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

[UKresonant]

Just now, Mike Lister said:

All Immi has to do is count the number of days you've been in the country by looking at your passport, even most immi staff are capable of doing that, perhaps! If less than 180, check and pass, if more than 180, tax clearance required from RD.

Oh I hope not, that tax clearance Cert was a PITA when it was on the go before and much happiness was expressed when it was no longer a thing.

Imagine an urgent matter arises and you get a call on a Friday evening to come home (country) a.s.a.p,  then there is a public holiday on Monday, you can't confirm your flight until you get an audience and get that stupid bit of paper 

[Mike Lister]

3 hours ago, Dogmatix said:

The statistics tell a different story.  https://stats.oecd.org/Index.aspx?DataSetCode=REVTHA. Direct taxes rose nearly every year from 2001 till 2019.  In fact personal income tax rose every year in that period except 2009 due to the 2008 subprime recession year.  Direct taxes accounted for 29%of government revenue in 2021, not 2%. 

 

It is great that you are proud of your wife's small business and minimal tax payments which you mention with great frequency. But the standard deduction of 60% is not really over generous for a business. That assumes a pre-tax profit margin of 40% which is far, far less than the average pre-tax margin of companies listed on the SET.  Combined with personal allowances a 60% expenses deduction is advantageous for a small enough business but for a significantly larger business such a small deduction would result in a crippling tax bill.  That is why businesses of any size will incorporate and submit audited financial statements showing their actual costs and benefit from lower corporate income tax rates.  

 

Below is a screenshot from page 26 of The World Bank Spending & Revenue Assessment dated June 2023 (linked below) which shows Revenue Collection by type since 2005. You will note that Income Tax equaled 5.7% of GDP in 2021 which is higher than the 2% I quoted previously. But then I also attach the 2022 budget breakdown which refers to direct tax as being 2% of total revenue budget. You will also note that income tax collection has fallen, YoY.

 

My apologies if I have used my wife's business as an example of taxation previously but she is the only wife and only business I have first hand knowledge of in Thailand where I can be absolutely certain of the financial details, whereas I cannot be certain which AN readers have seen that information before! I will try very hard from today onwards to try not to bore you with repetition since I understand how difficult it must be for you to not read something once it is posted! But one aspect of that repetition that perhaps you didn't understand is that my wife files taxes as a self employed person, she does not have any of the overheads of being a limited company, she is in effect, a regular employee, the same as any other regular employee of any company. Indeed, were the example of a limited company of any scale, it might involve capital expenditure and long term investment as well as supporting a labor force, along would all the other overhead costs that go along with being a limited company hence a 60% standard deduction would not be high.  But a self employed person generally has none of those things, in my wife's case, her actual costs are only 16% of the cost of sales!

 

https://dmcrth.dmcr.go.th/attachment/dw/download.php?WP=rUqjMT04qmqZG22DM7y04TyerPMjBT01qmIZAJ1CM5O0hJatrTDo7o3Q

 

https://documents1.worldbank.org/curated/en/099052523201010405/pdf/P17715700c42070140a5b009c8453acd7a6.pdf

 

Edited January 2 by Mike Lister

[Mike Lister]

6 hours ago, Dogmatix said:

The statistics tell a different story.  https://stats.oecd.org/Index.aspx?DataSetCode=REVTHA. Direct taxes rose nearly every year from 2001 till 2019.  In fact personal income tax rose every year in that period except 2009 due to the 2008 subprime recession year.  Direct taxes accounted for 29%of government revenue in 2021, not 2%. 

 

It is great that you are proud of your wife's small business and minimal tax payments which you mention with great frequency. But the standard deduction of 60% is not really over generous for a business. That assumes a pre-tax profit margin of 40% which is far, far less than the average pre-tax margin of companies listed on the SET.  Combined with personal allowances a 60% expenses deduction is advantageous for a small enough business but for a significantly larger business such a small deduction would result in a crippling tax bill.  That is why businesses of any size will incorporate and submit audited financial statements showing their actual costs and benefit from lower corporate income tax rates.  

 

Ah, I see the problem I started the ball rolling in my initial post by saying "Direct Taxes" when I intended to say, "PIT" (that has been falling and is 2%. My error in terminology.

