits.

 

I personally like some parts of that legal system - IMO a 1960 Toyota rustbucket with balding tyres being driven by a 70 year old woman and going at 100Kms is far more dangerous than a brand new Mercedes SL500 driven by a 40 year old man going at 130Km.  In Thailand you can talk to the Policeman and 'sort things out' (even slip a few baht) - but it the west the very dangerous Toyota is ignored and the Mercedes is impounded - because the legal definition of dangerous driving is 20+km over the limit. 

 

 

[Flyguy330]

Quote

Much obliged for your detailed answer! Are there any guidelines on mixed funds in the same account? Which money is already taxed and which is cap gain if I transfer 10K? Thanks! Malaysia or PH is my backup option however I have never been to the PH.

Sorry Stat, I overlooked this question yesterday.

It's a good question - about co-mingling funds from different sources in a bank account. I don't have an explicit ruling on that from the Malaysian tax authorities, however they gave me a written reply to a similar question which might be extrapolated to it. The savings I have overseas come from taxed income. I asked them if they needed me to prove the provenance of every penny I remit to Malaysia in order to prove it was from previously taxed income. Their reply was that it doesn't matter to them, as long as I can provide a tax paid cert or similar showing I paid some (at least 15%) tax on a sum equal to the remitted sum!

I was so shocked by that lenient answer that I asked them to confirm it, and asked if they meant I could even backdate such a tax cert to my first pay cheque 40+ years ago. They replied YES!

I know that sounds unbelievable, and I still don't really trust that answer, but I'm planning on 'experimenting' with it by remitting only small sums this year and I'll make a tax return showing tax I paid decades ago and see their reaction.

 

I may be being over optimistic, but so far all my dealings on this with the Malaysian IRD have been very friendly, and they almost seem to be bending over backward to accomodate me and prevent me being caught by this remittance tax. Yes, I know, that sounds bizarre behaviour from a taxman, but that's the feeling I'm getting. I think it's possible that at Government level they've been told to ease off on expats doing remittances - or maybe even only retired expats. And meantime the review of the MM2H rules is still in the pipeline, and I'm holding out hope that the Government will conclude that it's not wise to apply a remittance tax to foreign pensioners if they seriously want to attract them here. Common sense might actually triumph!

Fingers crossed. 

[TroubleandGrumpy]

52 minutes ago, dontpanic said:

So what would happen in this situation. 

 

You have all your finance dealings in Dubai and your taxes have been assessed and deemed to be 0% (still possible to get 0% even with the new corporate tax) because they have been assessed and deemed 0% would this then mean that there would be no tax to pay in Thailand? I had a look at the dta with Thailand and UAE, pages and pages of headaches but I did find a few bits of info that would suggest that if you have your business interests there (all your financial dealings) then that would go towards UAE having priority over Thailand. Also you need to be in country for 90 days within a calendar year and this gives you tax residency there. If you where to live the remainder of the year in Thailand you would obviously be classed as tax resident in Thailand also. But because all your finances are in Dubai this would give Dubai the right over any taxes? Which have been deemed 0% and "assessed"

 

I'm sure people who have been used to 0% from UAE from which they get their money, dividends, interest savings etc from would not be willing to go to the strongest tax bracket in Thai tax because of this half sentence change in the tax law. 

 

This is such bs, I've just confused myself with that I've written ffs! Anyway I hope someone gets what I trying to say 😤

 

Sorry - no one knows the definitive answer to your situation - not even two Thai tax/accountants I have contacted.

You could well be the 'target' group the Thai RD is after - people who earn income overseas and then bring some of it into Thailand.

