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

[TravelerEastWest]

14 hours ago, Danderman123 said:

This forum exists to help people.

 

I am suggesting that the new regulation deeming foreign transfers into Thailand as taxable income has some implications. One being that the banks will report such foreign transfers. Another being that the RD will have the data on the transfers.

 

What they do with the data is unknown today.

 

But, at some point, the RD is bound to make inquiries. Some here have speculated that the RD is not going to worry about relatively small transfers.

 

If the RD does worry about your transfers, how would you educate the RD about the tax free nature of your money, except by filing out a tax form?

In America, there are times when income is reported to the IRS but it is not actually taxable for a number of possible reasons. the correct way to handle this is to add the reported taxable income to your tax return and then subtract it out with a note. But you don't ignore the income reported as taxable. The good news is that CPAs in Thailand are not expensive at all. So if a bank reports income that is not taxable your CPA will be able to easily fix the issue for you.

[Danderman123]

40 minutes ago, TravelerEastWest said:

In America, there are times when income is reported to the IRS but it is not actually taxable for a number of possible reasons. the correct way to handle this is to add the reported taxable income to your tax return and then subtract it out with a note. But you don't ignore the income reported as taxable. The good news is that CPAs in Thailand are not expensive at all. So if a bank reports income that is not taxable your CPA will be able to easily fix the issue for you.

I am guessing that you are a tax resident with a tax ID in Thailand. 

 

For many of us, we have never filed a return, have no tax ID, and don't want to file.

 

The impact of these new regulations is probably trivial for you, but to us, it's a major problem.

[jerrymahoney]

9 hours ago, Neeranam said:

18 hours ago, TallGuyJohninBKK said:

then the other interesting wrinkle is a provision in Thai tax regs that allow spouses to gift to their own LEGAL spouse up to 20 MILLION baht per year without that being subject to taxation, which if it stands would seem to be another way of moving foreign funds here without being subject to taxation (though those would have to be non-community property funds).

To which the answer to that query was NOT:

 

Foreign sourced tax-free gifts up to 20 million baht as maintenance to spouse? You Betcha. We do that for our mega-wealthy tax clients all the time. Beats paying 35% tax on that 5 - 20 million baht of the gift component. Been that way since FEB 2016.
 

[Lorry]

In the AmCham webinar they mentioned several times that there are already 2 sets of QnA from the RD.

I only know the one attached. 

Could someone provide the other one?

QnA4.pdf

[Mike Lister]

19 minutes ago, Lorry said:

In the AmCham webinar they mentioned several times that there are already 2 sets of QnA from the RD.

I only know the one attached. 

Could someone provide the other one?

QnA4.pdf 418.36 kB · 1 download

Is there an English language version of this?

[Presnock]

20 hours ago, jerrymahoney said:

I expect the first line of inquiry may be when Immigration says they won't give you an extension of stay without a Thai tax number (TIN)

 

Also from Mazars:

 

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

 

When or if that happens,  I will comply.

 

I am not on here asking questions as to "How will they find out if ..."

suggest all read their country's DTA with Thailand and what can or cannot be taxed...US - article 20 is interesting

[jerrymahoney]

6 hours ago, Danderman123 said:

For many of us, we have never filed a return, have no tax ID, and don't want to file.

You said earlier this topic to me: What's new in 2024 is that your 65K (per month) is now reportable.

 

Fine. But it looks like you want to be 180+ days per year tax resident in Thailand with no reportable income.

 

Legally.

[jacko45k]

I have read a lot about this new foreigner tax scheme and decided I don't want to join in. 

[jerrymahoney]

13 minutes ago, jacko45k said:

I have read a lot about this new foreigner tax scheme and decided I don't want to join in. 

As I  have posted before, without any foreign tax credits or DTA-stuff, my tax bill based just on the currently available deductions, would be about $US 100 per month. Especially the 190K baht age 65+ credit.

 

I wouldn't like it, but not worth packing my bags 'cause of it.

[jaywalker2]

14 minutes ago, jacko45k said:

I have read a lot about this new foreigner tax scheme and decided I don't want to join in. 

And? What do you intend to do?

[jacko45k]

1 minute ago, jaywalker2 said:

And? What do you intend to do?

For now, nothing. 

[jerrymahoney]

1 hour ago, jacko45k said:

For now, nothing. 

It seems the only thing one can really do at this point is to make a lump sum foreign sourced deposit to ones Thai bank account prior to the DEC 31, 2023 witching hour.