[jerrymahoney]

On 12/31/2023 at 1:43 PM, The Cyclist said:

 

We will all come under scrutiny. Or none of us will come under scrutiny.

 

And going by your example, I would say the 800k in the bank would be the ones that would come  under scrutiny.

 

Thats great, you have 800k in the bank. Now what are you living on.

 

Easy to see what the 65 - 75k a month guy is living on.

Well my first 65K+ baht deposit for extension of stay via retirement landed at my Thai bank account 02JAN2024. Now ...

 

[Ralf001]

2 minutes ago, jerrymahoney said:

Well my first 65K+ baht deposit for extension of stay via retirement landed at my Thai bank account 02JAN2024. Now ...

 

 

 

Only 177 days to go.

 

[jerrymahoney]

1 minute ago, Ralf001 said:

 

Only 177 days to go.

 

Not to worry. I expect to be tax resident. But even Jim "I'm-OK-you're-not-OK" G. says I should relax. Any tax I might be charged -- if any -- would probably be around $US100 per year.

[Mike Lister]

6 minutes ago, jerrymahoney said:

Well my first 65K+ baht deposit for extension of stay via retirement landed at my Thai bank account 02JAN2024. Now ...

 

I feel left out and am very concerned. I have 800k in the bank and my pensions are paid directly into my Thai bank account. This means RD can see the source of all my funds, AND my living expenses. Does this mean I wont come under scrutiny like every other expat and that I'll miss out on the rubber glove treatment? Signed, Concerned from Barking

[jerrymahoney]

5 minutes ago, Mike Lister said:

15 minutes ago, jerrymahoney said:

 

I feel left out and am very concerned.

Have you considered therapy?

[Mike Lister]

Here's a better chart of the tax take in Thailand from the OECD that covers 2020 and 2021. At 11% of total tax take, you can see that Thailand's PIT take is not only the lowest in ASEAN but in ASIA/PAC and that there is massive reliance on corporate and indirect tax such as VAT.

https://www.oecd.org/tax/tax-policy/revenue-statistics-asia-and-pacific-thailand.pdf

 

 

The second graph shows tax to GDP ratio which again, shows Thailand near the bottom of the scale. And since government budgets now include deficit spending, the ratio of PIT to budget expenditure is extremely low.

 

 

Edited January 2 by Mike Lister

[tomkenet]

13 hours ago, stat said:

Dead wrong in the case of earnings in 2024 and remitted in 2024. In addition no one knows how and if to prove that their earnings have been from before 2024. In addition no one is 100% sure that earnings pre 2024 are not taxed when remitted.

Funny post, I did not state anything about earning and remittance the same year, which always is taxable.

 

 

A ringfenced account pre. 24 would prove that the earnings have been from before 2024

 

So you question the interpretation of Paw.162 made by all the major tax- consulting firms?

 

 

Edited January 3 by tomkenet

[motdaeng]

 

2 hours ago, jerrymahoney said:

Well my first 65K+ baht deposit for extension of stay via retirement landed at my Thai bank account 02JAN2024. Now ...

 

2 hours ago, jerrymahoney said:

if any -- would probably be around $US100 per year.

 

@jerrymahoney why do you think it will be only around 100 usd per year? 

[jerrymahoney]

11 minutes ago, motdaeng said:

 

 

 

@jerrymahoney why do you think it will be only around 100 usd per year? 

Because the bulk of that will be from US Social Security which is covered by US-Thailand DTA Article 20 Par. 2 and the top-off will be from a source which meets the definition of 'annuity' under the same DTA Article 20 Par. 3

 

So even is the annuity is not covered for tax purposes, after all the deductions including the age 65 + 190K baht per year and the 150K 0% tax level, the remaining amount will be in the 150K to 300K bracket that will be taxed at 5% or roughly 3000 baht.

[BobBKK]

There is so much noise on this thread. Can someone simply lay out the likelihood that they impose tax on pensions here?  surely 100,000s will leave, and fewer will retire here?  I thought they wanted Thailand to be a place to retire TOO?  Sorry if this has been explained before but I really cannot read 200 pages of posts to find the answer.

 

[Presnock]

2 hours ago, BobBKK said:

There is so much noise on this thread. Can someone simply lay out the likelihood that they impose tax on pensions here?  surely 100,000s will leave, and fewer will retire here?  I thought they wanted Thailand to be a place to retire TOO?  Sorry if this has been explained before but I really cannot read 200 pages of posts to find the answer.