My advice is to wait until the Thai RD releases their 'clarifiying explanations' - they are currently reviewing the impacts and outcomes of this change and how best to proceed going forward. Hopefully they will follow Malaysia's lead and delay implementation for a few years to give people and companies a reasonable time period for both to assess their future financial decisions.  If they do not provide that 'clarity' or do not give enough time, it is extremely very likely that this matter will go to the Thai Courts.  People and Companies have been making financial decisions based upon a method of operating by the Thai RD, than has been ratified in the Courts for over 30 years, and making such a change with 3 months notice is very lieley to be ruled as being against the Tax Laws/Constitution.    

 

[dontpanic]

11 minutes ago, TroubleandGrumpy said:

 

Sorry - no one knows the definitive answer to your situation - not even two Thai tax/accountants I have contacted.

You could well be the 'target' group the Thai RD is after - people who earn income overseas and then bring some of it into Thailand.

My advice is to wait until the Thai RD releases their 'clarifiying explanations' - they are currently reviewing the impacts and outcomes of this change and how best to proceed going forward. Hopefully they will follow Malaysia's lead and delay implementation for a few years to give people and companies a reasonable time period for both to assess their future financial decisions.  If they do not provide that 'clarity' or do not give enough time, it is extremely very likely that this matter will go to the Thai Courts.  People and Companies have been making financial decisions based upon a method of operating by the Thai RD, than has been ratified in the Courts for over 30 years, and making such a change with 3 months notice is very lieley to be ruled as being against the Tax Laws/Constitution.    

 

Totally agree and thanks for your reply. 

[beammeup]

13 minutes ago, dontpanic said:

Totally agree and thanks for your reply. 

Thought you were going to say Thanks for all the fish.

[TroubleandGrumpy]

8 minutes ago, beammeup said:

Thought you were going to say Thanks for all the fish.

 

Dont leave - the Vogons are not here (yet).

[Ricardo]

1 hour ago, TroubleandGrumpy said:

 

Dont leave - the Vogons are not here (yet).

Famous Last Words ?  😎 

[paddypower]

2 hours ago, TroubleandGrumpy said:

 

That is not my read of the Thai RD guidline - but it could be correct in how the Thai RD actually acts:

 

Section 56 Every taxpayer except a minor or a person adjudged incompetent or quasi-incompetent shall, on or before the last day of March every year, file to the official appointed by the Minister a tax return reporting the assessable income received in the preceding tax year in the form prescribed by the Director-General, if such person-

(1) has no spouse and has the assessable income of the preceding tax year exceeds 60,000 baht,

(2) has no spouse and has the assessable income of the preceding tax year under only Section 40 (1) exceeds 120,000 baht,

(3) has a spouse and the assessable income of the preceding tax year exceeds 120,000 baht, or

(4) has a spouse and the assessable income of the preceding tax year under only Section 40 (1) exceeds 220,000 baht.

 

That 60K figure I think is 'lost in translation' as 150K is the tax free threshold.

Section 40 is all about Assesable Income.

Chapter 3 Income Tax | The Revenue Department (English Site) (rd.go.th)

 

All Thai Laws (Tax, Immigration, etc etc) and the Thai RD Guidelines, are very 'interpretable'.  The reason is because the Thai Legal System (Courts) are not based on what we call 'Common Law' and they do not base their rulings on past 'Precedents'.  Unlike our systems which are very rigid and defined, with rulings going back hundreds of years, the Thai legal system is basically a case by case situation.  Perhaps I have not explained that enough before, when trying to explain to some posters that 'those words do not mean what you think they mean'.  That is the reason why in Thailand any Immigration Officer or Policeman can make a decision - within certain limits.

 

I personally like some parts of that legal system - IMO a 1960 Toyota rustbucket with balding tyres being driven by a 70 year old woman and going at 100Kms is far more dangerous than a brand new Mercedes SL500 driven by a 40 year old man going at 130Km.  In Thailand you can talk to the Policeman and 'sort things out' (even slip a few baht) - but it the west the very dangerous Toyota is ignored and the Mercedes is impounded - because the legal definition of dangerous driving is 20+km over the limit. 

