Thai government to tax all income from abroad for tax residents starting 2024

[quake]

Oops

Edited March 28 by quake

[Letseng]

11 hours ago, Mike Lister said:

You will almost certainly have noticed them before but just not paid attention because they weren't important at the time. They are all over the place, there are several in mini malls here in the North, also in business parks and smaller rows of shops. Tax, accountancy and book keeping all go together so you could try asking a business owner also.

Thanks. Will keep my eyes open.

[Letseng]

10 hours ago, stat said:

If there is government regulation that demands the TIN there is nothing the bank can do... However I do not know if current regulation demands the TIN. With the upcoming of e-wallets with fiat money in the near future in TH for falangs I do no longer see the need for an old school bank account.

Each & every bank in diff countries who are part of this tax collection scheme now asks for your TIN. Try Europe when you go there next. Ask a Singapore bank.

[freeworld]

10 hours ago, stat said:

If there is government regulation that demands the TIN there is nothing the bank can do... However I do not know if current regulation demands the TIN. With the upcoming of e-wallets with fiat money in the near future in TH for falangs I do no longer see the need for an old school bank account.

Financial institutions are complying with the oecd guides and have agreements which have been probably been implemented in law in the diff countries.

 

Here is a link to the FAQ (OECD) for financial institutions.

 

Most countries have signed up to CRS (US has FATCA) and regularly meet at OECD, G7 and G20 meetings to discuss how to control everyone through their finances.

 

https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/CRS-related-FAQs.pdf

Edited March 28 by freeworld

[jayboy]

10 hours ago, beautifulthailand99 said:

So the Thai government had a handle on the amount in Thai bank accounts aggregated, was my conclusion. They probably got each bank to run a query against each Thai ID number - pooled the information ins a single file and ran the app against this look up.

 

If my grandmother had wheels, she would have been a bike.

 

[Yumthai]

24 minutes ago, freeworld said:

Financial institutions are complying with the oecd guides and have agreements which have been probably been implemented in law in the diff countries.

 

Here is a link to the FAQ (OECD) for financial institutions.

 

Most countries have signed up to CRS (US has FATCA) and regularly meet at OECD, G7 and G20 meetings to discuss how to control everyone through their finances.

 

https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/CRS-related-FAQs.pdf

 

Thanks for the link. It shows that collecting a TIN, as a Financial Institution, is not a requirement (Section I paragraph 5.)... in case such Reportable Person is or may be eligible to obtain a TIN (or the functional equivalent) in its jurisdiction of residence, but is not required to obtain a TIN and has not obtained a TIN.

 

 

[freeworld]

53 minutes ago, Yumthai said:

 

Thanks for the link. It shows that collecting a TIN, as a Financial Institution, is not a requirement (Section I paragraph 5.)... in case such Reportable Person is or may be eligible to obtain a TIN (or the functional equivalent) in its jurisdiction of residence, but is not required to obtain a TIN and has not obtained a TIN.

 

 

Yes some countries do not issue TIN. If you do not provide a TIN the banks ask for a reason why and just report your accounts to the tax authorities where the account is held.

 

List of Jurisdictions That Do Not Issue Foreign TINs

Edited March 28 by freeworld

[RupertIII]

17 hours ago, Letseng said:

My husband recently needed a new ATM card. BKK Bank asked for his Thai TIN. 

A couple of points:-

1) My wife has spoken again to our previous book keeper who in turn spoke with the accountant/auditor for our previous company who confirmed that if personal income is below the taxable threshold it is not a requirement to submit a tax return and no TIN will therefore be issued.

2) As I have an ATM card with BKK Bank becoming due for renewal my wife telephoned the bank who confirmed that they definitely do not require a TIN for ATM renewal, only a/c passbook and passport. It would seem, as is typical in Thailand, that different branches will make up their own requirements as they see fit!

 

[Letseng]

3 hours ago, RupertIII said:

A couple of points:-

1) My wife has spoken again to our previous book keeper who in turn spoke with the accountant/auditor for our previous company who confirmed that if personal income is below the taxable threshold it is not a requirement to submit a tax return and no TIN will therefore be issued.

2) As I have an ATM card with BKK Bank becoming due for renewal my wife telephoned the bank who confirmed that they definitely do not require a TIN for ATM renewal, only a/c passbook and passport. It would seem, as is typical in Thailand, that different branches will make up their own requirements as they see fit!

 

This does not surprise me. Just like the practice when trying to open an account. Diff. rules at every branch.

The request wasn't odd at the time as suddenly a TIN was requested by banks in EU countries where we hold accounts. Austria automatically deducts 35% tax @ source from income as we are not resident or citizens. 

