Opinion: Thailand’s ambitious plan to tax incoming funds risks falling flat due to lack of clarity

[webfact]

The Thai Revenue Department’s recent announcement to impose taxes on funds entering the country from abroad sent ripples through the elite society and financial sectors over the weekend. In a nation where such a taxation scheme is unprecedented, the buzz was loud enough to compel newly appointed Prime Minister Srettha Thavasin to issue a statement, stressing the initiative’s aim to narrow the wealth gap. However, the government’s opaque approach and questionable execution raise several red flags.

 

First and foremost, the private banking industry is unambiguously unsettled by the announcement. Banks, after all, are gatekeepers to the capital flows that keep an economy robust. Their clients, many of whom have already moved funds out of Thailand, are now confronted with a policy quagmire that could have been avoided with clearer guidelines. While PM Srettha Thavasin speaks of an equitable society, the current ambiguity seems more likely to generate confusion and economic instability.

 

The banking sector’s alarm has cascaded down to individual clients who now face a predicament about the future of their investments. Without clear directives on how the new tax structure will be implemented, the government risks inciting a fiscal exodus or, at the very least, a chilling effect on future investments.

 

By Thai Enquirer

 

Full story: THAI ENQUIRER 2023-09-19

 

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[Enzian]

Several times I've stated on forums that the fact that this government (even more than others) is perfectly capable of changing any rule in any way at any time is why I will never buy a condo here, or contemplate any other long term commitments for that matter. Even if this particular issue quickly blows over (or just doesn't apply to me personally), the point is only reinforced. Myself, if needed, can have everything wrapped up and be out of here for good within two months at most. Caveat emptor.

[JBChiangRai]

This is misuderstood.

 

There is currently a loophole where funds earned overseas (eg tax free) can be brought in 1st January of the following year, still tax free.

 

This clause has been exploited by Thailand's rich and savvy digital nomads.  Thailand's rich are even sending money overseas from their companies as a deductible expense and then returning it to themselves personally tax free, all perfectly legal.

 

This what they want to stop, not you and your pension.

[Eric Loh]

Ambitious plan ! Nay, tax for incoming funds have been around for ages. He just sets targets for tax reform. 

[bob smith]

Just wait until all this uncertainty trickles down into the housing/condo markets!

All those posh new high rises that have just been finished in BKK will be empty.

 

Nobody will want to risk brining their money into Thailand if the government can legally chip away at their savings. 

 

There is just far too much risk involved. 

[Dmaxdan]

From the original article...

 

This ambitious tax reform agenda needs to be more than just a headline. It should be a meticulously crafted policy that serves its constituents — both the haves and the have-nots — without sacrificing economic stability. As it stands, the proposed taxation on incoming funds is a well-intended but half-baked plan, a ship sailing into murky waters without a compass.

 

This just sums up the whole scheme in a nutshell.

[mania]

17 minutes ago, webfact said:

Without clear directives on how the new tax structure will be implemented, the government risks inciting a fiscal exodus or, at the very least, a chilling effect on future investments.

This is a big problem with this country & its so called "Ministers" of this & that.

 

Their plans are always clear as mud with zero foresight. Nor do they discuss first with the government/parliament or put things to a vote

 

No instead with their Napoleon syndrome they like to make grand announcements. ????

 

But take it back or not it shows all investors one thing & that is you can count on nothing stability wise in Thailand.

[JBChiangRai]

What they are proposing is unworkable. 

 

But it gives them what they want "Mr. Rich Guy, please produce proof that 100M baht transfer into your bank here was taxed somewhere"

 

Right now it isn't,  It's leaving Thailand backed up by an invoice from overseas, overseas it has a corresponding cost invoice from Mr. Rich Guy personally for consultancy and they remit the following January to his personal account.  All perfectly legal currently and the whole thing tax-free..

[connda]

The Thai government’s intention to address social inequalities through taxation is commendable but requires a well-thought-out strategy.

Let's see how this works.  The government takes money from private citizens and gives it to itself and calls that leveling social inequalities?  More likely it gets funneled into corporate pork-barrels, "brother-in-law effect" business contracts, 29K THB lunches for dignitaries flying chartered, and offshore account of elite officials.  Taxes most often take unequal proportions of wealth from bottom 90% of society and transfers it to the upper 1%.  ????  This is then called Equality. 

[Ben Zioner]

17 minutes ago, JBChiangRai said:

This is misuderstood.

 

There is currently a loophole where funds earned overseas (eg tax free) can be brought in 1st January of the following year, still tax free.