 

 

absolutely correct. as anyone going through the application of any Thai laws will find out, precedent is not considered relevant.

[paddypower]

3 hours ago, jerrymahoney said:

Section 40 Assessable income is income of the following categories including any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer.

 

(3) Fee of goodwill, copyright or any other rights, annuity or annual payment of income derived from a will, any other juristic act, or court decision.

 

https://www.rd.go.th/english/37749.html

I guess 'annual payment derived from any other juristic act' means pension and just about anything. will not hold my breath. One of the great traditions of Thailand is - inertia.

[paddypower]

2 hours ago, TroubleandGrumpy said:

 

That is not my read of the Thai RD guidline - but it could be correct in how the Thai RD actually acts:

 

Section 56 Every taxpayer except a minor or a person adjudged incompetent or quasi-incompetent shall, on or before the last day of March every year, file to the official appointed by the Minister a tax return reporting the assessable income received in the preceding tax year in the form prescribed by the Director-General, if such person-

(1) has no spouse and has the assessable income of the preceding tax year exceeds 60,000 baht,

(2) has no spouse and has the assessable income of the preceding tax year under only Section 40 (1) exceeds 120,000 baht,

(3) has a spouse and the assessable income of the preceding tax year exceeds 120,000 baht, or

(4) has a spouse and the assessable income of the preceding tax year under only Section 40 (1) exceeds 220,000 baht.

 

That 60K figure I think is 'lost in translation' as 150K is the tax free threshold.

Section 40 is all about Assesable Income.

Chapter 3 Income Tax | The Revenue Department (English Site) (rd.go.th)

 

All Thai Laws (Tax, Immigration, etc etc) and the Thai RD Guidelines, are very 'interpretable'.  The reason is because the Thai Legal System (Courts) are not based on what we call 'Common Law' and they do not base their rulings on past 'Precedents'.  Unlike our systems which are very rigid and defined, with rulings going back hundreds of years, the Thai legal system is basically a case by case situation.  Perhaps I have not explained that enough before, when trying to explain to some posters that 'those words do not mean what you think they mean'.  That is the reason why in Thailand any Immigration Officer or Policeman can make a decision - within certain limits.

 

I personally like some parts of that legal system - IMO a 1960 Toyota rustbucket with balding tyres being driven by a 70 year old woman and going at 100Kms is far more dangerous than a brand new Mercedes SL500 driven by a 40 year old man going at 130Km.  In Thailand you can talk to the Policeman and 'sort things out' (even slip a few baht) - but it the west the very dangerous Toyota is ignored and the Mercedes is impounded - because the legal definition of dangerous driving is 20+km over the limit. 

 

 

Mushrooms, my friend. We are mushrooms.  🙂

[K2938]

4 hours ago, dontpanic said:

You have all your finance dealings in Dubai and your taxes have been assessed and deemed to be 0% (still possible to get 0% even with the new corporate tax) because they have been assessed and deemed 0% would this then mean that there would be no tax to pay in Thailand? I had a look at the dta with Thailand and UAE, pages and pages of headaches but I did find a few bits of info that would suggest that if you have your business interests there (all your financial dealings) then that would go towards UAE having priority over Thailand. Also you need to be in country for 90 days within a calendar year and this gives you tax residency there. If you where to live the remainder of the year in Thailand you would obviously be classed as tax resident in Thailand also. But because all your finances are in Dubai this would give Dubai the right over any taxes? Which have been deemed 0% and "assessed"

 

I'm sure people who have been used to 0% from UAE from which they get their money, dividends, interest savings etc from would not be willing to go to the strongest tax bracket in Thai tax because of this half sentence change in the tax law

Highly unlikely except for those income categories where the DTA unequivocally states that the EXCLUSIVE tax authority lies with the UAE which is usually only very few or even no income category at all.  You can check the DTA.  For all other income categories Thailand most likely will fully tax you and kindly give you a tax credit in the amount of any tax you have paid on this income in the UAE (zero) so you will de facto get fully taxed in Thailand.  Welcome to Thailand

Edited October 30, 2023 by K2938

[K2938]

3 hours ago, TroubleandGrumpy said:

making such a change with 3 months notice is very lieley to be ruled as being against the Tax Laws/Constitution

Would Thai courts actually be independent enough to make such a ruling against a determined government?

