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

[Dogmatix]

1 hour ago, jacob29 said:

The order doesn't exactly say that. It appears to classify taxable income, as income earned abroad *while* you were a tax resident in Thailand. Not once does it use past tense, income earned before you were even a tax resident of Thailand. It explicitly states the opposite, foreign source income earned *while you are a tax resident*, will be taxed in future (without limitation) at the time it's remitted to Thailand.

 

In practice, and grandfathering aside, I expect it will mean from the point you become a tax resident, tax on remittances will be capped to whatever accumulated foreign income they have on record (from CRS) from current or previous years in which you were a tax resident. If you exceed this amount, it's not taxable as you weren't a tax resident, thus it wasn't assessible as per the order (given the order makes no mention of income earned while you were a non resident).

One problem the wording raises appears to be that income earned in a tax year you are tax resident is assessable when remitted to Thailand in any tax year.  That appears to cut off the loophole to stay out of Thailand for over 180 days in a tax year to become non tax resident and make some large tax free remittances.  With that wording they can argue that the remittance was taxable because the money was earned while you were tax resident, since the year it was earned is key, not the year of remittance, as it is not assessable income whenever remitted in any tax year. That would be odd, if you were not required to file a tax return in the the year you are not a tax resident but that appears to be what it says, whether intentionally or not. If not intentional, they would still be happy to close a loophole that many here have suggested they would use.

[The Cyclist]

1 hour ago, ukrules said:

Even the O&G guys? There's quite a few of them and they only live here for one reason - no tax

Addressed directly above the part of my comment that you quoted.

 

Quote

Any monies remitted to Thailand that has not been taxed, or you cannot show where it has been taxed, will most likely incur Thai taxation.

 

O&G workers for example, working in tax free places and having their wages paid direct to Thailand.

 

 

[Dogmatix]

Re gift to spouse or child.  The Revenue Code allows you to make gifts to them up to 20 million a year tax free.  Over that amount tax is only 5%. Is it possible for them to gift it back to you without losing the tax allowance and having it taxed at the full rate, either in the same tax year or a later one. The Revenue Code doesn't specify how long the gifts have to be held for to avoid income tax.  Also there is no rule like the UK has that makes gifts liable for IHT, if the donor fails to survive for another 7 years.

 

The concept of gifting to a spouse seems at variance with the concept of conjugal property in the Civil and Commercial Code which holds that any assets acquired after marriage are common conjugal property which is applied in divorce cases. However, the 2017 amendment to the Revenue Code clearly contradicts that concept by specifically allowing the 20 million allowance on gifts to a spouse.

[Jinxed1]

16 hours ago, Jinxed1 said:

Sorry couldn't read the whole 92 pages, is there an answer to what happens to capital gains remitted from now to before Jan 1st ?

 

Do i have to pay tax on those? or only if remitted AFTER Jan 1st ?

 

Thanks

Bump

[samtam]

1 hour ago, Dogmatix said:

You don't get the 150k threshold twice, if you file jointly with spouse.  You have to file separately, if you want that. But you do get all the allowances for each.  I have filed both jointly and separately. Filing jointly is advantageous if the spouse has little or no income of her own and thus has allowances that she couldn't use, if she filed alone.  If her income is significant, it might be better for her to file separately to get the 150k threshold for herself.

I used the word "partner". We are not married. Overseas income is joint and in joint accounts. We would therefore have to file separately, but how co-mingling of funds on receipt overseas would be viewed is another hurdle that I expect is not addressed in the RD manual. We certainly don't make any distinction on who is the "owner" of the funds, however they came in.

[retiree]

1 hour ago, Dogmatix said:

With that wording they can argue that the remittance was taxable because the money was earned while you were tax resident, since the year it was earned is key, not the year of remittance, as it is not assessable income whenever remitted in any tax year.

That is not what the law says.  Below, the bracketed numbers and meaning notes are mine. 

https://www.rd.go.th/english/37749.html#section41

 

Section 41 

[1] A taxpayer who in the previous tax year derived assessable income under Section 40 from an employment, or from business carried on in Thailand, or from business of an employer residing in Thailand, or from a property situated in Thailand shall pay tax in accordance with the provisions of this Part, whether such income is paid within or outside Thailand.

Meaning: if you generate income in Thailand it is taxable, no matter where the income is paid, and even if you are not a tax resident. 

Meaning of the meaning:  if you fly in, work 1 day for a Thai company, then leave, that day's income is taxable.

 

[2] A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part.

