Expats in Thailand urged not to worry about negative income tax

[shady4lyfe]

I recently applied for the Thai Elite visa and have some questions and concerns regarding the new rule coming to place to tax foreign income in Thailand. Does anyone know how the Canada-Thailand tax treaty will come into play? In Canada, you can still be considered a tax resident even if you don't live there for more than 183 days. So if you pay tax there and are considered a tax resident, do you still have to pay tax in Thailand? Would appreciate any insights from fellow Canadians in Thailand. 

[Celsius]

8 minutes ago, shady4lyfe said:

Canada, you can still be considered a tax resident even if you don't live there for more than 183 days.

You could or you don't have to. It depends on how CRA sees your situation. I did not have any ties to canada except my rental condo and a bank account so they deemed me a non resident for tax purposes after spending 2 years in Thailand.

 

Which was qite a bit of inconvenience as i lost all my rights inclyding free healthcare.

[foreverlomsak]

Check in here

Double Tax Agreement (DTA) | The Revenue Department (English Site) (rd.go.th)

[Maestro]

https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties/country/thailand-convention-1984.html

 

[DrJack54]

6 hours ago, shady4lyfe said:

.....concerns regarding the new rule coming to place to tax foreign income in Thailand.

What new rule.

Don't believe all the rubbish you read.

Unfounded Scaremongering 

[kingstonkid]

OP Wat until a formal annuncement.  There is absolutely no way legally they can tax you for 4 months with the other countries agreeing not to tax you for the same period.

 

Imagine a snowbird comes here for 4 months and then goes back to their home country.

 

[Presnock]

On 9/26/2023 at 2:23 PM, foreverlomsak said:

Check in here

Double Tax Agreement (DTA) | The Revenue Department (English Site) (rd.go.th)

Great response!  Last updated almost 2 years ago but most likely still accurate.  It would seem to me that they would

be creating more problems instead of making more money but that doesn't stop them from trying to squeeze every cent out of the farangs who spend money here the entire time they live here!

2 hours ago, kingstonkid said:

OP Wat until a formal annuncement.  There is absolutely no way legally they can tax you for 4 months with the other countries agreeing not to tax you for the same period.

 

Imagine a snowbird comes here for 4 months and then goes back to their home country.

 

 

2 hours ago, kingstonkid said:

OP Wat until a formal annuncement.  There is absolutely no way legally they can tax you for 4 months with the other countries agreeing not to tax you for the same period.

 

Imagine a snowbird comes here for 4 months and then goes back to their home country.

 

 

[Presnock]

Just now, Presnock said:

Great response!  Last updated almost 2 years ago but most likely still accurate.  It would seem to me that they would

be creating more problems instead of making more money but that doesn't stop them from trying to squeeze every cent out of the farangs who spend money here the entire time they live here!

 

 

 

Just now, Presnock said:

Great response!  Last updated almost 2 years ago but most likely still accurate.  It would seem to me that they would

be creating more problems instead of making more money but that doesn't stop them from trying to squeeze every cent out of the farangs who spend money here the entire time they live here!

 

 

 

2 hours ago, kingstonkid said:

OP Wat until a formal annuncement.  There is absolutely no way legally they can tax you for 4 months with the other countries agreeing not to tax you for the same period.

 

Imagine a snowbird comes here for 4 months and then goes back to their home country.

 

Their announcement indicates that one must be here over 180 days a year to be taxed.  Some news indicated that the original decree indicates that countries with a tax agreement wouldn't double tax folks either nor would they tax retirement funds (unless they were coming from interest drawn on savings, IRA's or what ever) that are earned each year of retirement, so like the US, Social Security or government/military retirement funds would not be taxed.  But, =TIT and we have not yet seen the formal official annoncement so many folks are maybe wasting time even worrying about what might be.  We have nursery stories about killing the goose that laid the golden eggs.

[foreverlomsak]

20 hours ago, DrJack54 said:

What new rule.

Don't believe all the rubbish you read.

Unfounded Scaremongering 

Exactly, what new rule, read the underlined extract from Thai Revenue Personal Income Tax, this doesn't mean they will tax Expat's just that the option is there and has been for a while.

Personal Income Tax | The Revenue Department (English Site) (rd.go.th)

1.Taxable Person

Taxpayers are classified into “resident” and “non-resident”. “Resident” means any person residing in Thailand for a period or periods aggregating more than 180 days in any tax (calendar) year. A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand. A non-resident is, however, subject to tax only on income from sources in Thailand.

Date of last amendment 23.11.2020

[flexomike]

3 hours ago, kingstonkid said:

OP Wat until a formal annuncement.  There is absolutely no way legally they can tax you for 4 months with the other countries agreeing not to tax you for the same period.

 

Imagine a snowbird comes here for 4 months and then goes back to their home country.

 

To be a tax resident in Thailand you would have to stay in the country for more than 180 days in a calendar year

[Srikcir]

21 hours ago, Maestro said:

https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties/country/thailand-convention-1984.html

 

Notably:

Article 18

Pensions

1. Pensions and other similar remuneration, whether they consist of periodic or non-periodic payments, for past employment, arising in a Contracting State and paid to a resident or the other Contracting State shall be taxable only in the first-mentioned State.

