Calls for clarification of new Tax regime which appears to target expat foreign income sources

[Dogmatix]

15 hours ago, Marco100 said:

What about the loophole for Citizens owning BVI's and generating savings after a year ? Next year with the AEOI CRS the Beneficiary of the BVI will be reported to his country of residence by the bank ....

I am not sure how this scam works but the BVI government has been forced to sign up for information exchange but it is not automatic like banks in most countries.  They will hand over information, if asked by another country.  For this year for the first time, BVI's have to file unaudited accounts.  The accounts can be handed over, if another country asks.  Obviously, if the company has a bank account in another country information on year end balances and inflows can be reported under CRS.  Most banks will ask where the company is tax resident in order to comply with this.  The BVI currently only requires companies to have a tax residence if they are in certain businesses, such as asset management, holding company (holds only shares, no cash or other assets, logistics etc.  Probably in futute they will demand a tax residence for the rest too which will close down most personal BVIs. 

 

So not really the safe tax haven it was 20 years ago.  Turks and Caicos is a better choice for a personal company these days because it refuses to comply with any of the demands from EU, OECD etc.  

Edited September 27, 2023 by Dogmatix

[Dogmatix]

1 hour ago, freeworld said:

What is BVI? Off shore not paying tax in that jurisdiction? If you choose to be and are tax resident in Thailand according to tax residency and will be remitting income then it will be taxable according to Thai tax law and the DTA with your home country.

Some one who has a BVI company with a bank account may still be able to transfer money as a loan to a Thai resident.  But the RD might follow up and reclassify loans never get serviced with interest or repayment of principle as income after some years.  I think they can do that with director loans of Thai companies after 6 years.  Otherwise a payment from  a BVI to a Thai resident would be either payment of salary, consulting fees or dividends which will be assessable income in Thailand.

[Dogmatix]

1 hour ago, SuperSaiyan said:

Actually Thaksin's policies were all lenient towards foreigners. Anyone remember overstaying for years and then just paying 20k and return?

That was merely the maximum penalty already in place before Thaksin became PM.

[pedro01]

2 hours ago, freeworld said:

If you bring that passive income dividends or interest into Thailand and it has not been taxed abroad then it will be taxable according to Thai tax law but as it is income if it is below the marginal tax rate and minus the deductions it may not be taxable.

That's an interesting question. I get dividends from a HK company and the tax rate for dividends there is zero. I haven't avoided tax there - just that the rate is zero in my case. 

 

I wonder what will happen in cases where the payment has been declared in a country but the tax rate is zero.

[observer90210]

Putting tax on foreign earned revenue after 6 month stay is one thing.

 

But VAT definately has to be reduced if they want to make money with tourism.

 

Retail sales,  or services generates big money by foreigners or retirees.

 

Prices have already increased in Bangkok or Hua Hin. Many services are charging more. If prices continue as such, no point in spending on shopping in Thailand as Europe is becomming more cheap with better quality.

Edited September 27, 2023 by observer90210

[Lorry]

On 9/26/2023 at 2:58 AM, webfact said:

The announcement of a change to the tax code, with respect to taxation on the overseas income of foreigners who are resident in Thailand, is raising eyebrows and requires further clarification. Comments last week by Prime Minister Srettha Thavisin that the measure addressed chronic inequality will not assuage fears that a move is afoot to increase the tax liability of foreigners living in Thailand, raising questions about passive and possibly retirement income in the future.

The tax change which has already been defended by Prime Minister Srettha Thavisin as a move against income inequality, is coming with Thailand in talks with economic powers such as the European Union to put in place new trade and investment pacts.

 

It comes after the previous government had launched long-term visa regimes highlighting the zero tax imposed by the Thai government on income not generated in Thailand. This new move is already causing anxiety among foreigners living in the kingdom with passive income from abroad as well as retirees who are still thought to be exempt from tax. However, for the new tax regime to generate extra revenue to fund government stimulus efforts, some foreigners must end up paying more.

