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

[Lorry]

15 minutes ago, Misty said:

 

Thanks for posting the link above. At the bottom of the text it says the new criteria "will become enforced on 1 July 2024."  Is that a change or a typo?  I thought the effective date was 1 Jan 2024.

Typo.

 

BTW this text understands the QnA, that "both conditions have to be met" to be taxable:

1. You must be tax resident here (i.e. 180 days a year or more) in the year you bring the income into Thailand

2. You also were a tax resident in Thailand in the year you earned that income. 

 

1. is not 100% clear in the QnA, and some posters - me included -  found that suspicious 

[Mike Lister]

2 hours ago, Celsius said:

 

Actually it is related.

 

If Farang buys health insurance will he get a tax discount? What about life insurance?

 

Surely he should be allowed to use a 30 baht scheme?

There are generous tax deductions for both life and health insurance premiums, I claim for both.

 

I don't see the logic or connection between paying tax on income and automatic entitlement to enrolment in the 30 baht health scheme. TBH government health care system is cheap enough to where most people should be easily able to pay for treatment at the going rates and not even bother with costly health insurance which as you say, sometimes approves treatment and sometimes doesn't. For me, the cost of health insurance is around 150k per year but only insures 50% of my body. 150k per year will go a long way to paying treatment costs at government hospitals.

Edited November 5, 2023 by Mike Lister

[jerrymahoney]

Note information on available life and health insurance here:

 

https://taxsummaries.pwc.com/thailand/individual/deductions

[Mike Teavee]

7 hours ago, freeworld said:

You are going to sell your house to get clarification?

Don't get me started on the "Joys" of being a small landlord in the UK nowadays & things will only get worse if Labour do what they saying they're going to do when they get in next year. 

 

I was planning to sell the house anyway but this Tax announcement has the potential to make things more complicated, my main reason for selling is it's generating approx. 3% income after management/maintenance fees & you can get a better return by putting the money into a fixed deposit account, plus a big secondary reason for me is it will give me the $250K I need to support an LTR Visa application as my income is < $80 pa.

 

 

Edited November 5, 2023 by Mike Teavee

[Mike Teavee]

3 hours ago, Misty said:

 

Thanks for posting the link above. At the bottom of the text it says the new criteria "will become enforced on 1 July 2024."  Is that a change or a typo?  I thought the effective date was 1 Jan 2024.

Good spot, I suspect it's a typo as all other sources say the new rules come in 1st January 2024 which makes more sense as it's the start of the new Thai Tax Year.

[retiree]

Please note that I am not an accountant or tax lawyer.  This writeup reflects my understanding of how the Thai tax law affects me, and is how I would explain it to the rubber duck sitting on my desk.  

 

The law regarding what is assessable (as distinct from taxable) income has been in place for decades.  It has not been changed. No bill has been introduced to change it. 

 

Only Thai tax residents are Thai taxpayers, and only taxpayers can have assessable income.  Income earned in years in which you are not a Thai tax resident is not assessable because you are not a Thai taxpayer. 

 

A simple guideline for my rubber duck: 

 -- were you a Thai tax resident when you earned it?  If so, the income is assessable (section 40),

 -- were you a Thai tax resident when you brought it in?  If so, the income may be taxable, depending on DTA (section 41),

 -- was either answer "no" ?  It is not taxable.

 

The main unclear issue is this:  What documentation will a tax resident need to differentiate between assessable income and "other funds" when we bring money into Thailand? 

 

This is the exact same question our accountants ask our home countries or states when we liquidate assets, borrow money, or acquire other income that shows up in our home-country bank accounts:  how much of that was capital? how much was income? how and where was the income portion taxed?    And it still isn't always 100% clear (ask anybody who walks a fine line on state residence in the USA).  

 

Nevertheless, I would assume that there will be guidelines and "safe harbor" rules for showing the source of funds remitted to Thailand (and whether or not they are assessable and taxable), just as there are in every tax jurisdiction in the world.  

 

------------------------------------------------------

Section 40, below, defines assessable income.  I have elided most of it for brevity.  

 

https://www.rd.go.th/english/37749.html#section40

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.

