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

[TravelerEastWest]

On 12/7/2023 at 3:22 PM, jerrymahoney said:

With apologies to Dr. Niebuhr:

 

God grant me the serenity
to accept the things I cannot change;

courage to change the things I can;

 

... and the option to get out of the country before my 180 days are up if I can't tell the difference.
 

 

 

 

Jerry,

 

I love that prayer and your post even more!

[TroubleandGrumpy]

41 minutes ago, jerrymahoney said:

"The provisions of paragraph one shall not apply to assessable income incurred before January 1, 2024."

 

There are two clear ways to read this statement and what it means (that I can see):

1.  Assesable income earned before January 1, 2024 will not be taxed in the future (I do not think it means that);

2. Assessable income earned and remitted into Thailand before January 1, 2024 will not be taxed.

The question is when is income tax on assessable income incurred - it is incurred when it is remitted into Thailand. 

IMO it means - remit the money into Thailand before January 1, 2024 and it will not be taxed.

Clear as mud.

[RupertIII]

12 minutes ago, TroubleandGrumpy said:

 

There are two clear ways to read this statement and what it means (that I can see):

1.  Assesable income earned before January 1, 2024 will not be taxed in the future (I do not think it means that);

2. Assessable income earned and remitted into Thailand before January 1, 2024 will not be taxed.

The question is when is income tax on assessable income incurred - it is incurred when it is remitted into Thailand. 

IMO it means - remit the money into Thailand before January 1, 2024 and it will not be taxed.

Clear as mud.

My understanding is that income earned prior to 1 Jan 24, e.g. in the current year, will not be taxed if remitted into Thailand in 24, or thereafter I assume.

Income earned in 24 and thereafter will be taxed regardless of when remitted into Thailand.

[tomkenet]

24 minutes ago, TroubleandGrumpy said:

 

There are two clear ways to read this statement and what it means (that I can see):

1.  Assesable income earned before January 1, 2024 will not be taxed in the future (I do not think it means that);

2. Assessable income earned and remitted into Thailand before January 1, 2024 will not be taxed.

The question is when is income tax on assessable income incurred - it is incurred when it is remitted into Thailand. 

IMO it means - remit the money into Thailand before January 1, 2024 and it will not be taxed.

Clear as mud.

 

[stat]

7 hours ago, kuma said:

So lol most of the shares I hold are under water rn, does that mean I can claim the loss and get a refund with this new proposed tax regimen? Or is it a case of 'we are interested in your gains not your losses, you get to keep those'?

Of course you only liquidate the winners and keep the losers. No one knows if tax credit for loses will be given in TH in theory or practice.

[stat]

On 12/7/2023 at 5:05 PM, Krit said:

 

I wonder if Thailand has wash sale rules that would apply. In the US, for example, one cannot rebuy the next second but would need to wait 30 days before buying back the same securities.

I highly doubt that they have wash sales rules in TH as up to now they were not even taxing cap gains on a broad basis as everyone was sending proceeds in the next year. Germany does not have wash sales rule and TH is not a "sophisticated" capital market, so no wash sales rule in TH is my strong guess.

Edited December 8, 2023 by stat

[TroubleandGrumpy]

16 hours ago, tomkenet said:

 

That looks good - but what is the source?  Is it from Thai RD ??

[TroubleandGrumpy]

17 hours ago, RupertIII said:

My understanding is that income earned prior to 1 Jan 24, e.g. in the current year, will not be taxed if remitted into Thailand in 24, or thereafter I assume.

Income earned in 24 and thereafter will be taxed regardless of when remitted into Thailand.

 

There are two camps of opinions from tax 'experts' at this time :-

1. The rule applies to all income received in the past, and tax is incurred when it is remitted into Thailand after 1 January 2024. 

2. The rule applies only to income received after 1 January 2024, and tax is incurred whenever it is remitted into Thailand.

Like everyone, I am hoping that number 2 is the Thai RD interpretation and that statement is published soon.

 

Then it becomes (for many) an issue about a Govt Pension received after 1 Jan 2024, which is technically income and taxable when remitted into Thailand.  Hopefully, the Thai RD will declare all Govt Pensions from DTA countries as tax exempt, including when that money is remitted into Thailand. Otherwise, Expats on Govt Pensions will be required to lodge a tax return and claim the tax exemption, under their own applicable DTA.

Edited December 9, 2023 by TroubleandGrumpy

[tomkenet]

On 12/2/2023 at 11:51 AM, Dogmatix said:

Some up dated advisories in the light of P 162/2566 from BM, EY and SCB for interest.  

