taxation ......

[Chetzee]

Now apparently i've asked some pretty dim questions in the past , but I have to acknowledge that detail , and tax codes are really not my thing ! 

 

Next year I expect to spend more than 6 months in country , not much more , but more . 

I am registered for tax in the UK ,will this exempt me from paying tax again in Thailand on money brought into the country ? 

 

In the 80's I used to go through something called "tax clearance" before exiting the country after similar length visits .....

does a similar system still apply ? 

 

....    not asking for a friend ! 

[DrJack54]

Chill.

Just do an online transfer from your home country to Thailand.

 

Personally I use WISE and of course there are other options.

 

You are worrying over nothing.

 

[chickenslegs]

The UK and Thailand have a double taxation agreement, which means (in simple terms) that any income which has been taxed in the UK will not be taxed again if brought into Thailand - and vice-versa.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/507424/uk-thailand-dtc180281_-_in_force.pdf

[Moonlover]

55 minutes ago, chickenslegs said:

The UK and Thailand have a double taxation agreement, which means (in simple terms) that any income which has been taxed in the UK will not be taxed again if brought into Thailand - and vice-versa.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/507424/uk-thailand-dtc180281_-_in_force.pdf

Wow, that's a pretty weighty document for a layperson to wade through! Here's a much simpler version for the O/P's perusal.

 

https://thailand.acclime.com/guides/double-taxation/

[chickenslegs]

9 minutes ago, Moonlover said:

Wow, that's a pretty weighty document for a layperson to wade through! Here's a much simpler version for the O/P's perusal.

 

https://thailand.acclime.com/guides/double-taxation/

Agreed. And thanks for the simpler version.

[Chetzee]

thanks for that ! 

[UKresonant]

Being registered for tax in the UK does not In itself exempt you from Thai tax. (In a conversation with a UK officer, it is possible to be asked to pay tax, and then have to claim it back! Even if the item is clearly under the DT treaty. I don't really see that doing a ton of administration work a big attraction to be there = not sanook)

 

If you have a Thai bank account and have been / will be in Thailand less than 179 days during 2023, if possible it may be an idea to preposition some funds in Thailand before the 31st of December 2023 ( to be sure probably before mid Dec practically.

 

Until the recent tax changes that have been vaguely announced are technically clarified, it is difficult to anticipate the situation for 2024 regards tax. I've read articles and posts which are phrased in different ways on the subject, which could mean radically different outcomes in practice.

 

As I'll always be a UK tax payer., look forward to the situation becoming Chrystal clear,  at the end of the Day ???? 

Edited September 19, 2023 by UKresonant

[AlexRich]

Probably best to wait until the rules are ironed out and published. 

 

Double Tax treaties are well and good, but if the Thai tax is greater than the foreign country tax, you may be expected to pay the difference in Thailand. Another point already made is that you could be asked to pay tax and reclaim ... a nightmare scenario for most (and I'd have thought unlikely).

 

The killer blow is that the expat will no longer be able to bring in income earned in the previous tax year without being subject to tax. This is a game changer, and Thailand may find that it vastly reduces the number of foreigners living here. Perhaps that's the idea?

[quake]

6 minutes ago, AlexRich said:

This is a game changer, and Thailand may find that it vastly reduces the number of foreigners living here. Perhaps that's the idea?

Yeah, Two birds with one stone.

Get the rich Thai's with undeclared over seas income.

Get rid of some of the Foreigners.

Get money in the coffers.

Win, Win, Win. 

 

 

[nglodnig]

38 minutes ago, AlexRich said:

you may be expected to pay the difference in Thailand.

With my usual caveat of "I'm no expert" you get taxed in one country or another - not both. Otherwise the "agreement" is pointless. You would NOT be expected to pay the difference.

[Moonlover]

5 hours ago, nglodnig said:

5 hours ago, AlexRich said:

you may be expected to pay the difference in Thailand.

 

5 hours ago, nglodnig said:

With my usual caveat of "I'm no expert" you get taxed in one country or another - not both. Otherwise the "agreement" is pointless. You would NOT be expected to pay the difference.

Thank you. I don't know where @AlexRich is coming from, but this is exactly what DTAs are all about, at least as far as personal incomes are concerned, which is what concerns the vast majority of us.

