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

[scottiejohn]

2 minutes ago, jayboy said:

 

"The average farang retiree lives here on much less than 1 mill, surveys in this forum over the years confirm that."

If the survey was conducted on this forum then I suggest that you should be saying  "The average farang retiree members of AN lives here on much less than 1 mill".

 

I somehow do not think that AN is representative of all Expat retirees living in Thailand!

[TravelerEastWest]

55 minutes ago, jayboy said:

 

Another person who believes this forum represents all retired expatriates.I can assure you there are many retired or partially working expatriates who have investment/pension income far in excess of Baht 1 mill. Most of them wouldn't be members of the forum or even aware of its existence. Look at the advertisers and draw your own conclusions.The blue collar element of expat population is very over represented on this forum.

 Correct, school fees alone can easily be over 1,000,000 easily...

[Mike Lister]

12 minutes ago, jayboy said:

 

"The average farang retiree lives here on much less than 1 mill, surveys in this forum over the years confirm that."

"Another person who believes this forum represents all retired expatriates".

 

 

[The Cyclist]

19 minutes ago, Yumthai said:

 

Your quote is incomplete.

 

From PWC:

Maintenance income derived under a moral obligation or gifts made in a ceremony or on occasions in accordance with established custom from persons who are not ascendants, descendants, or spouse, in the amount not exceeding THB 10 million throughout a tax year.

 

And the point I am trying to get across

 

Maintenance Income.

 

Does the new interepretation of the rules effective from the 01 Jan 2024 not make all income remitted to thailand assessable for income tax  for all tax residents of Thailands ?

 

Perhaps it is just me. But I would think that tax free gifts of up to 20 million baht a year would be exactly the loopholes that they are trying to close.

[UKresonant]

Just now, 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.

 

It's just remitted income considered for the moment, if it goes global in later years the 179 day limit method may be the go to situation.  Yes, global tax would be like mosquito repellent that works 55% of the time .

 

Thai RD don't seem to have the tax return forms to express things correctly, so we may  do a return to show the Gross pension income (or similar), with what actually gets remitted to Thailand i.e. minus the tax credit relief value claimed. which would be in the Thai bank account (less a wee bit for the Banks after fees).  Then to determine  any  additional tax due in Thailand (or not).

 

They are supposed to be generating a new form apparently, but will it make things simple or not is still a mystery. Will it be like learning to ride a bike, once you've  done it once....??

 

 

 

 

[UKresonant]

Just now, Danderman123 said:

I guess the tax scheme has evolved. If so, everyone will jam through their transfers before January 1 (as I am doing).

 

If I need to add more funds into Thailand, I will carry $9,999 with me every time I come from my home country. 

 

Hmmmm... if I deposit that cash into my Bangkok Bank savings account, does that count as an international transfer subject to taxation?

Yes, interesting point about depositing the money, it may have to be explained especially  if you use it for anything official.

 

 

[JimGant]

3 hours ago, TroubleandGrumpy said:

Additionally, it is not a year to year matter - the Tax Dept can (if they want) go backwards over many years, and then they can hit you with fines for not lodging a tax return

 

Oh, yawn. How are they going to determine what amount of your remittance to Thailand is income or post-taxation savings? They can't, and they won't, as they're not brain dead about all the negatives being addressed on this thread. Most importantly, foreign direct investment (FDI) would evaporate if the they taxed all remittances -- and they're not about to go there.

 

Yes, there's income out there to be gained, if Thailand did away with the remittance rule (and the Thai fat cats didn't prevent that tax avoidance scheme from happening). So, say they did -- now worldwide income, subject to DTA exemptions or primary taxation authority rules, would dictate how taxation goes forth in Thailand. In my situation (US), I still would not need to declare my Air Force pension and Social Security pay as assessable income in Thailand (as US has "exclusive" taxation rights on those). But my IRA annual payout (due to RMD) would, under the DTA, be taxable primarily by Thailand, with the US as secondary taxation authority -- meaning, Thailand keeps all the taxes; the US keeps only the taxes, if any, not negated by the tax credit from Thailand. For me? Since Thai taxes would be less than US taxes on this IRA payout, my total tax payout from both countries would be no different than under the old rules, where I didn't need to file with Thailand. And, now, in all fairness -- Thailand finally gets those taxes dictated by the US-Thai DTA -- which had been precluded due to the 'remitted in a a later year' Thai law. Fine by me.