[stat]

5 hours ago, freeworld said:

Financial institutions are complying with the oecd guides and have agreements which have been probably been implemented in law in the diff countries.

 

Here is a link to the FAQ (OECD) for financial institutions.

 

Most countries have signed up to CRS (US has FATCA) and regularly meet at OECD, G7 and G20 meetings to discuss how to control everyone through their finances.

 

https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/CRS-related-FAQs.pdf

Having signed up for CRS does not imply the need for TINs. Just one example, residing in Thailand does not force you to obtain a Thai TIN no matter what your non thai bank tells you, there is a clear exemption. There are tons of exemption in CRS. So if you want to answer a specific question you have to read in detail see Point 5. BTW the OECDs intention is not to control everyone but to distribute information so they can tax their citizens. If TH choses  not to tax foreign income then the OECD has no problem with it (so far).

 

CRSno tin required.pdf

Edited March 28 by stat

[jayboy]

18 hours ago, MartinBangkok said:

Tell the freaking bank you are looking for a bank, not a tax office, and leave!

 

Haven't heard of this before but am not really that surprised.Many here will be aware of pressure from UK banks on expat customers in Thailand to provide tax identification numbers with a view to clarifying tax residency.This is of course driven by Common Reporting Standards (CRS) and Thai banks are also interested in this information and for the same reasons.How much pressure the Thai banks are under on this issue from the Thai Government I have no idea.But the direction of travel is clear and the ratcheting up is inevitable.For those who have flicked off impertinent inquiries about tax identification numbers - or cobbled up excuses - from their banks over the last couple of years (including yours truly) I don't think this can be done much longer.I'm guessing the Thai banks will be less insistent but they won't give up on the quest.

[JimGant]

6 hours ago, RupertIII said:

the accountant/auditor for our previous company who confirmed that if personal income is below the taxable threshold it is not a requirement to submit a tax return

 

Yeah, after subtracting out the 350k baht exemption, then the 150k freebie up front -- and there is no taxable income left -- why file a tax return? Sure, there's some nonsense about having over 120k baht in assessable income, you need to file a return. Forget it. No fine or foul, as no tax owed.

 

I will assume the accountant's "taxable threshold" meant assessable income minus allowances -- and not the arbitrary, and ridiculous, 120k marker.

 

[RupertIII]

57 minutes ago, JimGant said:

 

Yeah, after subtracting out the 350k baht exemption, then the 150k freebie up front -- and there is no taxable income left -- why file a tax return? Sure, there's some nonsense about having over 120k baht in assessable income, you need to file a return. Forget it. No fine or foul, as no tax owed.

 

I will assume the accountant's "taxable threshold" meant assessable income minus allowances -- and not the arbitrary, and ridiculous, 120k marker.

 

Yes, so my wife tells me, it is assessable income less allowances, including the 150K 0%.

Edited March 28 by RupertIII

[K2938]

Siam Legal appears to claim that investing in a foreign (non-Thai) investment fund or depositary receipt is tax-free even for Thai tax residents who bring the income back into Thailand:

“However, there is an exemption from being subject to income tax in Thailand by meeting one of the following conditions:

1. The individual must not reside in Thailand for 180 days or more in a particular tax calendar year.

2. Invest on a foreign investment fund or Depositary Receipt.

3. Does not bring an income from overseas into Thailand.“

(https://www.siam-legal.com/thailand-law/thailand-new-tax-on-foreign-income-an-overview/ )

This seems very strange and contrary to everything else written on this at least as far as I have seen.  Any thoughts?

[Mike Lister]

14 minutes ago, K2938 said:

Siam Legal appears to claim that investing in a foreign (non-Thai) investment fund or depositary receipt is tax-free even for Thai tax residents who bring the income back into Thailand:

 

“However, there is an exemption from being subject to income tax in Thailand by meeting one of the following conditions:

1. The individual must not reside in Thailand for 180 days or more in a particular tax calendar year.

2. Invest on a foreign investment fund or Depositary Receipt.

3. Does not bring an income from overseas into Thailand.“

(https://www.siam-legal.com/thailand-law/thailand-new-tax-on-foreign-income-an-overview/ )

This seems very strange and contrary to everything else written on this at least as far as I have seen.  Any thoughts?

 

What that says is that there is an exemption from Thai tax, as long as the funds remain overseas or the taxpayer is not Thai resident. So no, it's not contrary to anything else at all.

[K2938]

2 minutes ago, Mike Lister said:

What that says is that there is an exemption from Thai tax, as long as the funds remain overseas or the taxpayer is not Thai resident. So no, it's not contrary to anything else at all.

