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

[Misty]

12 hours ago, K2938 said:

Moreover, if you are paying yourself a fictitious salary via a UAE company while permanently living in Thailand, then this fictitious salary will most likely be considered to be Thai income anyway, regardless of where it is paid.  People got away with this in the past due to lack of reporting.  But these times are probably over.  So this is unlikely to work for many reasons.

 

Agreed.  And if you establish it was a "real" salary for work you are doing - if you were physically in Thailand doing the work, then it is Thai source income, not foreign source income. In that case, all of your salary is taxable in Thailand - whether or not you ever remit it.

[Dogmatix]

3 hours ago, The Cyclist said:

 

An excuse or exaggeration ? You really think so ?
 

 

You can read more here

 

https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/standard-for-automatic-exchange-of-financial-account-information-in-tax-matters-second-edition-9789264267992-en.htm

 

https://www.oecd.org/tax/international-standards-for-automatic-exchange-of-information-in-tax-matters-896d79d1-en.htm

 

https://www.oecd.org/tax/exchange-of-tax-information/oecd-releases-international-exchange-framework-for-crs-related-mandatory-disclosure-rules-updates-xml-schemas-for-exchange-of-crs-cbc-and-tax-ruling-information.htm

 

CRS and OECD go hand in hand. No excuses by the Thai Government 

or the Thai RD. If Thailand wants to play in the Big Boys Playground, it has to adopt the BIg Boys rules.

 

 

I can see the advantage to Thailand of joining in CRS reporting.  Countries that don't will get shunned and even Switzerland had to join after years of resistance, while former tax havens like the British Virgin Islands now provide information such as beneficial owners and directors of companies (and from 2024 unaudited accounts) to foreign tax authorities on request.  But what advantage will Thailand get from OECD by taxing foreign source personal income on remittance? What disadvantages do Singapore and HK get from joining CRS but continuing their policies not to tax individuals' foreign source income?  

[Dogmatix]

38 minutes ago, Misty said:

 

Agreed.  And if you establish it was a "real" salary for work you are doing - if you were physically in Thailand doing the work, then it is Thai source income, not foreign source income. In that case, all of your salary is taxable in Thailand - whether or not you ever remit it.

 

If someone has a company in UAE or elsewhere, wouldn't it make more sense for the company to make loans to the Thai tax resident, rather than pay a salary?  Loan agreements can be structured so that the repayments can be done from outside Thailand.  Even if the Thai tax resident is a shareholder and/or director the RD cannot make objections to loans to them. Interest payments from Thailand would be subject to withholding tax but no need to pay interest from Thailand. 

[The Cyclist]

14 minutes ago, Dogmatix said:

I can see the advantage to Thailand of joining in CRS reporting. 

 

Then you should also be able to see that " Where there are advantages " there will also be " Disadvantages "

 

The " Disadvantages " are going to fall on people who have been avoiding paying tax due to loopholes.

 

19 minutes ago, Dogmatix said:

But what advantage will Thailand get from OECD

 

The OECD is made up of 38 Countries that can all offer Thailand assistance with economic co-operation and further development.

 

21 minutes ago, Dogmatix said:

by taxing foreign source personal income on remittance?

 

Thailand gets tax revenue from foreign sourced income where it previously didn't. And all Countries need ever increasing tax revenue, even Thailand.

 

But perhaps it is questions that should be asked of the Government. I doubt anyone held a shotgun to their collective heads forcing them to join the CRS.

 

As I previously said. It is more likely that Thailand wanted to play in the Big Boys Playground, and that means adopting the Big Boys rules.

 

 

[Dogmatix]

I have seen some mention here of generous tax deductions for self-employed persons up to 60% of revenue. As many may not be familiar with this I think it is worth pointing out that these deductions are intended for self-employed persons and unlimited partnerships that prefer not to submit audited accounts which might be more beneficial, if their expenses are more than the standard deduction of 60%, or whatever is permitted for their industry. If you take someone operating a restaurant or selling things from a rented shop, a 60% deduction might not seem overly generous. The 60% deduction has to cover all their costs of products or raw materials, rent, salaries for any staff, utilities, protection money to cops, interest on loans etc.  This system is only suitable for small business because your progressive tax rate goes up to 35%, whereas the maximum corporate tax rate is 20%, while directors can charge some personal expenses like company car and driver and entertainment to the company as tax deductible. 