 

(1) Income derived from employment, whether in the form of salary, wage, per diem, bonus, bounty, gratuity, pension, house rent allowance, monetary value of rent-free residence provided by an employer, payment of debt liability of an employee made by an employer, or any money, property or benefit derived from employment.

  [... sections 2 through 7 ... ]

(8) Income from business, commerce, agriculture, industry, transport or any other activity not specified in (1) - (7).

The amount of tax under paragraph 1, which is paid for by the payer of income or by any other person on behalf of taxpayer on any category of income or in whichever tax year, shall be treated as income of the same category and of the same tax year as the income where payment of tax is made.

-------------------------------------------

 

Section 41, below, defines taxable income.  The bracketed numbers and meaning notes are mine, as explained to my rubber duck.

 

Note that in paragraph 2, the RD has said (Sept 15) that the English translation of the underlined phrase "in the previous" should instead be understood as "in a previous" ....  Whether or not this will require legislation to change the underlying Thai text of the law will probably be determined in court -- if it does, the current reading will stand for now.   

 

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. 

 

Please let me know if you see any factual errors, as I do not want my rubber duck to be misled.

 

Edited November 5, 2023 by retiree

[Negita43]

7 minutes ago, Mike Teavee said:

Good spot, I suspect it's a typo as all other sources say the new rules come in 1st January 2024 which makes more sense as it's the start of the new Thai Tax Year.

Yes maybe the rules become effective 01 Jan BUT it is impossible to assess an 180 day residency in any year before 180 days have passed

[Puccini]

5 hours ago, redwood1 said:

 

Anyone who stays in Thailand for over 180 days is a RESIDENT of Thailand....

 

Correction: 

Anyone who stays in Thailand for over 180 days is a TAX RESIDENT of Thailand (ie a resident for the purpose of taxation)

[redwood1]

1 hour ago, Puccini said:

 

Correction: 

Anyone who stays in Thailand for over 180 days is a TAX RESIDENT of Thailand (ie a resident for the purpose of taxation)

 

So in other words after 180 days you qualify as a resident for the bad stuff (taxes) but you don't qualify as a resident for any of the good stuff like (30 baht health care)...

[Klonko]

1 hour ago, retiree said:

Nevertheless, I would assume that there will be guidelines and "safe harbor" rules for showing the source of funds remitted to Thailand (and whether or not they are assessable and taxable), just as there are in every tax jurisdiction in the world.  

We may have to wait a long time until such guidelines are issued, or practice is decided by local RD. Segregated accounts not containing any income or gain may help. It  can be very difficulty to prove the non taxable source of funds with certified translation. This is one of the reasons I am not going the DTA route.

[Klonko]

1 hour ago, Puccini said:

Correction: 

Anyone who stays in Thailand for over 180 days is a TAX RESIDENT of Thailand (ie a resident for the purpose of taxation)

Over 179 days.

[stat]

https://www.thaiexaminer.com/thai-news-foreigners/2023/11/04/tax-change-for-expats-living-in-thailand/

[Mike Lister]

An interesting article but it clarifies very little and certainly does nothing for the argument that foreigners are going to suffer:

 

"If the Revenue Department were to launch an aggressive campaign to generate additional income, it could see some expats from countries that do not have tax treaties with Thailand impacted or where tax has not been paid on retirement funding or other income remittances from foreign countries".

 

"Mr Kitipong suggests that Section 41, Paragraph 2 of the country’s Revenue Code gives minimal scope to the Thai government to tax any income from abroad by pointing out that the existing provision does not specify that income earned in foreign countries outside the jurisdiction of the Kingdom is subject to tax at all". 

 

"the change in direction by the new government will be a retrograde step for the Kingdom, which in recent years has been touting itself as a destination for foreign investors and global business executives because of its tax-friendly regime". 

 

"legal experts suggest that the department order issued on September 15 can quickly be challenged with a strong likelihood that it will be overturned".

 

https://www.thaiexaminer.com/thai-news-foreigners/2023/11/04/tax-change-for-expats-living-in-thailand/

 

[4MyEgo]

3 hours ago, retiree said:

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

 

So the meaning is, if I understand it correctly, is that if you reside in Thailand for more than 180 days in a year, you are deemed a tax resident.