No, they are saying there is no taxation as long as one of the three conditions mentioned by them below is met, namely either not tax resident OR not remitted to Thailand OR foreign investment.  So according to them a foreign investment on its own would be sufficient to avoid taxes.

[Mike Lister]

1 minute ago, K2938 said:

No, they are saying there is no taxation as long as one of the three conditions mentioned by them below is met, namely either not tax resident OR not remitted to Thailand OR foreign investment.  So according to them a foreign investment on its own would be sufficient to avoid taxes.

I agree, one of the three. That means that a person who is not Thai tax resident, ie spends less than 180 days per year in Thailand, is exempt from tax in that year but th exemption doesn't exist in the years when they are tax resident.

 

Alternatively, if the funds remain overseas, they are not taxable in Thailand, it's only when they are remitted to Thailand that they become taxable here. That's the way it has always been, the current year issue not withstanding.

[stat]

2 hours ago, K2938 said:

Siam Legal appears to claim that investing in a foreign (non-Thai) investment fund or depositary receipt is tax-free even for Thai tax residents who bring the income back into Thailand:

 

“However, there is an exemption from being subject to income tax in Thailand by meeting one of the following conditions:

1. The individual must not reside in Thailand for 180 days or more in a particular tax calendar year.
2. Invest on a foreign investment fund or Depositary Receipt.
3. Does not bring an income from overseas into Thailand.“

(https://www.siam-legal.com/thailand-law/thailand-new-tax-on-foreign-income-an-overview/ )

This seems very strange and contrary to everything else written on this at least as far as I have seen.  Any thoughts?

 

Very interesting indeed! Thanks for the link. What strikes me the most is investment fund oder Depositary receipt. A DR is a very special case in the realm of investing. No idea why a DR should be exempt while a foreign share or bond should not be exempt but TiT. While I prepare and plan for the worst my gut feeling is that this whole tax issue will resolve itself somehow, nevertheless I remain extremly vigilant.

[stat]

2 hours ago, Mike Lister said:

What that says is that there is an exemption from Thai tax, as long as the funds remain overseas or the taxpayer is not Thai resident. So no, it's not contrary to anything else at all.

The passage about exemption for foreign investment funds/DR is contrary to everything voiced so far! I do not understand why you fail to see this. Pls explain.

[Mike Lister]

12 minutes ago, stat said:

The passage about exemption for foreign investment funds/DR is contrary to everything voiced so far! I do not understand why you fail to see this. Pls explain.

"However, there is an exemption from being subject to income tax in Thailand by meeting one of the following conditions:

1. The individual must not reside in Thailand for 180 days or more in a particular tax calendar year.
2. Invest on a foreign investment fund or Depositary Receipt.
3. Does not bring an income from overseas into Thailand".

 

Number 1 means the tax payer is not Thai tax resident

Number 3 means the funds are not remitted to Thailand

 

Both of the above are very straight forward I think.

 

Number 2 is investing in an offshore fund, which as long as it remains offshore, is not taxed here, (albeit it might be taxed offshore when it is encashed). The moment it is encashed and the funds remitted to Thailand, they are taxable here.

[stat]

30 minutes ago, Mike Lister said:

"However, there is an exemption from being subject to income tax in Thailand by meeting one of the following conditions:

1. The individual must not reside in Thailand for 180 days or more in a particular tax calendar year.
2. Invest on a foreign investment fund or Depositary Receipt.
3. Does not bring an income from overseas into Thailand".

 

Number 1 means the tax payer is not Thai tax resident

Number 3 means the funds are not remitted to Thailand

 

Both of the above are very straight forward I think.

 

Number 2 is investing in an offshore fund, which as long as it remains offshore, is not taxed here, (albeit it might be taxed offshore when it is encashed). The moment it is encashed and the funds remitted to Thailand, they are taxable here.

I assume you are able to understand logical operators?

 

by meeting one of the following conditions:

 

So 2 in itself is sufficient therefore investing in a non thai fund should be suffcient to not be taxed even if remitted to Thailand while being 180 days or more in TH. This would make a big difference to all investors.

 

Number 2 is investing in an offshore fund, which as long as it remains offshore, is not taxed here, (albeit it might be taxed offshore when it is encashed). The moment it is encashed and the funds remitted to Thailand, they are taxable here.

 

Dead wrong according to the article.

 

 

 

Edited March 29 by stat

[Mike Lister]

4 hours ago, stat said:

I assume you are able to understand logical operators?

 

by meeting one of the following conditions:

 

So 2 in itself is sufficient therefore investing in a non thai fund should be suffcient to not be taxed even if remitted to Thailand while being 180 days or more in TH. This would make a big difference to all investors.