 

My point is that these deductions are not that generous, if you business is over a certain size or your total costs are over 60% of revenue and these deductions don't apply to foreign source income, which is subject to standard deductions the same as Thai salary income, so irrelevant to this topic.

[Mike Teavee]

53 minutes ago, Dogmatix said:

 

If someone has a company in UAE or elsewhere, wouldn't it make more sense for the company to make loans to the Thai tax resident, rather than pay a salary?  Loan agreements can be structured so that the repayments can be done from outside Thailand.  Even if the Thai tax resident is a shareholder and/or director the RD cannot make objections to loans to them. Interest payments from Thailand would be subject to withholding tax but no need to pay interest from Thailand. 

This sounds like the "Dodge" my mate used to use for his consulting salary & it was eventually closed down so he had to repay a fortune.  

 

Same scheme that Jimmy Carr was investigated for https://www.theguardian.com/business/2012/jun/19/tax-scheme-jimmy-carr-hmrc

 

[Dogmatix]

28 minutes ago, The Cyclist said:

 

Then you should also be able to see that " Where there are advantages " there will also be " Disadvantages "

 

The " Disadvantages " are going to fall on people who have been avoiding paying tax due to loopholes.

 

 

The OECD is made up of 38 Countries that can all offer Thailand assistance with economic co-operation and further development.

 

 

Thailand gets tax revenue from foreign sourced income where it previously didn't. And all Countries need ever increasing tax revenue, even Thailand.

 

But perhaps it is questions that should be asked of the Government. I doubt anyone held a shotgun to their collective heads forcing them to join the CRS.

 

As I previously said. It is more likely that Thailand wanted to play in the Big Boys Playground, and that means adopting the Big Boys rules.

 

 

I see your points but I still think that Thailand would still be able to receive the same assistance and economic cooperation from OECD countries, if it choose to continue taxing foreign source income on a prior year remittance basis.  I don't think that Singapore and HK are going to be cut out of any OECD pies for not taxing individuals' foreign source income. If there were real pressure, I think the OECD would want taxation of all foreign source income, not just on a remittance basis.  The OECD doesn't have as big a gun as the US has individually.  Countries that refused to comply with US FATCA would have been cut out from being able to make US dollar payments that have to do through a US correspondence bank. Some Thai financial institutions refuse to deal with clients who are US persons as a result of FATCA.

[The Cyclist]

3 minutes ago, Dogmatix said:

  I don't think that Singapore and HK are going to be cut out of any OECD pies

 

Singapore and HK are absolutely nothing to do with the thread.

 

5 minutes ago, Dogmatix said:

, I think the OECD would want taxation of all foreign source income, not just on a remittance basis.

 

It doesn't really matter what ' you think ' Try reading the links that I previously supplied.

 

Stop looking at the small picture, which is Thailand. The larger picture CRS and the OECD is about closing loopholes that people have been using to avoid paying tax.

 

It is fairly simple, pay tax in the Country where the income originated, or pay tax when that income is remitted to Thailand.

 

Thailand had an option, keep the Status Quo or join the CRS and close loopholes. The Thai powers that be took the option of joining the CRS and the associated rules that came with that.

[Dogmatix]

10 minutes ago, Mike Teavee said:

This sounds like the "Dodge" my mate used to use for his consulting salary & it was eventually closed down so he had to repay a fortune.  

 

Same scheme that Jimmy Carr was investigated for https://www.theguardian.com/business/2012/jun/19/tax-scheme-jimmy-carr-hmrc

 

 

Was your mate doing this in Thailand or some other jurisdiction?