 

This clause has been exploited by Thailand's rich and savvy digital nomads.  Thailand's rich are even sending money overseas from their companies as a deductible expense and then returning it to themselves personally tax free, all perfectly legal.

 

This what they want to stop, not you and your pension.

But I and my pension may well get caught in this amateurish fiasco.

 

If I had to pay Income tax it would cost me 850000 a year, I'd be glad to contribute this to help make  Thailand  a better country my girls could grow and live in. But we all know this money would only feed more lazy and corrupt government agents.

[BenStark]

11 minutes ago, JBChiangRai said:

But it gives them what they want "Mr. Rich Guy, please produce proof that 100M baht transfer into your bank here was taxed somewhere"

Didn't I read just recently that the PM himself is being suspected of having used a tax loophole?

 

Any updates on that yet?

[retarius]

I won't be paying taxes on already taxed income that's for sure. I'd rather move to the Philippines. 

[connda]

6 minutes ago, JBChiangRai said:

But it gives them what they want "Mr. Rich Guy, please produce proof that 100M baht transfer into your bank here was taxed somewhere"

But it gives them what they want "Mr. Rich Guy Mr. Farang who will never be allowed to be a permanent resident of Thailand, please produce proof that 100M your 800,000 baht transfer / 65,000 per month or 400,000 baht / 40,000 per month transfers into your bank here was taxed somewhere in your home country which we acknowledge has a bilateral tax agreement with Thailand, but we'll force you to provide proof for each transfer, otherwise we will tax the transfer and it sucks to be you double-taxed Farang."  ????????

Farang:  ????

[Mr Meeseeks]

23 minutes ago, Dmaxdan said:

This just sums up the whole scheme in a nutshell.

Sums up the whole country imo. 

[Mr Meeseeks]

I live here, I will pay these taxes, and you recognise me as a defacto naturalised Thai citizen with all the rights that entails.

 

It's only fair.

[JBChiangRai]

10 minutes ago, Ben Zioner said:

But I and my pension may well get caught in this amateurish fiasco.

 

If I had to pay Income tax it would cost me 850000 a year, I'd be glad to contribute this to help make  Thailand  a better country my girls could grow and live in. But we all know this money would only feed more lazy and corrupt government agents.

 

7 minutes ago, connda said:

But it gives them what they want "Mr. Rich Guy Mr. Farang who will never be allowed to be a permanent resident of Thailand, please produce proof that 100M your 800,000 baht transfer / 65,000 per month or 400,000 baht / 40,000 per month transfers into your bank here was taxed somewhere in your home country which we acknowledge has a bilateral tax agreement with Thailand, but we'll force you to provide proof for each transfer, otherwise we will tax the transfer and it sucks to be you double-taxed Farang."  ????????

Farang:  ????

As usual, what they are trying to do, how it is written in Thai and translated to English is FUBAR.

 

It's clear to me what they want to do and they are not interested in us.

[Adumbration]

38 minutes ago, Enzian said:

Several times I've stated on forums that the fact that this government (even more than others) is perfectly capable of changing any rule in any way at any time is why I will never buy a condo here, or contemplate any other long term commitments for that matter. Even if this particular issue quickly blows over (or just doesn't apply to me personally), the point is only reinforced. Myself, if needed, can have everything wrapped up and be out of here for good within two months at most. Caveat emptor.

I posted just last week that I have been selling my stuff here for the last 12 months and anyone that does not have a bug out strategy already in place will be caught off guard.  As usual my post was riduculed.

[Adumbration]

How the <deleted> do they expect to get clarity of purpose from a government that is comprised of a coalition of FOURTEEN parties.

 

This place has always been a circus.  But now the results of this corruption and ineptitude are becoming a show stopper for expats.

 

Start working on your bug out strategy right now.

[Adumbration]

@Neeranam this should accelerate the flow of funds into crytpo nicely.

[John Drake]

1 hour ago, mania said:

This is a big problem with this country & its so called "Ministers" of this & that.

 

Their plans are always clear as mud with zero foresight. Nor do they discuss first with the government/parliament or put things to a vote

 

No instead with their Napoleon syndrome they like to make grand announcements. ????

 

But take it back or not it shows all investors one thing & that is you can count on nothing stability wise in Thailand.

My impression is that these guys get together, sit around some table while drinking a lot, and somebody says, "hey, let's try this!" And then they all sort of nod and, say, "yeah! sounds great. We'll write the rule tomorrow morning."

[dingdongrb]

47 minutes ago, John Drake said:

My impression is that these guys get together, sit around some table while drinking a lot, and somebody says, "hey, let's try this!" And then they all sort of nod and, say, "yeah! sounds great. We'll write the rule tomorrow morning."