 

Anyway, for Yanks, nothing's going to change with your worldwide tax bill -- only that more of your taxes may go to Thailand, where before they went to the US. Thus, no need to plan for a 185 day vacation from Thailand (186 in leap year) to avoid taxes.

 

Now, for those of you screaming about the unfairness of having Thailand tax some of your income, but who now have none of your income being taxed, including in your home country -- welcome to the new OECD effort for "fiscal fairness." And, yes, CRS and FATCA reporting will be a "gotcha" for you, should Thailand go to taxing income, and not remittances. And Thailand really has no choice, as trying to parse remittances for taxation purposes is a non-starter.

 

But, maybe the Thai fat cats will win out, and this new tax proposal will self-destruct. Thailand will survive -- just jump of VAT a couple of points.

 

If you're a Yank, I wouldn't waste too much time reading this thread, as all the doom and gloom doesn't affect you.

[UKresonant]

Just now, Danderman123 said:

That first paragraph doesn't make any sense.

 

If you transfer in money from abroad in 2024, RD is going to flag it, and you will have to fill out a tax form. Presumably, while filling out the form, you can inform RD that the money came from income earned in 2023 or earlier.

 

I am giving myself a headache, so I will stop here.

Hopefully their systems will be intelligent enough, that the flag will drop off in the Jan to March period, (when a return would be due), to check the immigration database if you have been 180 days or more in year and drop the flag if not..The Banks have your passport in their ID field on the computer after all.

[UKresonant]

Just now, Danderman123 said:

How is Thailand going to enforce the new tax scheme if not via the visa renewal process? 

Passport No

On Thai bank accounts 

Taken every time you change Money (but not sure what level the report at, general stats maybe at the moment).

Recorded each entry and exit of the country.

[Mike Lister]

13 minutes ago, UKresonant said:

Passport No

On Thai bank accounts 

Taken every time you change Money (but not sure what level the report at, general stats maybe at the moment).

Recorded each entry and exit of the country.

Thai Immi has always had the dates I have entered and left, in 1995 one officer at DM showed me screen after screen of my comings and goings (I lived in Hong Kong at the time but also worked part time in Bangkok but on  consultancy basis and without a work permit).

 

And whilst I haven't done so for a while, it always was the case that banks wanted to see my passport when I changed money.

[Etaoin Shrdlu]

38 minutes ago, JimGant said:

 

Oh, yawn. How are they going to determine what amount of your remittance to Thailand is income or post-taxation savings? They can't, and they won't, as they're not brain dead about all the negatives being addressed on this thread. Most importantly, foreign direct investment (FDI) would evaporate if the they taxed all remittances -- and they're not about to go there.

 

Yes, there's income out there to be gained, if Thailand did away with the remittance rule (and the Thai fat cats didn't prevent that tax avoidance scheme from happening). So, say they did -- now worldwide income, subject to DTA exemptions or primary taxation authority rules, would dictate how taxation goes forth in Thailand. In my situation (US), I still would not need to declare my Air Force pension and Social Security pay as assessable income in Thailand (as US has "exclusive" taxation rights on those). But my IRA annual payout (due to RMD) would, under the DTA, be taxable primarily by Thailand, with the US as secondary taxation authority -- meaning, Thailand keeps all the taxes; the US keeps only the taxes, if any, not negated by the tax credit from Thailand. For me? Since Thai taxes would be less than US taxes on this IRA payout, my total tax payout from both countries would be no different than under the old rules, where I didn't need to file with Thailand. And, now, in all fairness -- Thailand finally gets those taxes dictated by the US-Thai DTA -- which had been precluded due to the 'remitted in a a later year' Thai law. Fine by me.