There are growing concerns among foreigners about moves by the new Thai government to widen the country’s tax base. They fear this could lead to all incomes earned by foreign residents in the kingdom being subject to tax. It follows an announcement by the Revenue Department in mid-September which is leading to calls for greater clarification and indeed for the government to make it clear that there will be no attempt to impose tax on retirement or pension income from abroad.

calls-for-clarification-of-new-regime-income-tax-foreigners-overseas-income

On September 15th, the Revenue Department in Thailand issued a clarification stating that from the 1st of January 2024, it planned to tax foreign income on all individuals in the kingdom who have been resident in the country for over 180 days.

 

by Joseph O' Connor

 

Full story: Thai Examiner 2023-09-26

 

- Cigna offers a range of visa-compliant plans that meet the minimum requirement of medical treatment, including COVID-19, up to THB 3m. For more information on all expat health insurance plans click here.

 

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According to the article,  the PM made it very clear they are targeting the foreigners. 

Many people have said the new order is targeting rich Thais. That has never made sense. The PM and his government ARE the rich Thais. 

 

It does make sense,  though, that the PM says the new policy fosters more equality. Because,  as written in the article,  targeted are "wealthy" foreigners (Foreigners are, as every Thai will tell you, wealthy by definition). "Wealthy" as in retirement visa, LTR visa holders are exempt. 

[JimboB4]

3 hours ago, freeworld said:

If you bring that passive income dividends or interest into Thailand and it has not been taxed abroad then it will be taxable according to Thai tax law but as it is income if it is below the marginal tax rate and minus the deductions it may not be taxable.

And that’s more bull <deleted>

[Taboo2]

On 9/26/2023 at 6:10 AM, Thailand J said:

I cannot imagine the world without USA.

Coming soon....

[Thailand J]

1 hour ago, Taboo2 said:

Coming soon....

I hope it's not before this Sunday's Dolphins game.

[StayinThailand2much]

6 hours ago, redwood1 said:

What ever......Unless they have a investigative team of tax experts to check every one out.....This whole train wreck is DOA...

 

Save face and kill the beast...

True. This is not about international double tax agreements, or 'already taxed or not', but about the actual implementation... Knowing that everything here (e.g. Immigration offices, visa issuance, different pricing for foreigners, etc., etc.) is in a 'grey area', how do expats know that they will be treated fairly and according to the letter of the law?

Edited September 27, 2023 by StayinThailand2much

[SuperSaiyan]

5 hours ago, Mr Meeseeks said:

Not true. Under Thaksin, visas became increasingly more difficult to obtain.

 

During Thaksin's time in office, they stopped the agents sending your passport out of the country for visas and stamps, raised the departure tax from 500 to 700thb, raised the extension fees from 500thb to 1,900thb and raised the overstay fee from 200thb per day to 500thb.

 

There were other initiatives that began in his first term of office as well, those are the ones I can distinctly remember. 

 

So, very lenient?! Compare it to now.

[ukrules]

3 hours ago, StayinThailand2much said:

how do expats know that they will be treated fairly and according to the letter of the law?

Just assume the worst

[FarangJon]

9 hours ago, SuperSaiyan said:

Actually Thaksin's policies were all lenient towards foreigners. Anyone remember overstaying for years and then just paying 20k and return?

Thats the most important thing overstaying lol

Only no brainers risk it and overstay in thailand.

[SuperSaiyan]

28 minutes ago, FarangJon said:

Thats the most important thing overstaying lol

Only no brainers risk it and overstay in thailand.

 

Now, yes, before it was the smartest and easiest way to stay a very long time in Thailand as somebody under 50 or 30 for that matter, haha. Basically the good old times ????

[hondoelsinore]

4 hours ago, StayinThailand2much said:

True. This is not about international double tax agreements, or 'already taxed or not', but about the actual implementation... Knowing that everything here (e.g. Immigration offices, visa issuance, different pricing for foreigners, etc., etc.) is in a 'grey area', how do expats know that they will be treated fairly and according to the letter of the law?