 

The BM document is just in slide form.  One slide gives the idea of using an offshore company to remit a "genuine loan" to the company's 100% owner who is tax resident in Thailand.  It says this is not assessable but doesn't define "genuine loan".

 

SCB reiterates the point from the Prachachart Thurakit article that a RD source said they want to amend the Revenue Code to tax all foreign source income in the year it arises, regardless of whether remitted to Thailand or not. I guess that is where we are headed eventually and a future MFP government with plans for enhanced welfare funded by an iniquitous wealth tax and other new taxes would probably make that more likely. 

Baker McKenzie 24 Nov 2023.pdf 1.21 MB · 26 downloads EY 28_Nov_2023[1].pdf 248.91 kB · 24 downloads

It's from the Baker McKenzie report. It has been referred to several times on this thread, surprised you haven't seen it .

 

Mazars and Ernst & Young reports the same interpretation 

Edited December 9, 2023 by tomkenet

[jerrymahoney]

REDUX:

 

According to the Revenue Department, it will seek opinions from the stakeholders affected by the new rule and issue guidelines to provide more clarity. The plan includes an amendment of the personal income tax return form to facilitate the foreign tax credit claim.

 

https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Tax/Thailand-Tax-Foreign-Income-Taxable-from-2024

[The Cyclist]

8 minutes ago, jerrymahoney said:

REDUX:

 

According to the Revenue Department, it will seek opinions from the stakeholders affected by the new rule and issue guidelines to provide more clarity. The plan includes an amendment of the personal income tax return form to facilitate the foreign tax credit claim.

 

https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Tax/Thailand-Tax-Foreign-Income-Taxable-from-2024

 

Posted many times on the thread.

 

Some people cannot see it, or cannot understand it

 

I sat with a beer last night and worked out that by limiting my remitted income to my Government pension, I will pay somewhere between Zero  ( Taxed in UK and covered by a DTA ) and 80,000 Baht a year ( Before applying any deductions )

 

To give that a bit of perspective, 80,000 Baht would hardly cover my CouncilTax bill if I was to flee  back to the UK.

[tomkenet]

26 minutes ago, jerrymahoney said:

REDUX:

 

According to the Revenue Department, it will seek opinions from the stakeholders affected by the new rule and issue guidelines to provide more clarity. The plan includes an amendment of the personal income tax return form to facilitate the foreign tax credit claim.

 

https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Tax/Thailand-Tax-Foreign-Income-Taxable-from-2024

Looks like this one is from before. Paw. 162/2566 

They have also issued a report after, which is more useful.

[jerrymahoney]

21 minutes ago, tomkenet said:

Looks like this one is from before. Paw. 162/2566 

They have also issued a report after, which is more useful.

You may be referencing this starting page 3:

 

Further guidance from the Revenue Department on Foreign Sourced
Income
 

https://www.mazars.co.th/content/download/1175616/59807824/version//file/Technical-update-November-2023.pdf

 

However the salient point to me is that in the earlier notice they are said to be working to amend the income tax form to facilitate the foreign tax credit claim.

[Eudaimonia]

Here's my action plan. Maybe this is helpful to someone, or someone can point out mistakes. I am not in retirement age yet but live off investments abroad, so this change certainly affects me.

 

I have a portfolio of stocks from different countries. I now set up a new broker account and moved all my US stocks and ETFs there. Selling and buying back shares that have appreciated realised all capital gains so they will not be taxed later.

 

The main reason to have two accounts is that dividends from various countries have different withholding taxes. For example, the UK and Singapore are 0%. Those would be taxed when remitted to Thailand after 1.1.2024. That is why it is best to have separate accounts.

 

The US withholding tax for Thailand tax residents is 15%. I already have a Thai tax ID, which I have sent to my broker, so they apply the double tax agreement and withhold 15% tax from my US dividends. 
 
Calculating Thai personal income rates using the progressive levels (5-35%), I see that the overall tax rate rises to roughly 15% at around 1.4 million baht. I plan to remit up to 1.4 million per year and use a withholding certificate from my broker to prove that I have already paid 15%. I expect to attach proof of the withholding tax paid and be able to claim it as a credit (The Revenue Department has promised they will amend the tax forms for this). That means there should be little or no Thai tax to pay.

 

What if 1.4 million baht is not enough in the future? Maybe I need to buy something expensive. Luckily, according to the latest order No. 162/2566, the new rules will not apply to income earned before 1.1.2024.