 

Anyway, for Yanks, nothing's going to change with your worldwide tax bill -- only that more of your taxes may go to Thailand, where before they went to the US. Thus, no need to plan for a 185 day vacation from Thailand (186 in leap year) to avoid taxes.

 

Now, for those of you screaming about the unfairness of having Thailand tax some of your income, but who now have none of your income being taxed, including in your home country -- welcome to the new OECD effort for "fiscal fairness." And, yes, CRS and FATCA reporting will be a "gotcha" for you, should Thailand go to taxing income, and not remittances. And Thailand really has no choice, as trying to parse remittances for taxation purposes is a non-starter.

 

But, maybe the Thai fat cats will win out, and this new tax proposal will self-destruct. Thailand will survive -- just jump of VAT a couple of points.

 

If you're a Yank, I wouldn't waste too much time reading this thread, as all the doom and gloom doesn't affect you.

 

Good post.

 

Thai tax rates get up to 35% faster than US tax rates, so it is possible for some people that their tax bill would be higher when paying Thai taxes, especially under a global taxation scenario. To some extent this would be mitigated by non-assessable income such as Social Security and/or military pensions as well as for those with really high income where US tax rates go up to 37%, although there are probably few Americans here that would fall into this tax bracket. There is also the issue of qualified dividends and capital gains being taxed at lower rates than ordinary income in the US, but not in Thailand.

 

These are things to be aware of, but not lose sleep over. If Thai taxation of overseas income stays on a remittance basis, then it is generally easily managed.

 

Edited December 10, 2023 by Etaoin Shrdlu

[Mike Teavee]

2 hours ago, Yumthai said:

Why limiting your GF remittance at 210K? Assuming she's Thai tax resident you can gift her up to 10M THB a year tax-free (then 5% tax on the exceeding amount).

I know you can gift your wife 20M & I have read that parents can gift up to 10M for special occasions (e.g. a wedding) but I can't find it written anywhere that I could gift the GF 10M, do you have a link?

 

[UKresonant]

Just now, Mike Teavee said:

Maybe for the US (and even then you could be liable for tax in Thailand if the tax rate is higher here) but UK State & Private pensions are not covered by the UK/TH DTA.

 

I do think you're right in that nobody should be getting stressed about it until we have more clarity but I do think people should consider bringing money over before 1/1/24 and delaying any planned remittances after that date until we have clarification. 

 

 

From my context / view [......]

UK State & Private pensions are not [reserved to be taxed in the UK initially] by the UK/TH DTA.

But are covered by DTA article 23 3) that they should not be double taxed. (credit relief)

It could be if your out of the UK for years (unlikely in my situation), perhaps you could apply for the tax not to be  deducted in the UK and then all the tax falls to Thailand, but I could not do that with my Government pension as UK has first rights for taxation. 

[UKresonant]

Just now, TroubleandGrumpy said:

DTAs are not the blanket 'get out of jail free' card, that some people think they are in Thailand.

DTAs are a method whereby someone from one country can claim tax exemptions and offsets/credits in another country, in order to avoid Double Taxation being applied.

It is up to the Thai RD to agree with any claim made under a DTA in a tax resident's income tax return.

It not that any taxpayer can give themselves a free pass and not lodge a tax return because of what they read in a DTA. 

There is no guarantee that the Thai RD will accept or agree with any claim using any DTA in any taxpayers income tax return.

The application of a DTA is totally under the authority of the Thai RD - that authority does not reside with a tax resident of Thailand.

 

However. if the Thai RD declares that any form of 'income' remitted into Thailand is not taxable income (such as Pensions or Savings from prior employment years ago), then and only then can a tax resident in Thailand determine that they are not liable for income taxes. 

 

If the Thai RD does not provide a declaration/ruling that the income being remitted into Thailand is not taxable, then the tax resident has to lodge a tax return and claim under a DTA that they are exempt or have offsets/credits - it is then up to the Thai RD to agree or disagree with that claim. 