Meaning:  if you are a tax resident of Thailand your overseas income is assessable per Sec 40 and any DTA, and will be taxed only when it is remitted.

Meaning of the meaning:  other than paragraph [1] income, money that is not in Thailand is not taxed in Thailand.

 

[3]  Any person staying in Thailand for a period or periods aggregating 180 days or more in any tax year shall be deemed a resident of Thailand.

Meaning:  you are a tax resident only if you are here for 180 days or more in any tax year.

Meaning of the meaning:  if you are not a tax resident you will not be taxed as a resident. 

 

Edited October 12, 2023 by retiree

[ukrules]

40 minutes ago, Dogmatix said:

Re gift to spouse or child.  The Revenue Code allows you to make gifts to them up to 20 million a year tax free.

I am working on the assumption that this gift money would have to be already taxed as income inside Thailand and can't be gifted directly from some foreign bank account where you keep all your untaxed gains, do I have that right?

[EVENKEEL]

For us who use the 65k month extension as I do, I'll redirect my money to US bank again, use my debit card for cash and start using an agent for extensions.

 

But, I really don't believe my pension money will be taxed twice.

[Guavaman]

5 minutes ago, EVENKEEL said:

For us who use the 65k month extension as I do, I'll redirect my money to US bank again, use my debit card for cash and start using an agent for extensions.

 

But, I really don't believe my pension money will be taxed twice.

Using a debit card in Thailand is remittance from your US bank. A better option might be using a credit card, which provides you with a loan that you must pay back, so those funds should not be able to be construed as income in any way -- it is a loan with interest due.

[Guavaman]

1 hour ago, Dogmatix said:

Re gift to spouse or child.  The Revenue Code allows you to make gifts to them up to 20 million a year tax free.  Over that amount tax is only 5%. Is it possible for them to gift it back to you without losing the tax allowance and having it taxed at the full rate, either in the same tax year or a later one. The Revenue Code doesn't specify how long the gifts have to be held for to avoid income tax.  Also there is no rule like the UK has that makes gifts liable for IHT, if the donor fails to survive for another 7 years.

 

The concept of gifting to a spouse seems at variance with the concept of conjugal property in the Civil and Commercial Code which holds that any assets acquired after marriage are common conjugal property which is applied in divorce cases. However, the 2017 amendment to the Revenue Code clearly contradicts that concept by specifically allowing the 20 million allowance on gifts to a spouse.

This is what happens when you dig deep enough into the inconsistencies in the Thai legal system.  Technically, one could only make a gift of personal property (assets held before marriage, inheritance, and a few other exceptions), since all income & assets acquired after marriage are community/conjugal property. However, a gift could be made to a descendant or ascendant. 

 

I haven't been able to find any references to the tax residency of the giftor or the giftee or the source of funds related to gifts, seasoning offshore, etc.  The gift rules seem to be delightfully vague, thereby providing opportunities for the type of Thai taxpayers who might be making gifts up to 20m, e.g. tycoons, Generals and their wives and children.

[Neeranam]

1 hour ago, Dogmatix said:

Re gift to spouse or child.  The Revenue Code allows you to make gifts to them up to 20 million a year tax free. 

I'll just give all my salary to one of my kids then, it's under 20 million a year! 

[Klonko]

4 hours ago, jacob29 said:

If it's never remitted it seems it won't ever be taxed. I highly doubt they will allow someone to decide whether a specific transfer is of past savings or assessable income, as I don't see how that's workable.

There are many workable setups, at least from the perspective of Thai RD. For the less favourable  setups, it may help to maintain separate accounts abroad segregating taxed and untaxed income and transfer from the zero interest bearing taxed income account under DTA only when all funds in the account have been assessed by foreign RD.

Edited October 12, 2023 by Klonko

[freeworld]

40 minutes ago, Neeranam said:

I'll just give all my salary to one of my kids then, it's under 20 million a year! 

If you are living in Thailand and you give your salary to one of your children (I assume in Thailand), you are remitting income and will be obligated to declare and pay tax on it.

 

It is the receiver who does not pay tax on gifts (ascendant, descendant, spouse etc...)

Edited October 12, 2023 by freeworld

[jacob29]

15 minutes ago, Klonko said:

There are many workable setups, at least from the perspective of Thai RD. For the less favourable  setups, it may help to maintain separate accounts abroad segregating taxed and untaxed income and transfer from the zero interest bearing taxed income account under DTA only when all funds in the account have been assessed by foreign RD.

Proving money has been taxed is a compliance headache they may not want to deal with. That would require them to track what has been taxed, and make sure you don't claim against it twice. It would be much easier to aggregate the CRS data (worldwide income), data they have and can trust, and simply match remittances against that.