P.S.:  This is not a rhetorical question.

[TroubleandGrumpy]

12 minutes ago, K2938 said:

Would Thai courts actually be independent enough to make such a ruling against a determined government?

P.S.:  This is not a rhetorical question.

Good question.  I would say it depends on which Judge/s get the case and what the Govt announces is their desired outcome.

 

I think (hope) that the Thai Govt will realise from their current review, that they have made a bad decision targetting short term tax revenues gains with such short notice, at the expensive of future businesses and investors due to the uncertainty about potential future changes. 

[stat]

4 hours ago, Flyguy330 said:

Sorry Stat, I overlooked this question yesterday.

It's a good question - about co-mingling funds from different sources in a bank account. I don't have an explicit ruling on that from the Malaysian tax authorities, however they gave me a written reply to a similar question which might be extrapolated to it. The savings I have overseas come from taxed income. I asked them if they needed me to prove the provenance of every penny I remit to Malaysia in order to prove it was from previously taxed income. Their reply was that it doesn't matter to them, as long as I can provide a tax paid cert or similar showing I paid some (at least 15%) tax on a sum equal to the remitted sum!

I was so shocked by that lenient answer that I asked them to confirm it, and asked if they meant I could even backdate such a tax cert to my first pay cheque 40+ years ago. They replied YES!

I know that sounds unbelievable, and I still don't really trust that answer, but I'm planning on 'experimenting' with it by remitting only small sums this year and I'll make a tax return showing tax I paid decades ago and see their reaction.

 

I may be being over optimistic, but so far all my dealings on this with the Malaysian IRD have been very friendly, and they almost seem to be bending over backward to accomodate me and prevent me being caught by this remittance tax. Yes, I know, that sounds bizarre behaviour from a taxman, but that's the feeling I'm getting. I think it's possible that at Government level they've been told to ease off on expats doing remittances - or maybe even only retired expats. And meantime the review of the MM2H rules is still in the pipeline, and I'm holding out hope that the Government will conclude that it's not wise to apply a remittance tax to foreign pensioners if they seriously want to attract them here. Common sense might actually triumph!

Fingers crossed. 

Thanks a lot! Then I would be off the hook as I have a lot of dividends that come with withholding tax that are way more then what I will transmit to Thailand. I really hope that with suficient planing one will owe next to zero in thai income tax.

[stat]

6 hours ago, paddypower said:

you've raised an interest topic - if you live in Thailand for more than 180 days in a given year - are there regulations describing what your tax status is ? (never mind the Immigration rules).

It is a 180 day or 183 days, most people claim it is a 180 days.

[K2938]

Just now, stat said:

Thanks a lot! Then I would be off the hook as I have a lot of dividends that come with withholding tax that are way more then what I will transmit to Thailand. I really hope that with suficient planing one will owe next to zero in thai income tax.

Have a look at the UK non-dom remittance rules for mixed funds and you will see that things could also get hugely worse than what apparently happens in Malaysia. 

[dontpanic]

1 hour ago, K2938 said:

Highly unlikely except for those income categories where the DTA unequivocally states that the EXCLUSIVE tax authority lies with the UAE which is usually only very few or even no income category at all.  You can check the DTA.  For all other income categories Thailand most likely will fully tax you and kindly give you a tax credit in the amount of any tax you have paid on this income in the UAE (zero) so you will de facto get fully taxed in Thailand.  Welcome to Thailand

I guess that's my point, if it is earned in UAE it has been assessed, the assessment was that the rate of tax is 0% it's not like you're earning it there and not declaring it there, it's been through the tax system. So by rights you have paid all applicable taxes before it is remitted into Thailand which you would have a tax cert, accounts etc to show this. Just because UAE has a 0% tax shouldn't mean that you get taxed again in Thailand.