 

Before the end of this year, I will transfer some funds to a new offshore bank account that is ring-fenced for remittance purposes. In January, I will send some of that money to my Thai bank account, and as pre-2024 earnings it will not be taxed. So, I have some savings as a buffer. It is possible to remit that pre-2024 money later as well, but if the offshore account accrues any interest, that interest part would be taxable in Thailand. We do not yet know how such mixed funds will be treated.

 

(If I sent more money to my Thai account now, in December, it would be assessable income because I have earned it this year. That has always been the case, according to the old law. So I have to wait until 2024.)

 

My other broker account, with non-US stocks, will never be used to send anything to Thailand. I can use those funds when staying abroad. At this point, they will not be assessable income in Thailand. However, even that might change in the future. Therefore, it is best to sell (and buy back) those shares now as well to realise the capital gains before 2024.

 

Does this sound like a feasible plan? Have I missed anything?
 

[tomkenet]

1 hour ago, Eudaimonia said:

Here's my action plan. Maybe this is helpful to someone, or someone can point out mistakes. I am not in retirement age yet but live off investments abroad, so this change certainly affects me.

 

I have a portfolio of stocks from different countries. I now set up a new broker account and moved all my US stocks and ETFs there. Selling and buying back shares that have appreciated realised all capital gains so they will not be taxed later.

 

The main reason to have two accounts is that dividends from various countries have different withholding taxes. For example, the UK and Singapore are 0%. Those would be taxed when remitted to Thailand after 1.1.2024. That is why it is best to have separate accounts.

 

The US withholding tax for Thailand tax residents is 15%. I already have a Thai tax ID, which I have sent to my broker, so they apply the double tax agreement and withhold 15% tax from my US dividends. 
 
Calculating Thai personal income rates using the progressive levels (5-35%), I see that the overall tax rate rises to roughly 15% at around 1.4 million baht. I plan to remit up to 1.4 million per year and use a withholding certificate from my broker to prove that I have already paid 15%. I expect to attach proof of the withholding tax paid and be able to claim it as a credit (The Revenue Department has promised they will amend the tax forms for this). That means there should be little or no Thai tax to pay.

 

What if 1.4 million baht is not enough in the future? Maybe I need to buy something expensive. Luckily, according to the latest order No. 162/2566, the new rules will not apply to income earned before 1.1.2024.

 

Before the end of this year, I will transfer some funds to a new offshore bank account that is ring-fenced for remittance purposes. In January, I will send some of that money to my Thai bank account, and as pre-2024 earnings it will not be taxed. So, I have some savings as a buffer. It is possible to remit that pre-2024 money later as well, but if the offshore account accrues any interest, that interest part would be taxable in Thailand. We do not yet know how such mixed funds will be treated.

 

(If I sent more money to my Thai account now, in December, it would be assessable income because I have earned it this year. That has always been the case, according to the old law. So I have to wait until 2024.)

 

My other broker account, with non-US stocks, will never be used to send anything to Thailand. I can use those funds when staying abroad. At this point, they will not be assessable income in Thailand. However, even that might change in the future. Therefore, it is best to sell (and buy back) those shares now as well to realise the capital gains before 2024.

 

Does this sound like a feasible plan? Have I missed anything?
 

Sounds like a good plan. I will do something similar,but with a overweight of transferring money to a Ring fenced account before new year.

[Etaoin Shrdlu]

1 hour ago, Eudaimonia said:

Here's my action plan. Maybe this is helpful to someone, or someone can point out mistakes. I am not in retirement age yet but live off investments abroad, so this change certainly affects me.

 

I have a portfolio of stocks from different countries. I now set up a new broker account and moved all my US stocks and ETFs there. Selling and buying back shares that have appreciated realised all capital gains so they will not be taxed later.

 

The main reason to have two accounts is that dividends from various countries have different withholding taxes. For example, the UK and Singapore are 0%. Those would be taxed when remitted to Thailand after 1.1.2024. That is why it is best to have separate accounts.

 

The US withholding tax for Thailand tax residents is 15%. I already have a Thai tax ID, which I have sent to my broker, so they apply the double tax agreement and withhold 15% tax from my US dividends. 
 
Calculating Thai personal income rates using the progressive levels (5-35%), I see that the overall tax rate rises to roughly 15% at around 1.4 million baht. I plan to remit up to 1.4 million per year and use a withholding certificate from my broker to prove that I have already paid 15%. I expect to attach proof of the withholding tax paid and be able to claim it as a credit (The Revenue Department has promised they will amend the tax forms for this). That means there should be little or no Thai tax to pay.

 

What if 1.4 million baht is not enough in the future? Maybe I need to buy something expensive. Luckily, according to the latest order No. 162/2566, the new rules will not apply to income earned before 1.1.2024.