 

Hope they would agree. as Gross taxable income, less amount of tax credit relief, is what would actually be arriving into the bank in Thailand. (less the Thai banks inward deposit fee, could you claim the fees as expenses perhaps  ) Expecting Thai tax would be slightly more so something to pay likely, but minimal once I'm 65.

[The Cyclist]

57 minutes ago, UKresonant said:

It could be if your out of the UK for years (unlikely in my situation), perhaps you could apply for the tax not to be  deducted in the UK and then all the tax falls to Thailand, but I could not do that with my Government pension as UK has first rights for taxation. 

 

Not going to happen with any UK derived income.

 

It is added together and then taxed appropriately at the going rate after PTA has been deducted.

 

Income from the UK that is above the PTA, taxed on it you shall be, until the day you die.

[ukrules]

6 hours ago, TroubleandGrumpy said:

Anyone bringing in a large amount of money in 2024, thinking that it will all be fine and good is being very unwise.  Likewise, anyone packing up and leaving Thailand before July 2024 is also being unwise.

 

You know, you can always pay a tax bill if needed, I'm sure it won't be a massive burden for a year or two.

 

Things can be arranged to minimise tax in due course once the new rules if any are applied.

 

For example, I will be sending much less money each month from January, if I then need to file a tax return I'll pay the 20k Baht in tax, no big deal. But I will cut my remittances in half to get to this level.

 

Their plans to attempt to tax all global income in the future is the real potential problem here - this current situation is nothing compared to that one which may be a couple of years down the road.

 

 

[Yumthai]

2 hours ago, The Cyclist said:

And the point I am trying to get across

 

Maintenance Income.

 

Does the new interepretation of the rules effective from the 01 Jan 2024 not make all income remitted to thailand assessable for income tax  for all tax residents of Thailands ?

 

Perhaps it is just me. But I would think that tax free gifts of up to 20 million baht a year would be exactly the loopholes that they are trying to close.

 

I'm no lawyer but my understanding of the Thai law is that Gift Tax as well as Inheritance Tax are separate sections of Personal Income Tax that do not fall under assessable income (not listed in section 40 of the Revenue Code).

[Yumthai]

1 hour ago, Mike Teavee said:

I know you can gift your wife 20M & I have read that parents can gift up to 10M for special occasions (e.g. a wedding) but I can't find it written anywhere that I could gift the GF 10M, do you have a link?

 

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

 

Maintenance income derived under a moral obligation or gifts made in a ceremony or on occasions in accordance with established custom from persons who are not ascendants, descendants, or spouse, in the amount not exceeding THB 10 million throughout a tax year.

 

 

[The Cyclist]

4 minutes ago, Yumthai said:

 

I'm no lawyer but my understanding of the Thai law is that Gift Tax as well as Inheritance Tax are separate sections of Personal Income Tax that do not fall under assessable income (not listed in section 40 of the Revenue Code).

 

But they will do, if it is remitted from overseas.

 

You know that loophole that they are closing, where people hold money offshore to avoid paying tax.

 

5 minutes ago, Yumthai said:

Maintenance income derived under a moral obligation

 

I would really need some assistance in finding a ' moral obligation ' for a farang to gift his TG up to 10 million baht a year to do whatever she pleases with it, and it can remain tax free.

 

 

[Ben Zioner]

2 hours ago, UKresonant said:

Yes, interesting point about depositing the money, it may have to be explained especially  if you use it for anything official.

 

 

Would be utter stupidity to deposit. Keep it for shopping at Tops and Makro and go back to COD on Lazada. I  would even be  reluctant to change USD at Super Rich where  they will record your passport. So go to Singapore, get as much as possible out of ATMs and let the Chinese money changers deliver THB at your hotel room. After that you have to make sure customs don't pick you up at Don Muang. There are ways of doing it.

If you get caught you'll have to pat Tax,  and  get fine double the Tax amount. So be smart.

Edited December 10, 2023 by Ben Zioner
you have to make sure

[JimGant]

1 hour ago, Etaoin Shrdlu said:

If Thai taxation of overseas income stays on a remittance basis, then it is generally easily managed.