 

That would make it effectively the same as other countries systems, with possible reduction in tax liability if you don't remit the full assessed amount. Which means no new special compliance techniques have to be developed, they can apply existing systems that other countries use.

Edited October 12, 2023 by jacob29

[Lorry]

3 hours ago, ukrules said:

Even the O&G guys? There's quite a few of them and they only live here for one reason - no tax

I won't cry if they don't come anymore. 

[Dogmatix]

1 hour ago, ukrules said:

I am working on the assumption that this gift money would have to be already taxed as income inside Thailand and can't be gifted directly from some foreign bank account where you keep all your untaxed gains, do I have that right?

The Q&A from the RD on the order appeared to deal with this in the answer to Q4.

4 คําถาม: เงินได้พงึ ประเมนิ ประเภทใดบา้ งทีcต้องนํามาเสยี ภาษีเงินได้ตามมาตรา 41 วรรคสอง แหง่ ประมวลรษั ฎากร

คําตอบ: เงนิ ไดพ้ งึ ประเมนิ จากแหลง่ เงนิ ไดต้ า่ งประเทศทอีc ยูใ่ นบงั คบั ตอ้ งเสยี ภาษีเงนิ ได้ ได้แก่ เงินได้พึงประเมินตามมาตรา 40 (1) ถึง (8) แหง่ ประมวลรษั ฎากร อย่างไรก็ดี หากเปqนเงินได้พึงประเมินทีcได้รบั ยกเว้นภาษีตามกฎหมาย ผู้เสียภาษีไม่ต้องนําเงินได้พึงประเมินนัfนมาเสียภาษีในประเทศไทย เชน่ การรบั มรดก หรอื เงินไดท้ ีcไดร้ บั จากการอุปการะจากบุพการี ผสู้ บื สนั ดาน หรอื คสู่ มรส เฉพาะเงนิ ได้ ในสว่ นทไีc มเ่ กนิ ยสีc บิ ลา้ นบาทตลอดปภv าษีนนัf เปนq ตน้

 

It is very badly written and copying the pdf file messed up some of the words. Here's a bad google translate though.

QUESTION #4

What are the types of assessed income that must be subject to income tax under Section 41?, the second paragraph of the Revenue Code?

ANSWER:

Money has not been assessed from foreign sources at If you stay, you are forced to pay income tax including assessable income according to Section 40 (1) to (8) of the Revenue Code.

However, if it is assessable income received Tax exemption according to law. Taxpayers do not have to bring the assessable income is taxed in Thailand such as receiving an inheritance or receiving income received from the support of parents and trusted people, or marrying a married couple, only the money that is not received exceeding 20 millions of baht for the entire tax year.

 

It doesn't actually state that remitting gifts from overseas is tax free up to 20 mil but strongly implies this.  Otherwise why mention this at all in Q&A about RD P 161/2566?  It also doesn't mention gifts but AFAIK gifts are the only provision in the Revenue Code that can be regarded as supporting parents, spouse or child and the threshold for gift tax is 20 mil.  It is shame we are dealing with people who are utterly inarticulate in their own language.

 

 

[Neeranam]

29 minutes ago, freeworld said:

If you are living in Thailand and you give your salary to one of your children (I assume in Thailand), you are remitting income and will be obligated to declare and pay tax on it.

I was actually joking but so many question unanswered. 

For example, if I have income in Thailand and income abroad, why couldn't I gift my foreign salary to my children? 

[ukrules]

10 minutes ago, Neeranam said:

I was actually joking but so many question unanswered. 

For example, if I have income in Thailand and income abroad, why couldn't I gift my foreign salary to my children? 

I'll bet that you can and they will be rewarded with a tax bill exactly the same as you would.

 

[Lorry]

3 hours ago, Dogmatix said:

One problem the wording raises appears to be that income earned in a tax year you are tax resident is assessable when remitted to Thailand in any tax year.  That appears to cut off the loophole to stay out of Thailand for over 180 days in a tax year to become non tax resident and make some large tax free remittances.  With that wording they can argue that the remittance was taxable because the money was earned while you were tax resident, since the year it was earned is key, not the year of remittance, as it is not assessable income whenever remitted in any tax year. That would be odd, if you were not required to file a tax return in the the year you are not a tax resident but that appears to be what it says, whether intentionally or not. If not intentional, they would still be happy to close a loophole that many here have suggested they would use.

I have mentioned this problem a couple of times earlier in the thread. 