 

Number 2 is investing in an offshore fund, which as long as it remains offshore, is not taxed here, (albeit it might be taxed offshore when it is encashed). The moment it is encashed and the funds remitted to Thailand, they are taxable here.

 

Dead wrong according to the article.

 

 

 

I think this may be the difference between investing in an overseas investment fund, overseas, and investing in an overseas fund from within Thailand. It is very clear that any Thai tax resident who invests in a "foreign investment fund or Depositary Receipt", overseas and later remits the income from that profit, to Thailand, is liable to Thai tax. That scenario is the key driver for the new tax rule change, to capture people who have previously avoided tax in that way. I think we can say with great certainty there is no tax exemption associated with that, agreed?

 

What that leaves is the possibility that investing in a "foreign investment fund or Depositary Receipt" from within Thailand, say via a Thai bank or investment house, is exempt. If that was the case, it will be the first  time in over six months of thousands of posts that anyone in all these tax threads has heard of it and it would also make little sense. What that would mean is that making the investment via a Thai bank was a more cost effective way to make the investing, rather than investing offshore directly, but that the Revenue would relinquish any opportunity at tax, on the income. That would also mean that investors are incentivised not to invest in Thai companies but instead to invest in foreign companies. On the upside, such a measure would benefit the SET trading and Thai banks.

 

A depository receipt is designed to promote domestic trading of international companies thus avoiding the need to invest overseas. 

 

"A depositary receipt (DR) is a negotiable certificate issued by a bank. It represents shares in a foreign company traded on a local stock exchange and gives investors the opportunity to hold shares in the equity of foreign countries. It gives them an alternative to trading on an international market".

 

https://www.investopedia.com/terms/d/depositaryreceipt.asp

 

The following link is from the SET which shows the tax on domestic equities acquired in Thailand. Whilst it is possible to escape capital gains, it is not possible to escape with holding tax on interest or dividends. If it is true that  investing in a "foreign investment fund or Depositary Receipt" inside Thailand, escapes all tax, I'm left asking, why?

 

https://www.set.or.th/en/market/information/tax

 

There is a final possibility that I can imagine and that is that the article is not complete and isn't adequately specific about what that exemption might involve. I can imagine there might be some classes of DR or investment funds that might be made tax exempt, BOI related companies is one. But the idea that all foreign funds are exempt, doesn't seem credible. 

 

If anyone can see any other likely options, I will be interested to hear them.

 

 

 

 

[JimTripper]

On 3/26/2024 at 10:55 AM, Neeranam said:

I've no idea how much he earns. 

Is Thailand's tax rate higher than Israel's? You can't be taxed twice.

Yes, you can. If you don't have the documentation to back up your exclusions or deductions you end up with double taxation.

 

I had this problem in the Usa. I could not document contributions to retirement accounts from many years ago so ended up being double taxed on withdrawn money.

[K2938]

1 hour ago, Mike Lister said:

I think this may be the difference between investing in an overseas investment fund, overseas, and investing in an overseas fund from within Thailand. It is very clear that any Thai tax resident who invests in a "foreign investment fund or Depositary Receipt", overseas and later remits the income from that profit, to Thailand, is liable to Thai tax. That scenario is the key driver for the new tax rule change, to capture people who have previously avoided tax in that way. I think we can say with great certainty there is no tax exemption associated with that, agreed?

 

What that leaves is the possibility that investing in a "foreign investment fund or Depositary Receipt" from within Thailand, say via a Thai bank or investment house, is exempt. If that was the case, it will be the first  time in over six months of thousands of posts that anyone in all these tax threads has heard of it and it would also make little sense. What that would mean is that making the investment via a Thai bank was a more cost effective way to make the investing, rather than investing offshore directly, but that the Revenue would relinquish any opportunity at tax, on the income. That would also mean that investors are incentivised not to invest in Thai companies but instead to invest in foreign companies. On the upside, such a measure would benefit the SET trading and Thai banks.

 

A depository receipt is designed to promote domestic trading of international companies thus avoiding the need to invest overseas. 

 

"A depositary receipt (DR) is a negotiable certificate issued by a bank. It represents shares in a foreign company traded on a local stock exchange and gives investors the opportunity to hold shares in the equity of foreign countries. It gives them an alternative to trading on an international market".

 

https://www.investopedia.com/terms/d/depositaryreceipt.asp

 

The following link is from the SET which shows the tax on domestic equities acquired in Thailand. Whilst it is possible to escape capital gains, it is not possible to escape with holding tax on interest or dividends. If it is true that  investing in a "foreign investment fund or Depositary Receipt" inside Thailand, escapes all tax, I'm left asking, why?