 

The Jimmy Carr scheme was a bit brazen but the article suggested it was going to take a couple of years for HMRC to come up with rules to close the loopholes.  So does the RD have rules to prevent it?  I guess they could deem a loan longer than a certain number of years as income but I am not aware of any rules like that in place.

 

I wouldn't suggest doing this for someone working in Thailand as a way to avoid salary tax, certainly for payments coming in on a regularly monthly or quarterly basis.  It could work for someone who has sold an assets overseas and wishes to remit some or all of the gains on an occasional basis.  It might also be useful for people who have no easy way of showing what was principle or earnings generated prior to 2024 vs post 2024 assessable income.  I suspect wealthy Thais will be using this type of method or back to back loans, as suggested by Prof Kitipong.

[Dogmatix]

4 minutes ago, The Cyclist said:

 

Singapore and HK are absolutely nothing to do with the thread.

 

 

It doesn't really matter what ' you think ' Try reading the links that I previously supplied.

 

Stop looking at the small picture, which is Thailand. The larger picture CRS and the OECD is about closing loopholes that people have been using to avoid paying tax.

 

It is fairly simple, pay tax in the Country where the income originated, or pay tax when that income is remitted to Thailand.

 

Thailand had an option, keep the Status Quo or join the CRS and close loopholes. The Thai powers that be took the option of joining the CRS and the associated rules that came with that.

 

I think the comparison with HK and Singapore is very relevant to this question. How is it that they can comply with CRS without having to follow the rules on foreign source income you say come with that but Thailand would not be able to do likewise, if it so chose?  But it seems you are unable to answer that. So let's move on.

[Mike Teavee]

9 minutes ago, Dogmatix said:

Was your mate doing this in Thailand or some other jurisdiction?

 

The Jimmy Carr scheme was a bit brazen but the article suggested it was going to take a couple of years for HMRC to come up with rules to close the loopholes

No this was in the UK & was a few years back but I mentioned it as if somebody did go down a similar route then it could come back to bite them. 

[The Cyclist]

1 minute ago, Dogmatix said:

 

I think the comparison with HK and Singapore is very relevant to this question. How is it that they can comply with CRS without having to follow the rules on foreign source income you say come with that but Thailand would not be able to do likewise, if it so chose?  But it seems you are unable to answer that. So let's move on.

 

I didn't / couldn't answer it because I have no idea what HK or Singapore currently do.

 

However, a quick google tells me that surprise, surprise, Singapore is also introducing the taxing foreign income from 01 Jan 2024.

 

Quote

Taxation of Foreign Sourced Income in Singapore Effective January 2024. Singapore will begin taxing foreign-sourced disposable gains from January 1, 2024, with Parliament approving the amendments to the country's Income Tax Act.

 

Amazing 

[Guderian]

It might have been asked and answered here already, but there's too many pages to search through. Does anyone know if other SEA countries, like Cambodia and the Philippines, are doing the same thing as Thailand?

[Ben Zioner]

11 hours ago, huyuli said:

If I didn't transfer any money into Thailand but made monthly withdrawals at the ATM with a foreign debit card, would I be able to avoid local taxes? Thanks for your input.

They can catch you, eventually.

[Misty]

1 hour ago, Guderian said:

It might have been asked and answered here already, but there's too many pages to search through. Does anyone know if other SEA countries, like Cambodia and the Philippines, are doing the same thing as Thailand?

 

Malaysia  https://insightplus.bakermckenzie.com/bm/tax/malaysia-updates-regarding-taxation-of-foreign-sourced-income

[Ben Zioner]

20 minutes ago, Misty said:

 

Malaysia  https://insightplus.bakermckenzie.com/bm/tax/malaysia-updates-regarding-taxation-of-foreign-sourced-income

Amusingly, if I got this right, they did exactly the same thing as the Thais, in that they didn't know what they were doing.

[redwood1]

One thing that is very very clear......

 

The huge and massive amount of work and cost that would be required to monitor and enforce this tax plan would be vastly more than the pittance they could extract from expat retirees on a pension.....