The consequences would be enormous. 

Tax would be due in the year of remittance even if in that year you haven't been in Thailand at all. 

What convinced me they don't mean this is

 

https://www.rd.go.th/english/6045.html

A non-resident is, however, subject to tax only on income from sources in Thailand.

 

but this is not the law, only the RD 's interpretation. 

 

The law as quoted by retiree says

2 hours ago, retiree said:

A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part.

The important words are 

"A resident....shall....pay tax"

A resident,  not a non-resident.

The non-resident doesn't pay tax according to this paragraph (i.e. when remitting funds). The non-resident only pays tax as in sec41, first paragraph,  i.e. income from activities in Thailand. 

 

At this moment in time,  the RD agrees with me.

 

[Guavaman]

18 minutes ago, Dogmatix said:

The Q&A from the RD on the order appeared to deal with this in the answer to Q4.

4 คําถาม: เงินได้พงึ ประเมนิ ประเภทใดบา้ งทีcต้องนํามาเสยี ภาษีเงินได้ตามมาตรา 41 วรรคสอง แหง่ ประมวลรษั ฎากร

คําตอบ: เงนิ ไดพ้ งึ ประเมนิ จากแหลง่ เงนิ ไดต้ า่ งประเทศทอีc ยูใ่ นบงั คบั ตอ้ งเสยี ภาษีเงนิ ได้ ได้แก่ เงินได้พึงประเมินตามมาตรา 40 (1) ถึง (8) แหง่ ประมวลรษั ฎากร อย่างไรก็ดี หากเปqนเงินได้พึงประเมินทีcได้รบั ยกเว้นภาษีตามกฎหมาย ผู้เสียภาษีไม่ต้องนําเงินได้พึงประเมินนัfนมาเสียภาษีในประเทศไทย เชน่ การรบั มรดก หรอื เงินไดท้ ีcไดร้ บั จากการอุปการะจากบุพการี ผสู้ บื สนั ดาน หรอื คสู่ มรส เฉพาะเงนิ ได้ ในสว่ นทไีc มเ่ กนิ ยสีc บิ ลา้ นบาทตลอดปภv าษีนนัf เปนq ตน้

 

It is very badly written and copying the pdf file messed up some of the words. Here's a bad google translate though.

QUESTION #4

What are the types of assessed income that must be subject to income tax under Section 41?, the second paragraph of the Revenue Code?

ANSWER:

Money has not been assessed from foreign sources at If you stay, you are forced to pay income tax including assessable income according to Section 40 (1) to (8) of the Revenue Code.

However, if it is assessable income received Tax exemption according to law. Taxpayers do not have to bring the assessable income is taxed in Thailand such as receiving an inheritance or receiving income received from the support of parents and trusted people, or marrying a married couple, only the money that is not received exceeding 20 millions of baht for the entire tax year.

 

It doesn't actually state that remitting gifts from overseas is tax free up to 20 mil but strongly implies this.  Otherwise why mention this at all in Q&A about RD P 161/2566?  It also doesn't mention gifts but AFAIK gifts are the only provision in the Revenue Code that can be regarded as supporting parents, spouse or child and the threshold for gift tax is 20 mil.  It is shame we are dealing with people who are utterly inarticulate in their own language.

 

 

Here is a better translation from someone who has worked here for 37 years:

 

 

#4 QUESTION:   Question: What types of assessable income are subject to income tax according to Section 41, paragraph two, of the Revenue Code?

ANSWER:  Assessable income from foreign sources that is subject to income tax is assessable income according to Section 40 (1) to (8) of the Revenue Code. However, if it is assessable income that is exempt from tax according to law, taxpayers do not have to bring that assessable income to pay tax in Thailand, such as inheritance or income received from support from parents, descendants, or spouses, only for the amount of income that does not exceed twenty million baht throughout that tax year, henceforth.
 

[Lorry]

5 hours ago, Yumthai said:

I still don't get the difference in outcome.

Could you please make 2 examples with numbers that show how the calculation results differ, whether using the described method or using the 190K exemption as a simple allowance deduction?

 

It's just much simpler the way the law is written. 

Deductions differ for every type of income, the law has long lists.

Allowances differ for many different situations of taxpayers, long lists again. 

The 190,000 can be deducted from any kind of income, and by anybody over 65.

So instead of repeating this endlessly for any type of income and any taxpayer,  they wrote it once, at the very beginning of the calculation. 

[topt]

4 hours ago, KannikaP said:

I personally do not want to 'wait & see', to know what my financial situation will be in less than three months and for the rest of my days in Thailand.