 

In my home country I am deemed a non resident because I reside in Thailand for more than 183 days in a year.

 

So as I live here full time, I will be deemed a tax resident for tax purposes in Thailand, therefore required to pay tax on any funds entering the country, even though those funds, which maybe dividends that have already been taxed in my home country which has a DTA with Thailand.

 

I thought retiring in Thailand was easy, this is just going to get messy and personally don't believe it will get off of the ground.

 

 

 

 

 

 

 

What a mess........

Edited November 5, 2023 by 4MyEgo

[Negita43]

3 hours ago, Negita43 said:

Yes maybe the rules become effective 01 Jan BUT it is impossible to assess an 180 day residency in any year before 180 days have passed

Another thought what if I stay 178 (for the sake of arguement) days until the end of one tax year followed immediately by 178 days (for the sake of arguement) from the beginning of the next tax year. Am I a tax resident? - Total time in Thailand 356 consecutive days

Edited November 5, 2023 by Negita43
clarifacation

[The Cyclist]

11 minutes ago, Mike Lister said:

If the Revenue Department were to launch an aggressive campaign to generate additional income, it could see some expats from countries that do not have tax treaties with Thailand impacted or where tax has not been paid on retirement funding or other income remittances from foreign countries".

 

Scratches head 😀😀

 

I think I might have said a few times on this thread that income taxed in your home Country will probably not be subject to Thai tax ( especially Countries that have a DTA )

 

The tricky part ( for some ) will be proving that money has been taxed in Home Country before being remitted to Thailand.

[Mike Lister]

1 minute ago, The Cyclist said:

 

Scratches head 😀😀

 

I think I might have said a few times on this thread that income taxed in your home Country will probably not be subject to Thai tax ( especially Countries that have a DTA )

 

The tricky part ( for some ) will be proving that money has been taxed in Home Country before being remitted to Thailand.

Call me naive if you wish, but a tax return from the home country might help. 🙂

[Mike Lister]

12 minutes ago, Negita43 said:

Another thought what if I stay 178 (for the sake of arguement) days until the end of one tax year followed immediately by 178 days (for the sake of arguement) from the beginning of the next tax year. Am I a tax resident? - Total time in Thailand 356 consecutive days

No, you would not be tax resident. The days of residency in Thailand must be within a single tax year.

[The Cyclist]

2 minutes ago, Mike Lister said:

Call me naive if you wish, but a tax return from the home country might help. 🙂

 

Indeed

 

I always wondered why my pension providers sent me annual P60's all the way out to Thailand  😂😂

[retiree]

45 minutes ago, Mike Lister said:

https://www.thaiexaminer.com/thai-news-foreigners/2023/11/04/tax-change-for-expats-living-in-thailand/

 

My impression is that the Thai Examiner article is  a rewrite of this Sept. 29, 2023  article by Special Professor Kitipong Urapeepattanapong (in Thai, translate this page works fine), which I think was posted by Dogmatix (and copied to this thread by me) at the time. 

https://www.bangkokbiznews.com/finance/investment/1091100

[Felt 35]

13 hours ago, Mike Lister said:

The national parks are financed by government out of tax revenue income. This is not different from any tourism based tax applied to nonresidents/non-tax payers in any country, be it Venice, Cornwall or Nepal.  In this case the tax is applied on each attraction rather than each country, city or town. The fact that 150,000 western expats feel aggrieved and left out, overlooks the fact that the other (potentially) 40 million tourists who visit these optional attractions in Thailand are the ones who pay the lions share. If you were government, you'd tax in exactly the same way. Do I like it? No! Is it mostly fair? Yes.

This is nothing but discrimination. Full Stop.⏹️

Felt

[Ricardo]

1 hour ago, The Cyclist said:

 

I always wondered why my pension providers sent me annual P60's all the way out to Thailand  😂😂

 

And which sometimes even arrive here, when our local postie makes his weekly (if that) visit, to our village !  🙄

 

Not knocking Thailand, just making the point that the postal-service is sometimes imperfect.  😎

[Shop mak]

1 hour ago, The Cyclist said:

The tricky part ( for some ) will be proving that money has been taxed in Home Country before being remitted to Thailand.