 

Very well of ex-pats would just stay for 179 days and wire in a few million dollars then fly off to wherever.. Then come back in the new year and pay ZERO taxes....

[The Cyclist]

17 minutes ago, redwood1 said:

One thing that is very very clear......

 

The huge and massive amount of work and cost that would be required to monitor and enforce this tax plan would be vastly more than the pittance they could extract from expat retirees on a pension.....

 

Just as well it is not designed to extract a pittance from expat retiree pensioners then 

[Mike Lister]

16 minutes ago, redwood1 said:

One thing that is very very clear......

 

The huge and massive amount of work and cost that would be required to monitor and enforce this tax plan would be vastly more than the pittance they could extract from expat retirees on a pension.....

 

Very well of ex-pats would just stay for 179 days and wire in a few million dollars then fly off to wherever.. Then come back in the new year and pay ZERO taxes....

Leaving after 179 days and then returning, has a cost that is not small. I think they only need to sit back and wait let the fear factor go to work as people begin to file tax returns. Then, as time and willpower allows, begin to chase down some of the bigger fish, at their own leisure. The fact that retired pensioner Henry from Sidcup didn't file a return, so what! Many posters are talking up a good story about leaving and throwing temper tantrums but at some point they will begin to weigh the effort and cost of filing a return and begrudgingly will do so. Within nine months, this will be a none issues.

[Dogmatix]

3 hours ago, The Cyclist said:

 

I didn't / couldn't answer it because I have no idea what HK or Singapore currently do.

 

However, a quick google tells me that surprise, surprise, Singapore is also introducing the taxing foreign income from 01 Jan 2024.

 

 

Amazing 

 

I have already posted about this. It applies to companies. As mentioned, the EU has applied pressure on HK and Singapore to eliminate tax schemes whereby multinationals structure overseas companies or shareholdings as or in a subsidiary of a Singapore subsidiary and remit the proceeds to Singapore.  That will now be taxable and HK is considering similar legislation under similar pressure from the EU.  

 

However, foreign sourced personal income remitted to Singapore remains non-taxable https://www.iras.gov.sg/taxes/individual-income-tax/basics-of-individual-income-tax/what-is-taxable-what-is-not/income-received-from-overseas .

 

[Dogmatix]

I have a practical question about the implications of the new order P 162/2566.  I was planning to remit some funds before the end of the year but but these are old savings for which I have no records of tax being paid.  The remitting account has also received some income during this year.  So I was concerned the remittance could be interpreted as this year's income, if they adopt a LIFO approach.  I assume that P 162/2566 may only be applicable from 1 Jan 2024 and that anything remitted before year end 2023 is taxable, if income deemed to have arisen in the same tax year under old interpretation.  So, if it is remitted at beginning of Jan 2024, it is too early to be deemed as arising in 2024 and no income came into account yet in 2024.  It is also covered by the P 162/2566 exemption for pre-2024 income.  Am I missing something?

[The Cyclist]

35 minutes ago, Dogmatix said:

However, foreign sourced personal income remitted to Singapore remains non-taxable https://www.iras.gov.sg/taxes/individual-income-tax/basics-of-individual-income-tax/what-is-taxable-what-is-not/income-received-from-overseas .

 

That might be because Singapore only has a small population, where

 

Most Western expats will be in middle to high salary employment.

 

Most Western expats will not be retirees.

 

The number of Western Expats that actually remit foreign income to Singapore is probably miniscule

 

Perhaps tax avoidance is not an issue in Singapore

 

Quote

The GDP Per Capita of Singapore is $62,400US while that of Thailand is $9,900 US.

 

Thailand needs all the help it can get in trying to reach Singapore standards. Which would include sorting out the domestic tax and taxing people who are also avoiding tax.

[redwood1]

18 minutes ago, The Cyclist said:

 

That might be because Singapore only has a small population, where

 

Most Western expats will be in middle to high salary employment.

 

Most Western expats will not be retirees.