I never understood why anybody would kill their cash cow, yet some do, mainly out of greed and stupidity I suppose. I also do not understand why so many get "crazed" at what governments do, as we all know full well that you are not dealing with the best of the best in this country, and from the street vendors, the bar girls, the taxi drivers, and pretty much every soul in Thailand including the government has a bad case of the "I wants" and since too many don't have the capacity to comprehend hard work and discipline as a way of life that might get them a life that others might envy, too many always seem to go about achieving a better life, in the laziest way possible. I am always amazed at the expats when Thailand is not giving you what you want, and wonder why you would you stay? and bitch and bellyache about everything here and so condescending towards the population, that only makes you miserable and people hateful towards you. Being married to an older Thai lady that is very educated but clueless about so much in life, made me see immediately never to put all of your eggs in one basket here, be friendly and kind but do not be naive for one second because you will be the exact type that is on their radar. I am here to attest to the fact that you can live a semi decent life here if you do not make it like the life where you came from, invest little but take away much in the many experiences you can have. Live light and learn to play the game before the game plays you, use your intelligence to adapt and always have an "ace in the hole" and for gods sake, put away that ridiculous ego you brought with you, because you stand out like a sore thumb.

[quake]

40 minutes ago, hondoelsinore said:

I never understood why anybody would kill their cash cow, yet some do, mainly out of greed and stupidity I suppose. I also do not understand why so many get "crazed" at what governments do, as we all know full well that you are not dealing with the best of the best in this country, and from the street vendors, the bar girls, the taxi drivers, and pretty much every soul in Thailand including the government has a bad case of the "I wants" and since too many don't have the capacity to comprehend hard work and discipline as a way of life that might get them a life that others might envy, too many always seem to go about achieving a better life, in the laziest way possible. I am always amazed at the expats when Thailand is not giving you what you want, and wonder why you would you stay? and bitch and bellyache about everything here and so condescending towards the population, that only makes you miserable and people hateful towards you. Being married to an older Thai lady that is very educated but clueless about so much in life, made me see immediately never to put all of your eggs in one basket here, be friendly and kind but do not be naive for one second because you will be the exact type that is on their radar. I am here to attest to the fact that you can live a semi decent life here if you do not make it like the life where you came from, invest little but take away much in the many experiences you can have. Live light and learn to play the game before the game plays you, use your intelligence to adapt and always have an "ace in the hole" and for gods sake, put away that ridiculous ego you brought with you, because you stand out like a sore thumb.

Ok, 

[paddypower]

On 9/26/2023 at 4:08 PM, Dionigi said:

We all know that major companies get away with paying no income tax what ever country they operate in. The tax rules are made with loopholes that these companies use to ensure that there are no liabilities for their tax. Invest in these companies that operate in one country but are registered in a tax haven and you have no taxation. It is this money which can then be brought back to Thailand which, at present, has no taxation. I'm talking major money not Joe Averages small investments.

that is very interesting info, since there was a time when I practiced off shore tax planning for high net worth clients. those days are gone, now that I live in a country where you don't give the government any tax and they don't give you anything back (that's dark bean counter humour, of course we appreciate all of the services available to us here, as guests of the Kingdom). Currently researching what the new CRS rules will mean, now that Thailand has signed the treaty.

[newnative]

   If push comes to shove, as an American I will probably switch the direct deposit of my social security to my Thai bank, rather than my American bank, where it goes now.  It seems pretty clear that with the government tax agreement in place between the US and Thailand, social security should be safe from being taxed twice.  (I know, 'should' is the iffy word in that sentence.)

    At a rate of 36 baht to the dollar, that would get me about 61,000 baht each month.  Maybe not quite enough for my partner and I to live on but fairly close and we would not have to take too much out of the Thai savings we already have here to make up the difference.  Some months it might be enough since I pay some of our bills with an American debit card.

    In an earlier post on one of these threads, I mentioned that all my foreign income goes into my American bank account and I wondered how Thailand would know that this dollar I send to Thailand is from already taxed social security and not from capital gains or dividend income (which is also already  taxed but, apparently, fair game).  If the onus is on me to prove the money source, at least I can show a deposit coming in directly from the social security administration.