 

No ones getting anything for their tax payment, no easier road to residency, no ability to own land, nothing, zip a big fat zero. Honestly they must think we have marshmallows between our ears. 

 

TIT!!!! 

[stat]

14 minutes ago, K2938 said:

Have a look at the UK non-dom remittance rules for mixed funds and you will see that things could also get hugely worse than what apparently happens in Malaysia. 

Thanks for your post! I fully agree one has to follow the situation very closely as the Thais could come up with the "easy" solution that every penny is taxable that does not come with a translated certificate signed in person by Joe Biden and the Pope that Mr. Stat has paid withholding tax in the US. I very much doubt that Thai RD will provide anything remotely similar to the UK non-dom remittance rules if they provide any further explanation at all. My guess would be they leave the final decision to the individual RD inspector, which would a nightmare scenario.

Edited October 30, 2023 by stat

[samtam]

16 minutes ago, dontpanic said:

I guess that's my point, if it is earned in UAE it has been assessed, the assessment was that the rate of tax is 0% it's not like you're earning it there and not declaring it there, it's been through the tax system. So by rights you have paid all applicable taxes before it is remitted into Thailand which you would have a tax cert, accounts etc to show this. Just because UAE has a 0% tax shouldn't mean that you get taxed again in Thailand.

 

No ones getting anything for their tax payment, no easier road to residency, no ability to own land, nothing, zip a big fat zero. Honestly they must think we have marshmallows between our ears. 

 

TIT!!!! 

 

I think the key is "has the tax been assessed", (in Dubai)? It has been assessed, (at the zero rate). But Lord knows how Thai RD will interpret that. It would be nice if they could let us all know, and PDQ.

[dontpanic]

20 minutes ago, samtam said:

 

I think the key is "has the tax been assessed", (in Dubai)? It has been assessed, (at the zero rate). But Lord knows how Thai RD will interpret that. It would be nice if they could let us all know, and PDQ.

Exactly and unfortunately we are all at the mercy of their interpretation which has literally just changed a 40 odd year tax rule 🤣

 

If no further documentation has been released by next month they've got no hope or maybe we've got no hope. It's like they had a few beers one night, decided they wanted some more of the folding stuff and announced this hairbrain idea while they where still half cut. Now they're in it up to their necks and can't get out. 

Edited October 30, 2023 by dontpanic

[quake]

46 minutes ago, dontpanic said:

No ones getting anything for their tax payment, no easier road to residency, no ability to own land, nothing, zip a big fat zero. Honestly they must think we have marshmallows between our ears. 

TIT!!!! 

 

What ones do you prefer, pink or white ?

I like the pink ones. 

 

 

[dontpanic]

4 minutes ago, quake said:

 

What ones do you prefer, pink or white ?

I like the pink ones. 

 

 

Any colour you like if it means I can live here in peace without concerning myself with, is someone gonna get their grubby little mits on my coin. I mean if it's my decision then fair game and I deserve what I get but otherwise they can keep their hands to themselves. 

 

Actually I'm partial to the pink ones too 🤣

[paddypower]

1 hour ago, stat said:

It is a 180 day or 183 days, most people claim it is a 180 days.

with the IO we had for years and years - it would have been ''let's go outside''  🙂

[quake]

1 hour ago, dontpanic said:

Any colour you like if it means I can live here in peace without concerning myself with, is someone gonna get their grubby little mits on my coin. I mean if it's my decision then fair game and I deserve what I get but otherwise they can keep their hands to themselves. 

 

Actually I'm partial to the pink ones too 🤣

 

Maybe we will get some more info after the 1st of Jan next year.