 

Before the end of this year, I will transfer some funds to a new offshore bank account that is ring-fenced for remittance purposes. In January, I will send some of that money to my Thai bank account, and as pre-2024 earnings it will not be taxed. So, I have some savings as a buffer. It is possible to remit that pre-2024 money later as well, but if the offshore account accrues any interest, that interest part would be taxable in Thailand. We do not yet know how such mixed funds will be treated.

 

(If I sent more money to my Thai account now, in December, it would be assessable income because I have earned it this year. That has always been the case, according to the old law. So I have to wait until 2024.)

 

My other broker account, with non-US stocks, will never be used to send anything to Thailand. I can use those funds when staying abroad. At this point, they will not be assessable income in Thailand. However, even that might change in the future. Therefore, it is best to sell (and buy back) those shares now as well to realise the capital gains before 2024.

 

Does this sound like a feasible plan? Have I missed anything?
 

 

The 15% withholding that your US broker remits to the IRS is most likely not the actual amount of US taxes you will be required to pay.

 

I think you will only get a credit against your Thai taxes for actual amount of tax paid as evidenced on your 1040 tax form and not the amount that gets withheld by your broker. Depending upon your income level, the actual tax you pay on your investment income to the IRS could be more or less than the 15% withheld.

[Yumthai]

21 minutes ago, Etaoin Shrdlu said:

The 15% withholding that your US broker remits to the IRS is most likely not the actual amount of US taxes you will be required to pay.

 

I think you will only get a credit against your Thai taxes for actual amount of tax paid as evidenced on your 1040 tax form and not the amount that gets withheld by your broker. Depending upon your income level, the actual tax you pay on your investment income to the IRS could be more or less than the 15% withheld.

If you are a US non resident alien, withholding tax on US dividends is a final tax.

[Eudaimonia]

5 minutes ago, Yumthai said:

If you are a US non resident alien, withholding tax on US dividends is a final tax.

 

Yes, I forgot to mention that I am not a US citizen, I just like to invest there. As a nonresident alien, I have never filed anything with the IRS. The broker withholds 15% of my US dividends, and that's the final amount. It's shown on Form 1042-S, which I get every year.

[Yumthai]

2 hours ago, Eudaimonia said:

What if 1.4 million baht is not enough in the future? Maybe I need to buy something expensive. Luckily, according to the latest order No. 162/2566, the new rules will not apply to income earned before 1.1.2024.

If you earn at least US$80K a year in passive income (can be dividend) and 50+ yo you could apply for an LTR Wealthy Pensioners visa and benefit from "Tax exemption for overseas income". 

[Eudaimonia]

2 minutes ago, Yumthai said:

If you earn at least US$80K a year in passive income (can be dividend) and 50+ yo you could apply for an LTR Wealthy Pensioners visa and benefit from "Tax exemption for overseas income". 

 

I'm not yet 50 but that's a great benefit if it stays like that!

[Etaoin Shrdlu]

1 hour ago, Eudaimonia said:

 

Yes, I forgot to mention that I am not a US citizen, I just like to invest there. As a nonresident alien, I have never filed anything with the IRS. The broker withholds 15% of my US dividends, and that's the final amount. It's shown on Form 1042-S, which I get every year.

 

I should have deduced that from your post even though you did not mention it specifically. My mistake. You should be ok then.

[still kicking]

Myths about Thai expats and those income tax changes starting very soon - Pattaya Mail

[kuma]

5 hours ago, Eudaimonia said:

Here's my action plan. Maybe this is helpful to someone, or someone can point out mistakes. I am not in retirement age yet but live off investments abroad, so this change certainly affects me.

 

I have a portfolio of stocks from different countries. I now set up a new broker account and moved all my US stocks and ETFs there. Selling and buying back shares that have appreciated realised all capital gains so they will not be taxed later.

 

The main reason to have two accounts is that dividends from various countries have different withholding taxes. For example, the UK and Singapore are 0%. Those would be taxed when remitted to Thailand after 1.1.2024. That is why it is best to have separate accounts.

 

The US withholding tax for Thailand tax residents is 15%. I already have a Thai tax ID, which I have sent to my broker, so they apply the double tax agreement and withhold 15% tax from my US dividends. 
 
Calculating Thai personal income rates using the progressive levels (5-35%), I see that the overall tax rate rises to roughly 15% at around 1.4 million baht. I plan to remit up to 1.4 million per year and use a withholding certificate from my broker to prove that I have already paid 15%. I expect to attach proof of the withholding tax paid and be able to claim it as a credit (The Revenue Department has promised they will amend the tax forms for this). That means there should be little or no Thai tax to pay.