 

actually to find out any information just read one page...on that page you will notice it  does not give any definitive answers as to what the Thai govt is going to officially do... all the other 199 pages just keep guessing or asking the impossible questions to date and repeating over and over and over and over

[JimGant]

3 hours ago, BobBKK said:

Can someone simply lay out the likelihood that they impose tax on pensions here?  surely 100,000s will leave,

 

They'd be remiss if they didn't, since they have 60 tax treaty agreements that give them first taxation rights on certain pensions -- mainly private pensions (but not gov't pensions).

 

Identifying these private pensions would be easy, if they're direct deposited into a Thai bank account. Not so easy if these private pensions are part of a fungible glob of cash flow wired into Thailand, where much, if not most, are not private pensions, and not taxable per the DTA. Here, it would seem only self-assessment by the sender of what part of the wire is assessable income, per DTA, would be the only workable solution.

 

But this might collect more money than you think, because it you're already paying taxes on these pensions in your home country (like in the US), should Thailand finally utilize the DTA to their benefit -- you'll now mainly pay taxes to Thailand, instead of the US (when you factor in the tax credit from the Thai taxes). So, your combined tax bill --assuming you do owe some US tax, after factoring in the tax credit -- will be the same as if Thailand never took advantage of the DTA (and even less, if you're Norwegian, where any taxes paid to Thailand will negate a tax requirement to Norway, which are higher than Thailand taxes).

 

So, self assessment should be profitable, which is nice for Thailand, since there's no real alternative. No big deal for Yanks -- my IRA would now have to be declared to Thailand, so, yeah, some more paperwork. But, as previously said, my US tax on this IRA (payable due to the saving clause in the DTA) would be reduced dollar for dollar by the Thai tax credit. Ho hum. No new hole in my pocket.

 

You're not paying taxes now on your pension -- and are horrified by your country's DTA now allowing Thailand to tax it? Welcome to the OECD's latest effort in re-writing their model tax treaties to, not just eliminate double taxation, but to eliminate no taxation, period. So solly.

[TravelerEastWest]

On 1/2/2024 at 5:36 PM, FritsSikkink said:

Let's think a bit bigger, Car manufacturer wants to build factory in Thailand but first needs to pay tax on an investment of billions THB. The whole idea is insane.

 

Is that a good example? I would think the BOI would be sure to take care of taxes for a big investment including no import taxes on machinery and maybe a tax holiday for a number of years?

 

 

[TravelerEastWest]

23 hours ago, Ben Zioner said:

Well I have made a transfer of 100 000 USD that should be there by first business day 2024 (tomorrow). How could one think it was earned  this year? I'll show them my FCD book, and my USB statement and remittance advice. I hope I am not the only one to have done so.

A good point!

 

I think that common sense will solve many of these issues new regulations or not.

 

For the tough issues with large amounts of money - normally you hire an expert...

[Mike Lister]

10 hours ago, BobBKK said:

There is so much noise on this thread. Can someone simply lay out the likelihood that they impose tax on pensions here?  surely 100,000s will leave, and fewer will retire here?  I thought they wanted Thailand to be a place to retire TOO?  Sorry if this has been explained before but I really cannot read 200 pages of posts to find the answer.

 

Likelihood of pensions being taxed is extremely low for Americans because of their tax treaty but high if UK pensions. That said, UK pensioners over age 65 years of age will be allowed a minimum of 500k Baht in deductions and allowances meaning the first 500k baht per year is tax free, thereafter, the remainder will be taxed in bands, starting at 5%.

[stat]

13 hours ago, tomkenet said:

Funny post, I did not state anything about earning and remittance the same year, which always is taxable.

 

 

A ringfenced account pre. 24 would prove that the earnings have been from before 2024

 

So you question the interpretation of Paw.162 made by all the major tax- consulting firms?

 

 

You explicitly stated that nothing would change in 2024, I am glad that you now understand that this is not true.

[stat]

12 hours ago, BobBKK said:

There is so much noise on this thread. Can someone simply lay out the likelihood that they impose tax on pensions here?  surely 100,000s will leave, and fewer will retire here?  I thought they wanted Thailand to be a place to retire TOO?  Sorry if this has been explained before but I really cannot read 200 pages of posts to find the answer.