[jerrymahoney]

And if push comes to shove, I will maybe switch my extension via retirement to extension via marriage where my social security mostly covers it.

 

As Per section 20 of the Thai-US tax treaty, social security can only be taxed by the issuing country.

Edited September 28, 2023 by jerrymahoney

[John Drake]

9 hours ago, hondoelsinore said:

made me see immediately never to put all of your eggs in one basket here, be friendly and kind but do not be naive for one second because you will be the exact type that is on their radar.

I heard from the beginning when I first got here over 13 years ago never to buy any hard assets in Thailand. I never really appreciated how much doing so could damage you. Is it really the case that all these people who bought big condos and other goods are about to get hosed? Meanwhile, all the people that wanted to get rid of Prayuth no matter what it took, you happy now?

[samtam]

10 hours ago, hondoelsinore said:

....and bitch and bellyache about everything here and so condescending towards the population, that only makes you miserable and people hateful towards you. Being married to an older Thai lady that is very educated but clueless about so much in life, made me see immediately never to put all of your eggs in one basket here...

Contradictory, moi?

[jerrymahoney]

5 hours ago, jerrymahoney said:

And if push comes to shove, I will maybe switch my extension via retirement to extension via marriage where my social security mostly covers it.

 

As Per section 20 of the Thai-US tax treaty, social security can only be taxed by the issuing country.

So, to add to the above, even if add had to top-up social security to get the 40K per month, that extra money might be in the 0% level if under 150K per year or about 10K per month top-up which would be more than I need.

[Schuimpge]

On 9/26/2023 at 4:45 PM, chickenslegs said:

I don't know how @Schuimpge did it, but I found a Thai income tax calculator - here ... https://www.uobam.co.th/en/tax-calculation

This includes deductibles.

Using an excel file. My accountant uses that to prepare my taxes. Will drop an empty version here tomorrow. Thai taxes are dead-simple. Literally 10 minutes

[Puccini]

On 9/26/2023 at 9:08 PM, NanLaew said:

Wasn't it also published in the Royal Gazette? That's usually as official as anything gets around here.

It is an internal guideline for Revenue Department officials and as such doesn't require publication in the Royal Gazette.

[ukrules]

19 minutes ago, Puccini said:

It is an internal guideline for Revenue Department officials and as such doesn't require publication in the Royal Gazette.

This is the bit I find strange as the previous law is a law which was voted on in parliament and most definitely appeared in the Gazette.

 

I find it odd that a memo can override this and I think we will find in due course that it can't.

[Schuimpge]

On 9/26/2023 at 4:41 PM, tlcwaterfall said:

How did you work that tax amount out?  I am struggling to work my potential tax obligation out.

Thai Tax is dead-simple.

Attached a calculation sheet that my accountant uses for Personal Income Tax for me and the wife.

I filled it in with no deductions or savings, just basic 12 month salary of 100k/month as an example.

To use it: Empty Cells B3 to B5, Cells D14 to D17 and Cells E21 to E28.

 

Let's start with assumption that your salary is 50,000 Baht per month.

Step 1: Fill in Cell B3, basic income p/month (50,000)

Step 2: Fill in B4 all the way to B17 if applicable (more later). 

Step 3: you see a number appearing in Cell E31. In this example, if you put 50,000 in Step 1, the amount should be 540,000..The dark blue cells E21-E28 should be empty.

Now, start with Cell E21, your first tax bracket. Put 150,000 there.

You will see that cell E30 shows 150,000, Cell E31 now shows 390,000

Go to Cell E22, next tax bracket, fill in 150,000. E31 now shows 240,000.

Continue with the next cell until E31 shows zero.

Step 4: Cell H29 shows your tax to be paid. (there's a number below it which is a quick USD calculation. Forgot to delete that.).

 

Deductions: Cell D9, prefilled and already included in Cell E30 calcultation

Cell D10, expense allowance. I get 100k allowance deductions. Company expenses basically. Check for yourself. 

Cell D11, each child (under 18) gets a deduction of 30,000 THB, but only for you or for your wife, not both.