[FarangRimPing]

6 hours ago, nglodnig said:

With my usual caveat of "I'm no expert" you get taxed in one country or another - not both. Otherwise the "agreement" is pointless. You would NOT be expected to pay the difference.

Perhaps this is sufficiently different, but when I was working (I'm now retired), I paid taxes in Thailand and received a credit towards my taxes in the US, so I did have to pay the difference, theoretically. However, tax rates in Thailand were higher than the US, so I didn't pay US taxes on Thailand income. 

 

Let's see what comes out in the final regulations.

Edited September 20, 2023 by FarangRimPing

[freeworld]

Good to see that taxation is now a topic for the "Thailand Visa and Immigration Forums"

[Yeah rightio]

Storm in a tea cup....

 

Excerpt:- "This decision, governed by Section 48 of the Revenue Code, is expected to primarily influence three groups: individuals involved in foreign stock market trading via overseas brokerages, cryptocurrency traders, and Thais who have previously utilised a tax loophole to bring foreign income into the country tax-free after holding it in an offshore account for over a year."

https://thethaiger.com/news/business/thailand-tightens-tax-rules-on-overseas-income-from-2024

[pmarlin]

For Americans the US and Thailand have a tax treaty since 1997 that prevents double taxation.

Double Tax Agreement between the United States of America and Thailand (including examples) |HLB Thailand

[JimGant]

9 hours ago, nglodnig said:

With my usual caveat of "I'm no expert" you get taxed in one country or another - not both. Otherwise the "agreement" is pointless. You would NOT be expected to pay the difference.

Example: US taxpayer, who must declare all his worldwide income on his annual US tax return, including private pension income, which the tax treaty with Thailand says is "primarily taxed" by Thailand (not to be confused with gov't pensions and social security, whose taxation is the exclusive right of the US).

 

So, Joe America, who has his Ford Motor Company pension direct deposited into a Thai bank account, knows that, per the tax treaty, Thailand has first dibs on taxing this private pension -- and, as such, he files a Thai tax return showing this income (yeah, right....).

 

Now, say the effective Thai tax rate for his $50000 income is 10%, which amounts to baht equivalent of $5000. But when Joe files his US Form 1040 tax return, including the $50000 Ford pension, same as reported on Thai tax return -- he finds that, since his effective tax rate is 15% -- his US tax on this $50000 amounts to $7500. But, he gets a tax credit of $5000 for the Thai taxes paid, thus he only pays Uncle Sam a net $2500 in taxes for his Ford pension. Thus, total taxes paid are $7500 --$5000 to Thailand, $2500 to the US. Which, means, no tax break here -- you end up paying a total tax bill equivalent to the higher effective tax rate of whichever of the two treaty countries. [If Thailand had a 20% effective tax rate, your total taxes would have been $10000.]

 

Anyway, we could get into semantics here about 'not expecting to pay the difference.' But, that's what happens in avoiding double taxation when you have to file with both countries (which, by the way, the US tax credit is NOT treaty driven, but is part of the US Tax Code).

[biervoormij]

30 minutes ago, JimGant said:

Example: US taxpayer, who must declare all his worldwide income on his annual US tax return, including private pension income, which the tax treaty with Thailand says is "primarily taxed" by Thailand (not to be confused with gov't pensions and social security, whose taxation is the exclusive right of the US).

 

So, Joe America, who has his Ford Motor Company pension direct deposited into a Thai bank account, knows that, per the tax treaty, Thailand has first dibs on taxing this private pension -- and, as such, he files a Thai tax return showing this income (yeah, right....).

 

Now, say the effective Thai tax rate for his $50000 income is 10%, which amounts to baht equivalent of $5000. But when Joe files his US Form 1040 tax return, including the $50000 Ford pension, same as reported on Thai tax return -- he finds that, since his effective tax rate is 15% -- his US tax on this $50000 amounts to $7500. But, he gets a tax credit of $5000 for the Thai taxes paid, thus he only pays Uncle Sam a net $2500 in taxes for his Ford pension. Thus, total taxes paid are $7500 --$5000 to Thailand, $2500 to the US. Which, means, no tax break here -- you end up paying a total tax bill equivalent to the higher effective tax rate of whichever of the two treaty countries. [If Thailand had a 20% effective tax rate, your total taxes would have been $10000.]

 

Anyway, we could get into semantics here about 'not expecting to pay the difference.' But, that's what happens in avoiding double taxation when you have to file with both countries (which, by the way, the US tax credit is NOT treaty driven, but is part of the US Tax Code).