 

The number of Western Expats that actually remit foreign income to Singapore is probably miniscule

 

Perhaps tax avoidance is not an issue in Singapore

 

 

Thailand needs all the help it can get in trying to reach Singapore standards. Which would include sorting out the domestic tax and taxing people who are also avoiding tax.

 

 tax and taxing people who are also avoiding tax.

 

Right, you are......I am sure they will start with the 1% top richest in Thailand and make sure they pay every baht owed....

[The Cyclist]

1 minute ago, redwood1 said:

 

 tax and taxing people who are also avoiding tax.

 

Right, you are......I am sure they will start with the 1% top richest in Thailand and make sure they pay every baht owed....

 

Strange

 

You appear to have missed this part, I have put it in bold for you. I'm sure it was accidental that you omitted it when you quoted me.

 

24 minutes ago, The Cyclist said:

Which would include sorting out the domestic tax and taxing people who are also avoiding tax.

 

 

[Dogmatix]

18 minutes ago, The Cyclist said:

 

That might be because Singapore only has a small population, where

 

Most Western expats will be in middle to high salary employment.

 

Most Western expats will not be retirees.

 

The number of Western Expats that actually remit foreign income to Singapore is probably miniscule

 

Perhaps tax avoidance is not an issue in Singapore

 

 

Thailand needs all the help it can get in trying to reach Singapore standards. Which would include sorting out the domestic tax and taxing people who are also avoiding tax.

 

Singapore and HK, despite the small populations, have a lot of wealthy locals and because they have never had capital controls or any restrictions on investing overseas, you have a lot more investment income going back and forth for overseas investment, probably a lot more than from Thailand.  It is locals' similar foreign source income that the RD wants to catch. Expats and foreign retirees are irrelevant to the equation in all three jurisdictions. 

 

Thailand is doomed if it is going to rely on higher tax rates and a broader tax net to improve the standard of living.  HK and Singapore have done it by carefully maintaining competitiveness in all matters, including education and taxation to attract foreign investment through which most productivity gains flow, and hence GDP growth. Grow the pie faster and collect the same tax at lower tax rates. Thailand faces ever shrinking competitiveness, as seen in its shrinking share of FDI in SE Asian over the last quarter century. More heavily taxing a shrinking pie or a pie growing at a slower rate is probably not the answer but may be consistent with the type of short term fix thinking behind borrowing 3% of GDP to give away. 

[jayboy]

1 hour ago, Mike Lister said:

Within nine months, this will be a none issues.

 

I very much doubt that.My guess that in nine months this forum will still be speculating on what is required of resident expatriates.

[The Cyclist]

5 minutes ago, Dogmatix said:

More heavily taxing a shrinking pie or a pie growing at a slower rate is probably not the answer but may be consistent with the type of short term fix thinking behind borrowing 3% of GDP to give away. 

 

I never said that I thought that Thai Politicians were the sharpest knives in the drawer.

 

Which is evident by joining the CRS and having rules foisted upon them by the OECD at the behest of the G20 which for the most part are drowning in debt.

 

So Thailand can roll with it, or they can hold there hands up and say to the OECD, we are not ready for this and need to put it on hold.

 

The problem might then be if FDI has been promised for joining CRS.

[UKresonant]

15 minutes ago, Mike Lister said:

Leaving after 179 days and then returning, has a cost that is not small. I think they only need to sit back and wait let the fear factor go to work as people begin to file tax returns. Then, as time and willpower allows, begin to chase down some of the bigger fish, at their own leisure. The fact that retired pensioner Henry from Sidcup didn't file a return, so what! Many posters are talking up a good story about leaving and throwing temper tantrums but at some point they will begin to weigh the effort and cost of filing a return and begrudgingly will do so. Within nine months, this will be a none issues.

 

After the lengthy discussion on the subject here, I think the "leaving and throwing temper tantrums" bit should be held in reserve should Thai RD proceed to Global taxation rather than current remittance basis. (However I hope they don't copy the relatively arrogant attitude many of our home countries adopt, which you don't tend to notice, until your looking at the subject from the other direction).