 

Yes, under the current system, where income remitted the following year is tax exempt (and we filter this thru a home bank account, not via direct deposit to Thailand). But if all remittances, whenever remitted, are subject to taxation, and income has to be parsed from savings, then it becomes unmanageable (when I Wise a huge chunk of my savings account to Thailand, a savings account consisting of multiple after tax direct deposits) -- and established with an inheritance -- and where accounting rules, like Fifo or Lifo, don't apply to remittances (these are GAAP terms) -- how are you going to sort out this fungible mess of dollars?).

 

Anyway, we've heard rumblings about converting to an income vice remittance system. And, if Thailand is serious about collecting more taxes from overseas income, then this is the way they'll have to go; because their current 'brought in next year' is very clever at tax avoidance, and doesn't require a parsing between income and savings: It just gives blanket cover to all cash flow sent into Thailand, with the understanding that any income involved had to be earned in a previous year, otherwise the sender was nuts. Now, however, with the new proposed rules, parsing must take place, as you can't tax all remitted cash flow -- and such parsing is impossible, with reasonable screening resources. Thus, we'll either return to the old system, if the fat cats have their way -- or income, not remittances, will be the taxation of the future. 

[Shoeless Joe]

So, does everything become clear on the 1st of January 2024?

There's been such a lot of hype and  conjecture by AN contributors with what seems to be the minimum of available information. For me, I've transferred around 1 million baht in pensions from my bank every month for about 12 years and live quite comfortably. It's taxed at source in the UK. I have no idea if the Thai RD is planning to tax me again or not but I do know however, that any reduction in my income will make me consider seriously about whether I can (or want to) continue living here where I support my wife and her daughter (who is at Uni) and her mother. I could return to the UK and have my goverment pension adjusted upwards by around another £200 per month as for the last 12 years it's held steady at £456 per month. But I like living here with my wife and family so would rather not. Is it really likely that the RD might be targetting me and others like me?

[jayboy]

13 minutes ago, Shoeless Joe said:

For me, I've transferred around 1 million baht in pensions from my bank every month for about 12 years and live quite comfortably.

1 million baht per month in pensions.That's amazing - you are very fortunate. That"s about £ 22,000 pm or £ 264000 pa, say £ 343,000 gross before UK tax.

[The Cyclist]

48 minutes ago, Shoeless Joe said:

I could return to the UK and have my goverment pension adjusted upwards by around another £200 per month as for the last 12 years it's held steady at £456 per month.

 

Are you confusing a State Pension with a Government Pension ?

 

My Government Pension increases by CPI every year, regardless of where I am in the World.

[Etaoin Shrdlu]

21 minutes ago, JimGant said:

 

Yes, under the current system, where income remitted the following year is tax exempt (and we filter this thru a home bank account, not via direct deposit to Thailand). But if all remittances, whenever remitted, are subject to taxation, and income has to be parsed from savings, then it becomes unmanageable (when I Wise a huge chunk of my savings account to Thailand, a savings account consisting of multiple after tax direct deposits) -- and established with an inheritance -- and where accounting rules, like Fifo or Lifo, don't apply to remittances (these are GAAP terms) -- how are you going to sort out this fungible mess of dollars?).

 

Anyway, we've heard rumblings about converting to an income vice remittance system. And, if Thailand is serious about collecting more taxes from overseas income, then this is the way they'll have to go; because their current 'brought in next year' is very clever at tax avoidance, and doesn't require a parsing between income and savings: It just gives blanket cover to all cash flow sent into Thailand, with the understanding that any income involved had to be earned in a previous year, otherwise the sender was nuts. Now, however, with the new proposed rules, parsing must take place, as you can't tax all remitted cash flow -- and such parsing is impossible, with reasonable screening resources. Thus, we'll either return to the old system, if the fat cats have their way -- or income, not remittances, will be the taxation of the future. 

 

Yes, good point. Remitting commingled funds that include income earned after December 31, 2023 does create a big problem under the new interpretation of the rules.