"........Why wait until tomorrow morning, let's write the rules now while we're still buzzed!"

[wwest5829]

I am more concerned with any rise in retirement/marriage Visa income requirements or maintained balances. As to this proposal, I suspect as an American, subject to USA income tax on worldwide income, the Amity Treaty would kick in. If I understand it correctly, the Treaty provides agreement that citizens of the two countries will be protected from double taxation.

[soalbundy]

1 hour ago, connda said:

But it gives them what they want "Mr. Rich Guy Mr. Farang who will never be allowed to be a permanent resident of Thailand, please produce proof that 100M your 800,000 baht transfer / 65,000 per month or 400,000 baht / 40,000 per month transfers into your bank here was taxed somewhere in your home country which we acknowledge has a bilateral tax agreement with Thailand, but we'll force you to provide proof for each transfer, otherwise we will tax the transfer and it sucks to be you double-taxed Farang."  ????????

Farang:  ????

How many more civil servants are they going to have to employ to check all this, it's a quagmire but maybe the revenue department is attempting to build an Empire, the bigger the department the more important it is.

[jaywalker2]

I'm sure it will be fine. It's clear that only the finest minds in the kingdom have been appointed to this Cabinet.

[ThaiFelix]

Kidnapping for ransom is probably coming soon too.  Lets face it they must be running out of ways to parasite farang and get away with it.  Its no wonder this country was never colonised, raped, plundered and exploited........the colonisers were scared of being raped, plundered and exploited instead!

[Red Phoenix]

14 minutes ago, wwest5829 said:

I am more concerned with any rise in retirement/marriage Visa income requirements or maintained balances. As to this proposal, I suspect as an American, subject to USA income tax on worldwide income, the Amity Treaty would kick in. If I understand it correctly, the Treaty provides agreement that citizens of the two countries will be protected from double taxation.

True, most Western countries have a bilateral agreement with Thailand to avoid double taxation.  But just like Immigration requires proof of the foreign origin of the funds when applying for a Non Imm O (retirement) Visa or extension, they could add an additional requirement to provide 'evidence' that these funds were already taxed in your home-country and if not that you need to have declared them to the Thai revenues dept.

Obviously, an Agent to circumvent or help you dealing with such a requirement would be a very Thai solution to the administrative problems of providing such evidence.

[placnx]

19 minutes ago, wwest5829 said:

I am more concerned with any rise in retirement/marriage Visa income requirements or maintained balances. As to this proposal, I suspect as an American, subject to USA income tax on worldwide income, the Amity Treaty would kick in. If I understand it correctly, the Treaty provides agreement that citizens of the two countries will be protected from double taxation.

Interesting. So Article VI (3) reads: "3. Companies of either Party shall not be subject within the territories of the other Party, to the payment of taxes upon income not attributable to sources within such territories, or upon transactions or capital not attributable to the operations and investments thereof within such territories." But Article VI (1) reads, in part: "1. Nationals and companies of either Party shall not be subject to the payment of taxes, fees or charges within the territories of the other Party, or to requirements with respect to the levy and collection thereof, more burdensome than those borne by nationals of all third countries."

 

So as an individual, this treaty does not help. You should read the Thai-US treaty on double taxation. You can probably get a credit on your US taxes for income taxes paid to Thailand.

[lordgrinz]

Well its doing wonders for the THB/USD exchange right now, its at 35.905 and climbing! Here's hoping the Pheu Thai cause a financial collapse, would like to see the THB/USD to head above 40 before the end of the year.....555

[daveAustin]

2 hours ago, JBChiangRai said:

This is misuderstood.

 

There is currently a loophole where funds earned overseas (eg tax free) can be brought in 1st January of the following year, still tax free.

 

This clause has been exploited by Thailand's rich and savvy digital nomads.  Thailand's rich are even sending money overseas from their companies as a deductible expense and then returning it to themselves personally tax free, all perfectly legal.

 

This what they want to stop, not you and your pension.

Then say that then. Putting out spurious policies will only do one thing… scare off investors! Someone looking to set up shop here will likely be none too pleased at potentially having their ALREADY TAXED money stolen by banks/government. 

[timendres]

2 hours ago, Dmaxdan said:

From the original article...

 

This ambitious tax reform agenda needs to be more than just a headline. It should be a meticulously crafted policy that serves its constituents — both the haves and the have-nots — without sacrificing economic stability. As it stands, the proposed taxation on incoming funds is a well-intended but half-baked plan, a ship sailing into murky waters without a compass.

 

This just sums up the whole scheme in a nutshell.

It sums up pretty much every scheme of the Thai government.