[Srikcir]

16 minutes ago, flexomike said:

To be a tax resident in Thailand you would have to stay in the country for more than 180 days in a calendar year

And it would be more than an aggregate of 180 days during the year.  

[flexomike]

Just now, Srikcir said:

And it would be more than an aggregate of 180 days during the year.  

yes, does not have to be consecutive days

[Jaggg88]

7 hours ago, Presnock said:

 

 

Their announcement indicates that one must be here over 180 days a year to be taxed.  Some news indicated that the original decree indicates that countries with a tax agreement wouldn't double tax folks either nor would they tax retirement funds (unless they were coming from interest drawn on savings, IRA's or what ever) that are earned each year of retirement, so like the US, Social Security or government/military retirement funds would not be taxed.  But, =TIT and we have not yet seen the formal official annoncement so many folks are maybe wasting time even worrying about what might be.  We have nursery stories about killing the goose that laid the golden eggs.

There has been an official announcement. Currently if you have untaxed income from abroad and you don't bring it on shore to Thailand in the year you earn it then in future years it was exempt from tax. The new Departmental Instruction No. Por 161/2566 (“DI No. 161/2566”) changes that and if you are resident in Thailand, that is stay more than 180 days in a year, then your untaxed earnings from abroad will now be subject to tax no matter when you bring them into Thailand. This does NOT affect income you have already been taxed on in your home country if Thailand has a double taxation agreement. Going forward we may need to prove the money we are bringing in has already been taxed which will be a real pain. International accountants KMPG have supplied their take on it.   https://kpmg.com/th/en/home/insights/2023/09/th-tax-news-flash-issue-145.html?fbclid=IwAR1kEo_QrnHc2SH10G16TJICnIdzRh4f5L5wUFol_n4tDO7b5h6ZGqp4oE8

[ChaiyaTH]

1 hour ago, Jaggg88 said:

There has been an official announcement. Currently if you have untaxed income from abroad and you don't bring it on shore to Thailand in the year you earn it then in future years it was exempt from tax. The new Departmental Instruction No. Por 161/2566 (“DI No. 161/2566”) changes that and if you are resident in Thailand, that is stay more than 180 days in a year, then your untaxed earnings from abroad will now be subject to tax no matter when you bring them into Thailand. This does NOT affect income you have already been taxed on in your home country if Thailand has a double taxation agreement. Going forward we may need to prove the money we are bringing in has already been taxed which will be a real pain. International accountants KMPG have supplied their take on it.   https://kpmg.com/th/en/home/insights/2023/09/th-tax-news-flash-issue-145.html?fbclid=IwAR1kEo_QrnHc2SH10G16TJICnIdzRh4f5L5wUFol_n4tDO7b5h6ZGqp4oE8

What you are stating is not what I am reading from the article.

''On 15 September 2023, the Thai Revenue Department issued Departmental Instruction No. Por 161/2566 (“DI No. 161/2566”) as a guideline to assist tax officers in determining the personal income tax implications for foreign-sourced income brought into Thailand by Thai tax residents.

 

DI No. 161/2566 provides a new interpretation of Section 41 Paragraph 2 of the Thai Revenue Code: the assessable income under Section 40 of the Revenue Code derived by a resident of Thailand in the previous tax year — from employment, a business carried on overseas, or property situated overseas — that is brought into Thailand should be subject to personal income tax in the tax year that the said assessable income is brought into Thailand. ''

 

So yes, you would pay taxes even it is earnings from a year ago in the new scenario, but you will still not pay any tax on the money you earn abroad, that you do not bring into Thailand, which is a significant difference.

 

I suspect the part of ''that is brought into Thailand'' was also designed for the Elite, not to be friendly to us.

 

This also makes the entire story logical. However the question would still be how this works for specific things like retirement, or money you saved up while being taxed in the past etc etc. There is not really a way to proof this.

Edited September 27, 2023 by ChaiyaTH

[Skeptic7]

Nobody knows anything because as typical, Thailand imbeciles spouting off another ill-considered BS money grab scheme without a clue and zero forethought of implications, existing treaties, exemptions, enforcement. Clear as mud, as usual.

 

Constantly scamming for ways to pay for their problems with others money. Never manning up, never taking responsibility and never solving their inept country's designed poverty/inequality from within and leading by example. Because it has nothing to do with that. That's the con, the smokescreen, the lie. Those in need will see a pittance at best and all the fat cats at the top will prosper immensely and widen that gap even further. 

Edited September 28, 2023 by Skeptic7

[Jaggg88]

11 hours ago, ChaiyaTH said:

What you are stating is not what I am reading from the article.

''On 15 September 2023, the Thai Revenue Department issued Departmental Instruction No. Por 161/2566 (“DI No. 161/2566”) as a guideline to assist tax officers in determining the personal income tax implications for foreign-sourced income brought into Thailand by Thai tax residents.