 

But I'm looking at this from the point of view of presently not being in Thailand and not in the firing line, and only thinking of configuring the UK end to be as clear as possible, should the PITA paperwork need to be compiled in Thailand in the future.  I think the longest cumulative number of days in one tax year I've ever stayed there is about 270 days, with 70days longest entry, since the first time I went there in 1993, (when the daughter was just under two, and there was a need  to visit the Thai side of the family  ). 

If they retain the remittance basis and if you can simply deduct the UK tax paid on that specific income, from the Thai Tax liability that would work OK in my situation.  But it may limit by preference and incentive, the amount remitted to Thailand, as it would be mostly only be the bit with full tax credit. It wouldn't work if they haggle over where it should be taxed.

 But I'm sure there could be a lot of non-resident visitors 

 

 

[UKresonant]

1 hour ago, Dogmatix said:

 

Singapore and HK, despite the small populations, have a lot of wealthy locals and because they have never had capital controls or any restrictions on investing overseas, you have a lot more investment income going back and forth for overseas investment, probably a lot more than from Thailand.  It is locals' similar foreign source income that the RD wants to catch. Expats and foreign retirees are irrelevant to the equation in all three jurisdictions. 

 

Thailand is doomed if it is going to rely on higher tax rates and a broader tax net to improve the standard of living.  HK and Singapore have done it by carefully maintaining competitiveness in all matters, including education and taxation to attract foreign investment through which most productivity gains flow, and hence GDP growth. Grow the pie faster and collect the same tax at lower tax rates. Thailand faces ever shrinking competitiveness, as seen in its shrinking share of FDI in SE Asian over the last quarter century. More heavily taxing a shrinking pie or a pie growing at a slower rate is probably not the answer but may be consistent with the type of short term fix thinking behind borrowing 3% of GDP to give away. 

But is there not a traditional old remedy, in the tourist sector, that if there are less customers,  the prices need to be increased, presumably to attract more customers (not) 

[Mike Teavee]

13 hours ago, Mike Lister said:

Leaving after 179 days and then returning, has a cost that is not small. I think they only need to sit back and wait let the fear factor go to work as people begin to file tax returns. Then, as time and willpower allows, begin to chase down some of the bigger fish, at their own leisure. The fact that retired pensioner Henry from Sidcup didn't file a return, so what! Many posters are talking up a good story about leaving and throwing temper tantrums but at some point they will begin to weigh the effort and cost of filing a return and begrudgingly will do so. Within nine months, this will be a none issues.

I don't think anybody is packing their bags just yet, but (IMHO) it is prudent to have at least an idea of what you will do should any changes cause you a problem (I.e. Hope for the Best, Plan for the Worst). 

 

I have no confidence in any changes being implemented smoothly so can only see it being kicked down the road OR causing chaos, so my simple plan for next year is to bring in no more than the 235K tax free element (60K Personal Allowance, 25K for Health Insurance & 150K at 0% rate) & simply spend down what I already have here (I keep 2-3 years spends in-country so can do the same in 2025 if necessary).  

 

My "Worse Case" plan for bringing in the capital gains from the sale of house in the UK AND/OR the tax free lump sum from my pension is to spend < 180days in Thailand in 2026... This might seem extreme to some, but obviously the potential tax on 2 largish lump sums could be significant so not only would this give me the perfect excuse to travel, effectively I would be saving money by doing so.

 

Once I've brought over the lump sums I am hoping to switch to the LTR visa which would (according to current "knowledge") make me exempt from the tax changes so would carry on as normal bringing last year's income over, should I not get this Visa or it not make me exempt then I would (hopefully) know a lot more by then & plan accordingly, but leaving Thailand permanently is not one of my plans. 

 

There it is No Fear, No Panic, No Tantrums, just a clear (in my head) plan for what I'm going to do for the next 2-3 years.

 

 

Edited November 28, 2023 by Mike Teavee
Typos