The Taxman seemed very informed and sure about what he told me, and it does make sense.

You seem to be forgetting that this comes into effect from 1/01/24 which means the effect will not be seen until your tax return some time in the first quarter of 2025

[topt]

4 hours ago, Dogmatix said:

If you submit online,

Please correct me if wrong but my understanding that the online process is in Thai only? I think even the paper record is Thai only (certainly was to reclaim tax withheld on bank interest).

 

If so how many foreigners will be able to circumnavigate the forms even with the help of a significant other...........

[Yumthai]

4 minutes ago, Lorry said:

The 190,000 can be deducted from any kind of income, and by anybody over 65.

OK I get your point: it differs on the way it is formulated but at the end the calculation outcome comes back to a simple allowance deduction.

[Dogmatix]

30 minutes ago, topt said:

Please correct me if wrong but my understanding that the online process is in Thai only? I think even the paper record is Thai only (certainly was to reclaim tax withheld on bank interest).

 

If so how many foreigners will be able to circumnavigate the forms even with the help of a significant other...........

Yes, it is only in Thai. Come to think of it I think only Thais can file online because you not only need a 13 digit ID number, which PRs have, but you need the laser code on the back of a blue ID card to register and log in.

 

As mentioned earlier in the thread the English translations of the forms, which are for guidance only, are frequently not updated on time when there are changes. They just change the date on the form.  The RD also puts up guidance notes on its website that are years out of date with incorrect allowances.  They want to collect tax from foreigners but are too lazy to produce quality materials in English, or, perish the thought, let foreigners file on line and in English.

 

The first time I file a tax return without help, it took me hours to figure out the forms and what had to be filled in. On the paper forms you also have to do all the calculations and figure out your tax for yourself. I am familiar with acounting and tax but I imagine most peoples Thai significant others would really struggle with a tax return, if they've never had to do it before. 

Edited October 12, 2023 by Dogmatix

[Neeranam]

4 minutes ago, Dogmatix said:

Yes, it is only in Thai. Come to think of it I think only Thais can file online because you not only need a 13 digit ID number, which PRs have, but you need the laser code on the back of a blue ID card to register and log in.

I filed my tax returns online as a foreigner a few years ago.

[Dogmatix]

1 hour ago, Guavaman said:

Here is a better translation from someone who has worked here for 37 years:

 

 

#4 QUESTION:   Question: What types of assessable income are subject to income tax according to Section 41, paragraph two, of the Revenue Code?

ANSWER:  Assessable income from foreign sources that is subject to income tax is assessable income according to Section 40 (1) to (8) of the Revenue Code. However, if it is assessable income that is exempt from tax according to law, taxpayers do not have to bring that assessable income to pay tax in Thailand, such as inheritance or income received from support from parents, descendants, or spouses, only for the amount of income that does not exceed twenty million baht throughout that tax year, henceforth.
 

It's odd that they don't actually say Gift tax.  But I don't think there is any other exemption they could be referring to .

[Dogmatix]

4 minutes ago, Neeranam said:

I filed my tax returns online as a foreigner a few years ago.

Thanks. So it's possible or was a few years ago.

[Klonko]

2 hours ago, jacob29 said:

Proving money has been taxed is a compliance headache they may not want to deal with. That would require them to track what has been taxed, and make sure you don't claim against it twice. It would be much easier to aggregate the CRS data (worldwide income), data they have and can trust, and simply match remittances against that.

 

That would make it effectively the same as other countries systems, with possible reduction in tax liability if you don't remit the full assessed amount. Which means no new special compliance techniques have to be developed, they can apply existing systems that other countries use.

I doubt aggregating CRS data (AFAIK no tax information) solves the problem when my foreign untaxed income is 300% of my foreign taxed income (20% tax rate) and I only transfer from my foreign account with only taxed income, which transfers would be taxed with 10% in Thailand unless offset under my  DTA. I currently plan with multiple accounts unless Thai specifies a favourable ruling this year. I am confident that my DTA would protect me. However, instead of going the legal route, I would rather split my transfers between my account and as gift to my wife resulting in a 5% tax payable in Thailand, still better than being taxed on global income.

Edited October 12, 2023 by Klonko

[stat]

7 hours ago, KannikaP said:

Because I will have 5% of Bht 80,000  to pay

The tax officer seemed to think it will apply to me as well

Maybe, what question?

I assume you went to a small tax office in the sticks? They will not have a clue about anything. Another thing is however if they can make up their rules in your place and you have to follow them.