 

https://www.set.or.th/en/market/information/tax

 

There is a final possibility that I can imagine and that is that the article is not complete and isn't adequately specific about what that exemption might involve. I can imagine there might be some classes of DR or investment funds that might be made tax exempt, BOI related companies is one. But the idea that all foreign funds are exempt, doesn't seem credible. 

 

If anyone can see any other likely options, I will be interested to hear them.

 

 

 

 

I am glad you now agree that it appears to be very strange what Siam Legal is saying.

 

 

Edited March 30 by K2938

[Mike Lister]

Further to my earlier post regarding tax exempt foreign investments, PWC says this: 

 

"Furthermore, provided certain conditions are met, gains or benefits from registered provident funds, retirement mutual funds, long-term equity funds, and national saving funds, including amounts derived from insurance or social security funds, are also tax exempt".

 

https://taxsummaries.pwc.com/thailand/individual/income-determination

 

My take on those funds is that they are all domestic instruments rather than foreign.

[Mike Lister]

4 minutes ago, K2938 said:

I am glad you now agree that it appears to be very strange what Siam Legal is saying.

 

 

It's not only strange, it doesn't seem correct, unless you view it in the context of onshore and offshore and that was the very reason the tax rule was changed in the first place! 

[Danderman123]

13 hours ago, K2938 said:

No, they are saying there is no taxation as long as one of the three conditions mentioned by them below is met, namely either not tax resident OR not remitted to Thailand OR foreign investment.  So according to them a foreign investment on its own would be sufficient to avoid taxes.

Yes, as long as you don't remit any of the proceeds of the foreign investment into Thailand.

 

Of course, if you are a tax resident, and you happen to transmit any other funds into Thailand, you will incur a tax liability, or at least the duty to file a tax return.

[Mike Lister]

37 minutes ago, Danderman123 said:

Yes, as long as you don't remit any of the proceeds of the foreign investment into Thailand.

 

Of course, if you are a tax resident, and you happen to transmit any other funds into Thailand, you will incur a tax liability, or at least the duty to file a tax return.

That's not quite a tax exemption, more of a tax avoidance. Anyway, that answer got poo poo'ed earlier.

[TroubleandGrumpy]

4 hours ago, JimTripper said:

Yes, you can. If you don't have the documentation to back up your exclusions or deductions you end up with double taxation.

 

I had this problem in the Usa. I could not document contributions to retirement accounts from many years ago so ended up being double taxed on withdrawn money.

Nail on the head HIT !! 

The elephant in the room !!

 

The use of a DTA is not automatic as some people seem to think. You can only use a DTA as a claim in your tax return and YOU must PROVE you have already been taxed to the satisfaction of the TRD.  How you can do that is not detailed or explained - and it will probably not be (there are 61) - it will be IMO decided based on 'legal precedent'.  Before I go into what legal precent is, IMO the best strategy to take going forward for the vast majority of Expats is to avoid TRD at all costs - at least for a few years while this all sorts itself out.  Gather your own personal information and calculate why you do not (IYO) have to lodge a tax return (eg. My country DTA states Pension not taxed, etc etc).  Keep records of all of that information you based that decision upon - reasons, pension payments, bank statements, etc etc etc.  IF you are ever asked by TRD to explain why you have not lodged a tax return, immediately go see a tax accountant/lawyer and provide them with your documents and information. IMO very very few Expats will ever be asked to explain. However, if you are earning money from overseas (investments, rentals, etc) and are a Thai tax resident, then IMO you should go and see a tax accountant/lawyer and ask what they think you should do. 

 

Legal Precedent is how a lot of issues are resolved in the Thai taxation system (and the vast majority of those are by businesses and wealthy individuals). TRD makes a decision - the tax payers disagrees and lodges an appeal - TRD accepts or rejects the appeal - if rejected the taxpayer takes the matter to Court - the Court listens to both sides and decides - that becomes the 'legal precedent' for this particualr issue - unless the TRD lodges a higher Court Appeal in which case it goes a few steps further.  TRD rarely appeals - the matter is handled very amicably (not confrontational like in western Court) with both sides politely asking the Court to help them settle a misunderstanding and/or something that they both are not sure of how it should be decided. 

[Danderman123]

18 minutes ago, Mike Lister said:

That's not quite a tax exemption, more of a tax avoidance. Anyway, that answer got poo poo'ed earlier.

Let's be clear on this:

 

Tax avoidance = legal

 

Tax evasion = illegal.

 

Tax deferral schemes, such as deferring transmission of revenues into Thailand, are tax avoidance.

Edited March 30 by Danderman123