Cell D14 to D17: putting money in various savings can basically reduce your tax by up to 600,000 THB combined. Basic idea is, Not more than 30% of income can go into savings for tax-deduction and the total deductions combined can not be more than 600,000 THB.

 

All these deductions will show up automatically in cell E31 when you fill them out.

You can choose monthly tax payments if you want (assuming you're employed). Or pay at tax-submission. Column K to do a quick calculation for that.

 

That's basically it! Can't explain it any more simple.

 

 

 

TaxCalculationThailand.xlsx

[scorecard]

On 9/27/2023 at 3:41 PM, freeworld said:

1. No, if it is taxed in another country then the DTA will cover that.

2. Income is salary, interest, dividends and capital gains (applies for most people)

3. If you have no untaxed income arising in or remitted to Thailand you will have no tax to pay.

Which category, includes state pensions (e.g. Old Age pension), and if the incoming monthly amount is under the threshhold of 150,000Baht, I'm assuming there will be no need to submit a personal Thai Tax return. Correct?

[Thailand J]

8 hours ago, Schuimpge said:

Thai Tax is dead-simple.

Everything is dead simple after you've done it over and over.

[jerrymahoney]

On 9/27/2023 at 9:01 AM, Moonlover said:

'It is unclear at this point how this will apply to foreigners living in Thailand on a retirement visa'.

Well for a simple analysis, if you are on an exension via marriage at 40,000 baht per month that is 480,000 baht per year which would put you in the 10% bracket.

 

So 4000 baht per month for taxes or $US 100+ per month even assuming  ALL of the 40K per month is taxable.

 

The problem for extension via retirement is that the 65K per month would likewise put you in the 20% bracket. OUCH. Hopefully at least Social Security would be exempt and you would only pay tax on the difference between your SocSec and the 65K which you could try to keep in the 5% bracket.

Edited September 28, 2023 by jerrymahoney

[redwood1]

10 hours ago, Schuimpge said:

Thai Tax is dead-simple.

Attached a calculation sheet that my accountant uses for Personal Income Tax for me and the wife.

I filled it in with no deductions or savings, just basic 12 month salary of 100k/month as an example.

To use it: Empty Cells B3 to B5, Cells D14 to D17 and Cells E21 to E28.

 

Let's start with assumption that your salary is 50,000 Baht per month.

Step 1: Fill in Cell B3, basic income p/month (50,000)

Step 2: Fill in B4 all the way to B17 if applicable (more later). 

Step 3: you see a number appearing in Cell E31. In this example, if you put 50,000 in Step 1, the amount should be 540,000..The dark blue cells E21-E28 should be empty.

Now, start with Cell E21, your first tax bracket. Put 150,000 there.

You will see that cell E30 shows 150,000, Cell E31 now shows 390,000

Go to Cell E22, next tax bracket, fill in 150,000. E31 now shows 240,000.

Continue with the next cell until E31 shows zero.

Step 4: Cell H29 shows your tax to be paid. (there's a number below it which is a quick USD calculation. Forgot to delete that.).

 

Deductions: Cell D9, prefilled and already included in Cell E30 calcultation

Cell D10, expense allowance. I get 100k allowance deductions. Company expenses basically. Check for yourself. 

Cell D11, each child (under 18) gets a deduction of 30,000 THB, but only for you or for your wife, not both.

Cell D14 to D17: putting money in various savings can basically reduce your tax by up to 600,000 THB combined. Basic idea is, Not more than 30% of income can go into savings for tax-deduction and the total deductions combined can not be more than 600,000 THB.

 

All these deductions will show up automatically in cell E31 when you fill them out.

You can choose monthly tax payments if you want (assuming you're employed). Or pay at tax-submission. Column K to do a quick calculation for that.

 

That's basically it! Can't explain it any more simple.

 

 

 

TaxCalculationThailand.xlsx 35.66 kB · 2 downloads

That's basically it! Can't explain it any more simple.

 

I can...

 

Wont pay jack.......Can't explain it any more simple.