For me the issue with the way the new tax is worded it will impact savings. I live mostly off my savings and my interest is usually less the US standard deduction of around $12,000.  Since I do not pay any US tax I will be taxed on any money I bring into Thailand just like it was earned in Thailand. 

 

Is my understanding correct or am I missing something?

[federicoP]

4 minutes ago, biervoormij said:

For me the issue with the way the new tax is worded it will impact savings. I live mostly off my savings and my interest is usually less the US standard deduction of around $12,000.  Since I do not pay any US tax I will be taxed on any money I bring into Thailand just like it was earned in Thailand. 

 

Is my understanding correct or am I missing something?

You should pay taxes only if you bring the money into Thailand in the same year you earned it.

[Sheryl]

Just now, federicoP said:

You should pay taxes only if you bring the money into Thailand in the same year you earned it.

This is exactly what has just changed effective 1 January.

[federicoP]

Just now, Sheryl said:

This is exactly what has just changed effective 1 January.

Do you have a reference about it ?

I was still considering this version of article 41 :

"A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part."
 

[Sheryl]

9 minutes ago, biervoormij said:

For me the issue with the way the new tax is worded it will impact savings. I live mostly off my savings and my interest is usually less the US standard deduction of around $12,000.  Since I do not pay any US tax I will be taxed on any money I bring into Thailand just like it was earned in Thailand. 

 

Is my understanding correct or am I missing something?

 

To my understanding of the US-Thai tax treaty the issue is which country has the right to tax it, not whether you would owe tax there. In other words if income or interest is  taxable in the US and you file taxes accordingly, the fact that your tax liability was 0 would not alter things.

 

The issue is, which country has the right to tax you? Here it gets very complicated since if here in Thailand more than 180 days a year you are considered a dual resident of both Thailand and the US for tax purposes (since the US taxes based on nationality not residence -- this would not be the case  in many other countries).

 

The tax treaty has a lengthy section about what determines where you can be taxed in that situation as follows. Good luck deciding what it means for you:

 

"Where by reason of the provisions of paragraph 1, an individual is a resident of both Contracting States, then his status shall be determined as follows:
a) he shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (center of vital interests);
b) if the State in which he has his center of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;
c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;
d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement"

 

This as regards interest. Savings would presumably already have been taxed in the US at the time earned?

 

 

[Sheryl]

4 minutes ago, federicoP said:

Do you have a reference about it ?

I was still considering this version of article 41 :

"A resident of Thailand who in the previous tax year derived assessable income under Section 40 from an employment or from business carried on abroad or from a property situated abroad shall, upon bringing such assessable income into Thailand, pay tax in accordance with the provisions of this Part."
 

Which has now changed per announcement of the Revenue Dept.

 

Several threads running about this

 

 

https://aseannow.com/topic/1306994-opinion-thailand’s-ambitious-plan-to-tax-incoming-funds-risks-falling-flat-due-to-lack-of-clarity/

 

[federicoP]

5 minutes ago, Sheryl said:

Which has now changed per announcement of the Revenue Dept.

 

 

Thanks, I did not know, so they should change the english version of article/section 41 that for the moment, in the official Revenue Department site (https://www.rd.go.th/english/37749.html) is still the old version.

[JimGant]

4 hours ago, biervoormij said:

Since I do not pay any US tax I will be taxed on any money I bring into Thailand just like it was earned in Thailand. 

This is where it gets cloudy. First and foremost, Thailand is looking at taxing only income REMITTED to Thailand -- not identifying taxable income generated abroad, and identifiable from all the new, modern data sharing records under FATCA and CRS, and other schemes -- but not necessarily remitted to Thailand.

 

So, how in the world is Thailand going to identify what is, and what is not, taxable cash flow from a WISE transfer from your savings account, which contains a basket of funds, mostly after-tax deposits, but also net deposits after withholding of taxes, plus, yes, taxable interest. They can't really come knock on your door and say we believe you have a taxable event here. So, if you have a firehose transfer of money from a savings or checking account, don't worry about some Thai tax authority pondering its contents. Yes, a direct deposit from a private pension to Thailand could draw more attention. But even here, I doubt there would be resources for such scrutiny.

 

Bottom line: Don't worry about it.

[Captain Monday]

I would not panic yet