 

At least you should mention which country you are from and if your government taxes your pension at home.

[UKresonant]

7 hours ago, JimGant said:

You're not paying taxes now on your pension -- and are horrified by your country's DTA now allowing Thailand to tax it?

I'm horrified by the potential complexity it could become, as all my pensions are taxed in the UK.

If the over 180 days over rides the tax residency in the UK, I would still need Thai RD to allow a tax credit on 10% of income remitted, and potentially they may issue a tax  credit asking me to claim it against UK Taxes on the other 90%. I might be tax resident in UK and Tax resident in Thailand, maybe 270 days in UK tax year and 260 days in Thailand tax year, at the extreme, the tax years don't align. May need a Tax float of 150000baht to cope with interim double taxation. This assumes that only fully taxed pension is remitted and that is the only scope of a Thai return. It's just a headache waiting to happen. Would be flip a coin perhaps if the UK tax authorities would issue me a Certificate of Residence or not.  

 

 

Edited January 3 by UKresonant

[freedomnow]

Have they not dumped this pie in the sky idea as unworkable yet ?

 

Foreign long-term flight will soon happen to easier locations...

[stat]

17 minutes ago, UKresonant said:

I'm horrified by the potential complexity it could become, as all my pensions are taxed in the UK.

If the over 180 days over rides the tax residency in the UK, I would still need Thai RD to allow a tax credit on 10% of income remitted, and potentially they may issue a tax  credit asking me to claim it against UK Taxes on the other 90%. I might be tax resident in UK and Tax resident in Thailand, maybe 270 days in UK tax year and 260 days in Thailand tax year, at the extreme, the tax years don't align. May need a Tax float of 150000baht to cope with interim double taxation. This assumes that only fully taxed pension is remitted and that is the only scope of a Thai return. It's just a headache waiting to happen. Would be flip a coin perhaps if the UK tax authorities would issue me a Certificate of Residence or not.  

 

 

Do you have any chance of NOT remitting your pension and using other monies?

[stat]

23 hours ago, UKresonant said:

Oh I hope not, that tax clearance Cert was a PITA when it was on the go before and much happiness was expressed when it was no longer a thing.

Imagine an urgent matter arises and you get a call on a Friday evening to come home (country) a.s.a.p,  then there is a public holiday on Monday, you can't confirm your flight until you get an audience and get that stupid bit of paper 

This is the way it is in the PH once you stay longer then 6 months. However seems to be a relative easy and fast process that can be done within hours.

[Mike Lister]

6 hours ago, UKresonant said:

I'm horrified by the potential complexity it could become, as all my pensions are taxed in the UK.

If the over 180 days over rides the tax residency in the UK, I would still need Thai RD to allow a tax credit on 10% of income remitted, and potentially they may issue a tax  credit asking me to claim it against UK Taxes on the other 90%. I might be tax resident in UK and Tax resident in Thailand, maybe 270 days in UK tax year and 260 days in Thailand tax year, at the extreme, the tax years don't align. May need a Tax float of 150000baht to cope with interim double taxation. This assumes that only fully taxed pension is remitted and that is the only scope of a Thai return. It's just a headache waiting to happen. Would be flip a coin perhaps if the UK tax authorities would issue me a Certificate of Residence or not.  

 

 

You will always be taxed on any income that arises in the UK, for example, rental income, pension, state pension etc. You will also always be taxed on any income that arises in Thailand, bank interest, investment interest, rental income and others. In the case of the UK, tax residency rules are slightly more complex but generally speaking, you are tax resident there, if you remain for more than 183 days per tax year, in which case, you must file as tax resident. But if you remain in the UK for under 183 days per year, OR, the residency rules allow you, you can file as not UK tax resident which means you do not have to declare any income that does not arise in the UK.

 

Moving on to the Thai tax side of things. If you remain in Thailand for under 180 days per year, you are not Thai tax resident and you do not need to file a Thai tax return. But if you remain here for more than 180 days, you must file a return and declare all assessable income that was imported and all income that arose here.