 

We'll have to see how this plays out.  I suspect eventually Thailand will move to taxation of global income, but that will require a re-write of existing tax law and may take some time.

 

 

[Yumthai]

1 hour ago, The Cyclist said:

But they will do, if it is remitted from overseas.

 

You know that loophole that they are closing, where people hold money offshore to avoid paying tax.

 

They will do what? Tax the GF on inward remittance from someone overseas?

No because it's a gift, described as it, falling under gift law. Period.

Be it a local transfer or from abroad does not matter. GF receives money (tax-free up to 10M THB per calendar year) from a third-party, the BF, who feels a moral obligation to support her (support could mean anything: money for food/rent or to buy a property).

 

A lot of people survive thanks to supporting gifts in Thailand, I can't see TRD start taxing this other than maybe lowering the threshold.

 

Now, feel free to speculate on RD officials interpretation, law enforcement, gift law change, etc...

 

[UKresonant]

Just now, The Cyclist said:

 

Not going to happen with any UK derived income.

 

It is added together and then taxed appropriately at the going rate after PTA has been deducted.

 

Income from the UK that is above the PTA, taxed on it you shall be, until the day you die.

Apologies, your right! 

https://www.gov.uk/tax-on-pension/tax-when-you-live-abroad

"If you’re not a UK resident, you don’t usually pay UK tax on your pension. But you might have to pay tax in the country you live in. There are a few exceptions - for example, UK civil service pensions will always be taxed in the UK". UK government pension remain liable to tax in the UK no matter where you are resident.

 

But not for Thailand, only credit relief, against Thai Tax, if still UK resident.

Claim back via R43 / UK return (maybe) or still only  credit relief if non-resident.
 

 

 

 

 

[UKresonant]

Just now, Shoeless Joe said:

So, does everything become clear on the 1st of January 2024?

There's been such a lot of hype and  conjecture by AN contributors with what seems to be the minimum of available information. For me, I've transferred around 1 million baht in pensions from my bank every month for about 12 years and live quite comfortably. It's taxed at source in the UK. I have no idea if the Thai RD is planning to tax me again or not but I do know however, that any reduction in my income will make me consider seriously about whether I can (or want to) continue living here where I support my wife and her daughter (who is at Uni) and her mother. I could return to the UK and have my goverment pension adjusted upwards by around another £200 per month as for the last 12 years it's held steady at £456 per month. But I like living here with my wife and family so would rather not. Is it really likely that the RD might be targetting me and others like me?

 

Based on the minimum amount of information available loosely 

 

With 1 million baht/ year remitted 2024 onwards  £23256 (@43) would  have about £2755 Thai Tax due but you would have to subtract from that any tax deducted from the pensions in the UK and claim Credit relief..

 

As you have been only transferring savings i.e. pension accumulating in the bank then sent the following year from when it was earned, up until 2023. You may be affected now from Jan 24 remitted to Thailand, especially if it is all pension income and not pre 2024 savings.

 

I think it is very unlikely they will be targeting you for tax.

[Neeranam]

Are university students taxed?

Could I remit say 50k a month to my child tax free?

 

Will Thai banks investigate every Thai person that gets cross border remittance regularly?

 

 

Edited December 10, 2023 by Neeranam

[Danderman123]

To recap the bidding:

 

Starting January 1, 2024, the Thai government will monitor and tax (at a later date) money transferred into Thailand by anyone classified as a tax resident (Thai citizens and foreigners residing in Thailand more than 180 days in any given year).

 

Much of how this will be implemented is TBD. For example, different nations have different tax treaties with Thailand, how this will be resolver is TBD.

 

Current Thai tax forms are available in English, but these forms cannot be used as is for this new tax scheme.

 

2 ways to avoid having to fill out a bunch of Thai tax forms:

 

1. Don't transfer any money to Thailand after January 1, 2024.

 

2 Don't stay in Thailand more than 180 days in 2024.

 

A third option is to hope that this all goes away, like so many similar proposals. Given that we are already in December, and they still haven't figured this out is a hopeful sign.