 

 

[jacko45k]

Just now, jerrymahoney said:

It seems the only thing one can really do at this point is to make a lump sum foreign sourced deposit to ones Thai bank account prior to the DEC 31, 2023 witching hour.

 

 

You are quite right. I have increased the money I have sitting in a Thai bank and will use that for a while to see how things pan out. I can also use my home country ATM card, not the best financial way get baht, but I do not see how that can be monitored. 

[JimGant]

1 hour ago, jerrymahoney said:

As I  have posted before, without any foreign tax credits or DTA-stuff, my tax bill based just on the currently available deductions, would be about $US 100 per month. Especially the 190K baht age 65+ credit.

 

If your US tax bill is $100/mo, your Thai taxes will be a one for one tax credit.

[JimTripper]

 

1 hour ago, jaywalker2 said:

And? What do you intend to do?

I may take a trip to the phillippines to see what's up. Hearing good things about Dumaguete.

 

I don't want to file at all, even if I don't end up owing.

[jerrymahoney]

13 minutes ago, JimGant said:

 

If your US tax bill is $100/mo, your Thai taxes will be a one for one tax credit.

If the the USA-Thai DTA article 20 Pars. 2 & 3 are applied, I won't have any tax bill in Thailand at all.

 

And before some says: Well with what evidence of income could you prove that? at least for immigration and their "source of funds" letter, I already do.

 

[jaywalker2]

54 minutes ago, JimTripper said:

 

I may take a trip to the phillippines to see what's up. Hearing good things about Dumaguete.

 

I don't want to file at all, even if I don't end up owing.

Me either. I came to Thailand to have a hassle-free retirements. Seems like they're intent on putting an end to that.

[JimGant]

16 minutes ago, jerrymahoney said:

If the the USA-Thai DTA article 20 Pars. 2 & 3 are applied, I won't have any tax bill in Thailand at all.

 

Yes, for para 2 (Social Security). But para 3 treats annuities the same as private pensions, IRAs, other 40x type plans (para 1), namely: Thailand, as resident country, has exclusive taxation rights (although "exclusive" is moot, since the US also taxes this money via the saving clause, found in all US DTAs). So, if you won't have any tax bill in Thailand, great. But it won't be because of para 3.

[Mike Teavee]

1 hour ago, JimTripper said:

 

I may take a trip to the phillippines to see what's up. Hearing good things about Dumaguete.

 

I don't want to file at all, even if I don't end up owing.

Be careful as if you spend more than 2 years in the Philippines you would be considered a "Resident Alien" & so might be subject to tax on your worldwide income...

 

 

Liability for income tax

The liability of aliens for Philippines tax is determined by their residence status. Generally an alien who is present in the Philippines for at least 2 years is a resident alien. An alien who stays in the Philippines for less than 2 years is considered a non-resident alien.

 

There are two classifications of a non-resident alien:

1. engaged in trade or business in the Philippines
2. not engaged in trade or business in the Philippines.

A non-resident alien engaged in trade or business (NRAETB) is one who stays in the Philippines for an aggregate period of more than 180 days during any calendar year. If the individual stays in the Philippines for an aggregate period of 180 days or less, the individual is considered a non-resident alien not engaged in trade or business (NRANETB). The taxable income of citizens, resident aliens and NRAETB is defined as gross compensation and net business income less personal allowances. The taxable income of NRANETBs is their gross income.

 

Non-resident citizens and aliens are subject to income tax on Philippines-sourced income only.

 

Resident citizens are subject to Philippines income tax on worldwide income. Non-resident citizens and aliens are subject to Philippines income tax on their Philippines-sourced income only, such as employment income and passive income

 

https://kpmg.com/xx/en/home/insights/2021/07/philippines-thinking-beyond-borders.html

 

 

[Sheryl]

11 minutes ago, JimGant said:

 

Yes, for para 2 (Social Security). But para 3 treats annuities the same as private pensions, IRAs, other 40x type plans (para 1), namely: Thailand, as resident country, has exclusive taxation rights (although "exclusive" is moot, since the US also taxes this money via the saving clause, found in all US DTAs). So, if you won't have any tax bill in Thailand, great. But it won't be because of para 3.

However some annuities are funded through already taxed income (except for the interest portion) and thus only the interest portion should be taxable - I have  one such.  I don't remit it to Thailand though and certainly won't under the new rules, luckily my SS is enough for my in-Thailand expenses.

[jerrymahoney]

22 minutes ago, JimGant said:

 

Yes, for para 2 (Social Security). But para 3 treats annuities the same as private pensions, IRAs, other 40x type plans (para 1), namely: Thailand, as resident country, has exclusive taxation rights (although "exclusive" is moot, since the US also taxes this money via the saving clause, found in all US DTAs). So, if you won't have any tax bill in Thailand, great. But it won't be because of para 3.