 

As a general rule, it is not possible to be tax resident in the UK and Thailand, in the same tax year, 180 days plus 183 days is 363 days, but days are counted based on where you are at midnight and if you are on a plane, you are not counted on either side. Having said that, The UK rule regarding Ties to the UK, after the first year overseas are complex and I don't intend to go into them in any depth here, other than to say you need to look at them closely if you intend to split your year.

 

Because I'm a Brit, I'll use myself as a real example, I live in Thailand year round so I am tax resident here and here alone. But I have rental property income, investment income and state pension income, all of which arise in the UK. That mean I must file a UK tax return to declare that income although because I am not UK tax resident, my income that arises elsewhere in the world, does not need to be reported on the UK return. The UK allows me 12,750 Pounds per year in a Personal Allowance so much of my UK sourced income falls within that allowance.

 

I also have income that arises in the US which means I must file a US tax return but I do so as a non-resident which means all my other worldwide income is ignored. My income is also below the threshold for filing a return which I do in order to reclaim tax deducted at source only.

 

My Thai tax return reports my US and UK pensions, both of which have been the subject of tax returns hence they are considered to have been taxed and are tax free. But just in case, Thailand allows me deductions and allowances of 500k baht per year that is effectively tax free.

 

I hope those things help

[jerrymahoney]

42 minutes ago, Mike Lister said:

As a general rule, it is not possible to be tax resident in the UK and Thailand, in the same tax year

And just to note as a general 'matter':

 

https://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/tax-residency/United-States-Tax-Residency.pdf

[BE88]

__

 

Edited January 3 by BE88

[tomkenet]

9 hours ago, stat said:

You explicitly stated that nothing would change in 2024, I am glad that you now understand that this is not true.

Sorry, i still think this will not change in 2024.

 

Earnings from previous years are remitted taxfree, just like 2023 and before.

 

Earnings from same year are taxable when remitted , just like 2023 and before.

 

What is new in 2024

[Jonpail]

HERE is something to throw ROCKS at :)

 

"No one should bury their heads in the sand; something WILL happen, and it could cost you $5,000, $6,000, $7,000+ if you ignore the projected taxes. Here's my expert opinion (as an ex-auto mechanic):

 

No one knows the specifics of the 'how'. It might all come down to banks reporting total deposits in 2024. At that point, you would need to detail where the money came from and its purpose. I suspect you'll also have to prove whether it is tax-exempt. Pensions and social security benefits are not safeguarded. If you didn't pay tax on it in your home country because it wasn't taxable there, you might find yourself liable for tax here.

 

What I'm saying is there could be consequences by the end of 2024. It would be wise to prepare and plan just in case. Burying one's head in the sand is not a prudent strategy, in my opinion.

 

JUST HAD A SCARY THOUGHT. You MUST bring in 800,000 THB initially, and it will be taxed!

 

Year One: Bring in $23,000 (800,000 THB) for immigration, $1,000 for health insurance, and then $1,000 a month for monthly expenses. Remember, if you get less than $25k in the USA, it's NOT taxed.

 

From what I can find, the tax breakdown in USD is as follows:

Income between 0 and 150,000 THB, tax rate at 0%, resulting in 0.00 USD tax.
Income between 150,000 and 300,000 THB, tax rate at 5%.
Income between 300,000 and 500,000 THB, tax rate at 10%.
Income between 500,000 and 750,000 THB, tax rate at 15%.
Income between 750,000 and 1,000,000 THB, tax rate at 20%.
Income between 1,000,000 and 1,145,635.08 THB (after the 30,000 THB deductible), tax rate at 25%.
The total tax on this adjusted income, when converted to USD, is approximately $4,541.36.

[jayboy]

5 hours ago, Mike Lister said:

But if you remain here for more than 180 days, you must file a return and declare all assessable income that was imported and all income that arose here.

 

I don't think you are suggesting otherwise but to be clear that is the expected position as from 1.1.24 not the position previously existing.In practice the vast majority of expatriate residents not employed in Thailand did not file returns with the RD.The RD turned a blind eye to this or at least did not take action.Quite why the tiny number of expat residents with no Thai income felt the urge to file returns is anyone's guess.Even now it's not really clear whether all expatriates will be required to file (eg low income pensioners). Furthermore despite RD clarification there are countless questions how "assessable income" will be treated or indeed what comprises "assessable income". My hunch is that this will all become much clearer over the next 12 months.