 

I assume most countries revenue office are online and send a report to tax payer, also available when one log into ones personal account there.

No??

[Guavaman]

After 130 pages, people are joining this thread who have not absorbed the valuable information about the Thai income tax system that has been shared here.

 

Let's face it, people don't want to wade through the 66% of grievances and personal situations that weigh down this valuable resource for tax planning for expats in Thailand.

 

I suggest that a new thread be established starting with the recent article in the Thai Examiner. 

[Mike Lister]

3 minutes ago, Guavaman said:

After 130 pages, people are joining this thread who have not absorbed the valuable information about the Thai income tax system that has been shared here.

 

Let's face it, people don't want to wade through the 66% of grievances and personal situations that weigh down this valuable resource for tax planning for expats in Thailand.

 

I suggest that a new thread be established starting with the recent article in the Thai Examiner. 

I understand your point but new people are always going to come along and want personalised answers without having to read the thread. I think it's probably best to keep everything in one place and insist that newcomers read through it all.

[stat]

45 minutes ago, Shop mak said:

 

I assume most countries revenue office are online and send a report to tax payer, also available when one log into ones personal account there.

No??

It does not solve the problem how to prove which funds have been taxed and which have not. As an example pls find attached a German Einkommensteuerbescheid. How will Somchai determine which funds have been taxed? Not even a German Wirtschaftsprüfer could tell because there are only cummulated resulted and taxes are not on an account or financial instrument level. Never mind that Somchai does not speak German or has the faintest idea of German tax law. As cyclist has correctly stated it is next to impossible to prove which funds have been taxed. However Thai RD could make some amends like in MY that if you ever had 100K USD in taxed income that would suffice to bring in 100K tax free.

Einkommensteuerbescheid_2019.pdf

Edited November 5, 2023 by stat

[Puccini]

5 hours ago, redwood1 said:

 

So in other words after 180 days you qualify as a resident for the bad stuff (taxes) but you don't qualify as a resident for any of the good stuff like (30 baht health care)...

 

You got that right.

[Guavaman]

44 minutes ago, Mike Lister said:

understand your point but new people are always going to come along and want personalised answers without having to read the thread. I think it's probably best to keep everything in one place and insist that newcomers read through it all.

"insist that newcomers read through it all"

Surely you jest -- these are homo sapiens! 

[Puccini]

2 hours ago, Mike Lister said:

An interesting article but it clarifies very little and certainly does nothing for the argument that foreigners are going to suffer:

 

"If the Revenue Department were to launch an aggressive campaign to generate additional income, it could see some expats from countries that do not have tax treaties with Thailand impacted or where tax has not been paid on retirement funding or other income remittances from foreign countries".

 

"Mr Kitipong suggests that Section 41, Paragraph 2 of the country’s Revenue Code gives minimal scope to the Thai government to tax any income from abroad by pointing out that the existing provision does not specify that income earned in foreign countries outside the jurisdiction of the Kingdom is subject to tax at all". 

 

"the change in direction by the new government will be a retrograde step for the Kingdom, which in recent years has been touting itself as a destination for foreign investors and global business executives because of its tax-friendly regime". 

 

"legal experts suggest that the department order issued on September 15 can quickly be challenged with a strong likelihood that it will be overturned".

 

https://www.thaiexaminer.com/thai-news-foreigners/2023/11/04/tax-change-for-expats-living-in-thailand/

 

 

In my view, it clarifies a lot:

1. Section 41 is for nationals of countries that have no Double Taxation with Thailand (DTA)
2. The DTAs are for nationals of countries that have a DTA with Thailand.

 

[Puccini]

3 minutes ago, Guavaman said:

"insist that newcomers read through it all"

Surely you jest -- these are homo sapiens! 

 

Never mind the homo sapiens, but I think any homo sapiens sapiens coming fresh to this topic would be more than a little crazy to read through the 130 (so far) pages of this topic.