Article 20 Paragraph 3
Under paragraph 3, annuities that are derived and beneficially owned by a resident of a Contracting State are taxable only in that State. An annuity, as the  term is used in this paragraph, means a stated sum paid periodically at stated times during a specified number of years, under an obligation to make the payment in return for adequate and full consideration (other than for services rendered).

 

https://www.irs.gov/pub/irs-trty/thaitech.pdf

 

And as per Ms. Sheryl above, my Social Security payments alone are NOT enough for the min. 65K per month transfer.

[Yumthai]

11 minutes ago, Mike Teavee said:

Be careful as if you spend more than 2 years in the Philippines you would be considered a "Resident Alien" & so might be subject to tax on your worldwide income...

No. Only resident citizen are subject to tax on their worldwide income.

Alien (resident or not) are subject to tax on their Philippines-sourced income only.

[Ben Zioner]

11 hours ago, Eudaimonia said:

 

That's a lot of money in the bank. And the spreadsheet shows 0% interest earnings. Isn't there quite a high opportunity cost for this plan?

 

Time deposits in Thailand yield around 1.7% p.a., considerably less than many investments abroad. One might pay 25% tax for a 6-8% yield and still be better off than remitting all that money to Thailand, where it earns much less.

 

It almost looks like you might achieve a <5% income tax rate but end up with a 5% wealth tax.

 

[Edit: I probably misunderstood what "Bangkok UBS" means – is it funds that are not in Bangkok?]

You've missed the point entirely. The idea here is that when remitting only 1.5 Million a year and use untaxed savings accumulated in previous years to sustain spending in LOS at 3 Million I will save half a million in income tax a year. And we can repeat this cycle by taking sabbaticals every 5 of 5 years. 

 

But as some have mentioned, by that time RD might have worked out how to tax foreign income, instead of remittances. In which case I'll cough up the money every year. But my wife and kids will probably get the money untaxed.

 

Now, the 6% or 8% yield on savings is just urban legend  where my money is. Dunno about US, Oz or UK. Always worry when I hear that sort of figures, as they are totally disconnected from economic reality,. Don't want to be a doomsayer though. 

 

Just one more thing, I am just a normal worker, but not totally naive either; for the last 33 years I managed to earn about a quarter of a million a year while active, less since I've retired,  all totally tax exempt, without breaking any law.

[Mike Teavee]

7 minutes ago, Yumthai said:

No. Only resident citizen are subject to tax on their worldwide income.

Alien (resident or not) are subject to tax on their Philippines-sourced income only.

I thought that was a little ambiguous which is why I put "Might"

 

This seems much clearer...

US Expat Taxes in the Philippines 

As a US expat living in the Philippines, it’s important to know your tax obligations in both the US and the Philippines. As a resident of the Philippines, you are subject to income tax on all income earned, including income earned outside of the country.  

 

However, the Philippines does have a tax treaty with the US to prevent double taxation on your income. It’s important to keep track of all income earned and any taxes paid to ensure compliance with both countries’ tax laws.  

 

Additionally, US expats in the Philippines may be eligible for certain tax credits and deductions, such as the foreign tax credit, which can help reduce their overall tax burden. 

 

https://www.greenbacktaxservices.com/country-guide/expat-taxes-for-philippines/

 

[bugger bognor]

On 12/17/2023 at 8:55 AM, Lorry said:

It works the other way round :

 

they don't have to check all ATM withdrawals done in Thailand. 

They will just have to ask all tax residents (ie people staying over 179 days) to list their ATM withdrawals. 

If they don't believe the answer they can ask the tax resident to provide the corresponding statements of  all his foreign bank accounts, translated into Thai and stamped by his embassy in BKK and the MFA. They know from CRS which banks he has accounts with.

If he won't provide this information,  they may just estimate the withdrawals. 

 

All the people here who think all this is too much work for the RD, maybe  have never filed taxes anywhere. It's generally not the RD, or his or her Majesty, the IRS or whoever, who does the work.  It's the taxpayer who has to do the work.

 

Unfortunately for the RD, a database of all people staying over 179 days does not exist yet.

 

Your delusional nothing is going to happen for decades to expats nothing as for ATM withdrawals foreign banks don't share information with Thailand that's the law 

[Yumthai]

1 hour ago, Mike Teavee said:

I thought that was a little ambiguous which is why I put "Might"

 

This seems much clearer...