 

What if 1.4 million baht is not enough in the future? Maybe I need to buy something expensive. Luckily, according to the latest order No. 162/2566, the new rules will not apply to income earned before 1.1.2024.

 

Before the end of this year, I will transfer some funds to a new offshore bank account that is ring-fenced for remittance purposes. In January, I will send some of that money to my Thai bank account, and as pre-2024 earnings it will not be taxed. So, I have some savings as a buffer. It is possible to remit that pre-2024 money later as well, but if the offshore account accrues any interest, that interest part would be taxable in Thailand. We do not yet know how such mixed funds will be treated.

 

(If I sent more money to my Thai account now, in December, it would be assessable income because I have earned it this year. That has always been the case, according to the old law. So I have to wait until 2024.)

 

My other broker account, with non-US stocks, will never be used to send anything to Thailand. I can use those funds when staying abroad. At this point, they will not be assessable income in Thailand. However, even that might change in the future. Therefore, it is best to sell (and buy back) those shares now as well to realise the capital gains before 2024.

 

Does this sound like a feasible plan? Have I missed anything?
 

Too much account juggling for me but it is a reasonable plan.,except there are no details in stone yet about what the plan is so it could all be for naught. Hope it works out for you. I am not going to set up more accounts just to navigate all this - the hassle of account opening can be even worse. See what 2024 brings. Cheers

[Eudaimonia]

4 hours ago, tomkenet said:

Sounds like a good plan. I will do something similar,but with a overweight of transferring money to a Ring fenced account before new year.

I'm thinking about buying a condo in early 2024. Owning instead of renting would lessen the need to bring in money later. The purchase window seems to be closing now: the requirement to bring in all funds from abroad combined with progressive taxation of those funds means that the Thai real estate market is dead to me from 2025 onwards.

[Danderman123]

20 hours ago, The Cyclist said:

 

Posted many times on the thread.

 

Some people cannot see it, or cannot understand it

 

I sat with a beer last night and worked out that by limiting my remitted income to my Government pension, I will pay somewhere between Zero  ( Taxed in UK and covered by a DTA ) and 80,000 Baht a year ( Before applying any deductions )

 

To give that a bit of perspective, 80,000 Baht would hardly cover my CouncilTax bill if I was to flee  back to the UK.

It's a bigger problem than just the money - the labor involved in calculating the tax would be enormous. Will the tax forms and instructions be in English? Will the tax forms provide reductions in taxable income due to bilateral tax treaties?

 

I have seen a lot of discussion about the theory of how this new tax would work, but very little about actual practice. The danger is at visa renewal time, the government demands a full accounting of all my income anywhere in the world, and no visa renewal if I don't provide it.

 

Right now, my plan is to remain in Thailand less than 180 days next year, starting January 4. If, as usually happens, the new scheme fails, then I will return to Thailand.

[Danderman123]

8 hours ago, Eudaimonia said:

I'm thinking about buying a condo in early 2024. Owning instead of renting would lessen the need to bring in money later. The purchase window seems to be closing now: the requirement to bring in all funds from abroad combined with progressive taxation of those funds means that the Thai real estate market is dead to me from 2025 onwards.

This new scheme will have many unanticipated impacts on the Thai economy.

[Mike Lister]

1 minute ago, Danderman123 said:

This new scheme will have many unanticipated impacts on the Thai economy.

For example?

[Mike Lister]

3 minutes ago, Danderman123 said:

It's a bigger problem than just the money - the labor involved in calculating the tax would be enormous. Will the tax forms and instructions be in English? Will the tax forms provide reductions in taxable income due to bilateral tax treaties?

 

I have seen a lot of discussion about the theory of how this new tax would work, but very little about actual practice. The danger is at visa renewal time, the government demands a full accounting of all my income anywhere in the world, and no visa renewal if I don't provide it.

 

Right now, my plan is to remain in Thailand less than 180 days next year, starting January 4. If, as usually happens, the new scheme fails, then I will return to Thailand.

Tax forms and rules are available in English, the online system is not, currently.

 

There is very little extra labour involved, many people now enter their taxes online. 

[Danderman123]

27 minutes ago, Mike Lister said:

For example?

One obvious example will be retirement visa holders staying in Thailand less than 180 days in order to be exempt from the tax.

[Danderman123]

26 minutes ago, Mike Lister said:

Tax forms and rules are available in English, the online system is not, currently.

 

There is very little extra labour involved, many people now enter their taxes online. 

For people who are currently tax residents and who currently pay Thai income tax, the new scheme will have little impact.

 

For the rest of us, the new scheme will be a big problem.