 

DI No. 161/2566 provides a new interpretation of Section 41 Paragraph 2 of the Thai Revenue Code: the assessable income under Section 40 of the Revenue Code derived by a resident of Thailand in the previous tax year — from employment, a business carried on overseas, or property situated overseas — that is brought into Thailand should be subject to personal income tax in the tax year that the said assessable income is brought into Thailand. ''

 

So yes, you would pay taxes even it is earnings from a year ago in the new scenario, but you will still not pay any tax on the money you earn abroad, that you do not bring into Thailand, which is a significant difference.

 

I suspect the part of ''that is brought into Thailand'' was also designed for the Elite, not to be friendly to us.

 

This also makes the entire story logical. However the question would still be how this works for specific things like retirement, or money you saved up while being taxed in the past etc etc. There is not really a way to proof this.

What I stated is exactly what the article says. My quote "then your untaxed earnings from abroad will now be subject to tax no matter when you bring them into Thailand." I never said all your untaxed earning will be subject to tax but only the ones you bring into Thailand, whether it's the year you earn them or later years. They are trying to close a loop hole.

[oldcpu]

Unfortunately , this old thread really got off track in terms of the tax treaty between Canada and Thailand, as it focused on a new Thai RD interpretation for taxation, and has multiple posts about major worries by some of a possible, yet to come, change to taxing foreign income.

 

Yes - we all know that is very possible.

 

But, can we please take a step back - and put some of those worries aside for a moment? 

 

And consider the current situation (BEFORE any such hypothetical changes implemented).

 

I want to review the tax scenario so to better understand how any changes could impact myself as a Canadian expatriate, dependent on the visa I may hold.

 

Canadian Pensions:

 

For Canadian expat tax-residents in Thailand , I have read that Canadian pensions are taxed in Canada (and not in Thailand) - this is also my experience as I pay Canadian tax on my Canadian Old Age Security (OAS) and on my Canada Pension Plan (CPP). I also read RRIF payments are considered in that 'pension' category (ie they will also be taxed in Canada).  The Thai/Canada Double Tax Agreement (DTA) also suggests that to me that Canadian pensions are to be only taxed in Canada.

 

Canadian Interest/Dividends:

 

I have read that nominally, for non-residents to Canada, who hold stock market shares in Canadian brokerage, that the dividends (and also interest in savings (?) ) are nominally taxed at 25% - but they instead 'may' be taxed by Canada (per the Thai-Canada DTA) at 15% tax rate. I suspect < unsure > that some Canadian Revenue Agency (CRA) form (possibly NR301) needs to be completed to reduce the withholding tax to 15% for dividends and interest. ... I assume later, when one submits their income tax return to Canada - one could end up still being taxed at a higher rate than the 15% (and possibly higher than the 25%).

 

I also read that withholding tax by Canada for mutual funds held in an account in Canada may be less ... and its withholding tax is at 15% (possibly as specified in the Canada/Thai DTA (and an NR301 form is not necessary in the mutual fund case)).  Again, I assume after income tax returns filed, the actual tax rate could be higher.

 

As to the above taxes - in my case, this is more a curiousity for me, in regards to the taxation of 'dividends' and 'interest' earned in Canada (with myself being a non-resident to Canada, but a resident of Thailand) as I don't receive much in dividends nor interest from investments in Canada.  

 

Canadian Capital Gains:

 

It gets more interesting when it comes to Capital Gains (Section 116 of the Canadian Income Tax Act (ITA) and the Thai/Canadian DTA).  

 

If I understand the DTA between Thailand and Canada, then capital gains from Canadian investments earned in a Canadian brokerage  'may' be taxed in Canada (but not in Thailand). < unsure >  However, further, I read (and also inferred to be more specific) from the Canadian ITA that that if a non-resident to Canada owns less than 25% of a public company listed on a stock exchange in Canada, then capital gains (on stocks, and also mutual funds, ETFS, ... ) on that equity are not taxed in Canada.  .... Of course a non-resident to Canada is not entitled to the ~$1-million capital gains deduction in Canada, so perhaps not being required to pay any capital gains tax here is not so far off a speculation.  I am NOT certain about this.

 

Again, so to manage ones tax payments (or lack there of), a Canadian Revenue Agency (CRA) form may be required for the capital gains. I don't know.

 

I ALSO am not certain on this capital gains interpretation of mine is accurate and I could be 100% wrong here.  This (capital gains) is of more interest to me, as I do have equities outside of my RRSP/RRIF in a Canadian brokerage margin account where, when I sell the equities from my margin account, I will have capital gains (which may or may not be payable in Canada).  

 

LTR Visa holder perspective

 

I am an LTR visa holder at present. As an LTR visa holder, I may have some benefits here, above and beyond the clear benefits of the Thai/Canada DTA, which is why I am now becoming curious about this.  If the money was small (ie dividends/interest) I would not bother much to review this, but for capital gains, this could be of substantial amounts and hence of interest for me sometime in the future.

 

And yes - I fully understand there could be tax changes coming up in Thailand - but to better understand any upcoming changes which may or may not occur - it would be very useful to understand the current situation.

 

EDIT : And for the moderators - please move this to the appropriate financial thread if and as appropriate.

Edited 1 hour ago by oldcpu