US Expat Taxes in the Philippines 

As a US expat living in the Philippines, it’s important to know your tax obligations in both the US and the Philippines. As a resident of the Philippines, you are subject to income tax on all income earned, including income earned outside of the country.  

 

However, the Philippines does have a tax treaty with the US to prevent double taxation on your income. It’s important to keep track of all income earned and any taxes paid to ensure compliance with both countries’ tax laws.  

 

Additionally, US expats in the Philippines may be eligible for certain tax credits and deductions, such as the foreign tax credit, which can help reduce their overall tax burden. 

 

https://www.greenbacktaxservices.com/country-guide/expat-taxes-for-philippines/

Source is misleading.

If you mean you have to pay tax in US as a US person it's true wherever you reside (mitigated with DTA if any).

 

However, you don't pay PH taxes on foreign-sourced income as an alien residing in the Philippines

 

So, if you are not a PH citizen: no income sourced in PH => no income tax in PH.

 

https://www.taxesforexpats.com/country-guides/philippines/us-tax-preparation-in-philippines.html

 

RESIDENT CITIZENS
Resident citizens of the Philippines are taxed on all their net income derived from sources within and without the Philippines.

 

ALIEN INDIVIDUALS
An alien individual, whether a resident or not of the Philippines, is taxable only on income derived from sources within the Philippines. Resident aliens are taxed in the same manner as resident citizens on income sourced within the Philippines.

 

https://taxsummaries.pwc.com/philippines/individual/taxes-on-personal-income

 

The Philippines taxes its resident citizens on their worldwide income. Non-resident citizens and aliens, whether or not resident in the Philippines, are taxed only on income from sources within the Philippines.

 

https://kpmg.com/xx/en/home/insights/2021/07/philippines-thinking-beyond-borders.html

 

Resident citizens are taxed on their income from all sources. A person who is not a citizen of the Philippines (that is, someone who is defined as an alien), regardless of whether the person is a resident or a non-resident, is taxed only on the individual's income from Philippines sources. Likewise, non-resident citizens are taxed only on their income from Philippines sources.

 

 

[Eudaimonia]

1 hour ago, Ben Zioner said:

You've missed the point entirely. The idea here is that when remitting only 1.5 Million a year and use untaxed savings accumulated in previous years to sustain spending in LOS at 3 Million I will save half a million in income tax a year. And we can repeat this cycle by taking sabbaticals every 5 of 5 years. 

 

Now, the 6% or 8% yield on savings is just urban legend  where my money is. Dunno about US, Oz or UK. Always worry when I hear that sort of figures, as they are totally disconnected from economic reality,. Don't want to be a doomsayer though. 

 

The point is this: Your calculation shows an 8 million deposit in Bangkok Bank, which is then spent gradually. The last 500,000 in savings, to be used in early 2028, will have enjoyed over four years of holiday in Bangkok Bank. If kept offshore and invested, this money could (in my humble opinion) have been working offshore and earning much more during that time.

 

I think your principle makes a lot of sense. I will also bring in a lump sum of tax-free money on 1.1.2024 and then remit something taxable every year in the future. However, it is rather difficult to optimize the ratio. Small tax savings seem to lead to big lost profits.

 

By the way, I don't think a 6-8% yield is unrealistic. Even US Treasuries that I bought recently have a yield on cost of over 5% until 2040. The average annualized return of the S&P 500 since 1928 is 9.81%.

[Ben Zioner]

5 hours ago, jerrymahoney said:

You said earlier this topic to me: What's new in 2024 is that your 65K (per month) is now reportable.

Not correct, it has always been "reportable" if remitted to Thailand during the year of earning. Now the question is whether RD will go back 10 years  on all these unreported incomes.

[jerrymahoney]

T

11 minutes ago, Ben Zioner said:

Not correct, it has always been "reportable" if remitted to Thailand during the year of earning. Now the question is whether RD will go back 10 years  on all these unreported incomes.

The italics quote was just someone looking to give me my comeuppance. And as far as I am concerned, ALL my remittances to Thailand going back 10 years and more  would be covered by US-Thai DTA Article 20.

 

I have now done the 65K+ baht per month retirement extension for the 4 years of the new regime wherein you had to supply banking records of the monthly FTT transactions.

 

So if the revenue folks were looking for me, they would know where to find me.

[Ben Zioner]

Just looked at one of the 3 DTAs that may affect me  and found that 

 

"ARTICLE 18
PRIVATE PENSIONS

            Income in the nature of pensions or other remuneration for past employment arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned State."

 

Doesn't say anything IMHO.