Seeking details on "Resolution 2/2528" (1985) -- basis of the current-year-only tax rule.

[retiree]

I'm having trouble understanding why there is a "current-year-only" rule in the first place.  Does anybody have a fact-based explanation for why Resolution 2/2528 was promulgated?  Can somebody with access to the Thai legal texts provide a brief comment on the actual decision?

 

The non-binding English translation of 41 para 1 and 2 of the actual tax law is given here:  https://www.rd.go.th/english/37749.html#section41

Section 41

A taxpayer who in the previous tax year derived assessable income under Section 40 from an employment, or from business carried on in Thailand, or from business of an employer residing in Thailand, or from a property situated in Thailand shall pay tax in accordance with the provisions of this Part, whether such income is paid within or outside Thailand.

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.

 

I don't see the second paragraph as waiving prior years' taxes -- it just delays their collection.  Note that the definitive Thai phrase for "in the previous tax year" is: ในปีภาษีที่ล่วงมาแล้ว  , which I think could also be read as "in a previous tax year" or "in previous tax years".  (I'm assuming it is not a "term of art", or phrasing that is always used in legislation to refer to only the prior year.)

 

The refs I have for Resolution 2/2528 are:

https://www.belaws.com/thailand/stricter-regulations-for-taxing-foreign-income/

Per Section 41 in the Revenue Code, Thai tax residents must pay Thai personal income tax on income earned from offshore sources when repatriating it to Thailand. However, Resolution No. 2/2528, issued by the Committee for the Consideration of Legal Issues and Appeals or Petitions of the Revenue Department in 1985, announced that any offshore income or assets brought into Thailand after the year of its accrual would not be subject to personal income tax.

 

https://insightplus.bakermckenzie.com/bm/tax/thailand-offshore-sourced-income-brought-into-thailand-from-1-january-2024-onward-will-be-subject-to-thai-personal-income-tax/

According to paragraph two of section 41 of the Revenue Code, Thai tax resident individuals, i.e., any person who stays in Thailand for at least 180 days in any calendar year, shall pay Thai personal income tax on the offshore-sourced income when they bring that income into Thailand. The Resolution of the Committee for the Consideration of Legal Issues and Appeals or Petitions of the Revenue Department No. 2/2528, dated 21 February 1985 ("Resolution No. 2/2528") ruled that the offshore-sourced income that was brought into Thailand after the calendar year of receipt was not subject to personal income tax.

 

Since then, the Revenue Department has issued numerous rulings following the interpretation under the Resolution No. 2/2528. Thai tax residents will be subject to Thai personal income tax with respect to the offshore-sourced income, only if that income is brought into Thailand in the same calendar year in which it is received.

 

I'd imagine that these points will be raised when the new ruling, 161/2566 (2023), is challenged in court by a Thai taxpayer.

 

And again -- I'm hoping that somebody can provide a factual explanation of why Resolution 2/2528 (1985) was issued in the first place (and not simply more opinions about what the government should or shouldn't do).  

[freeworld]

Doubt you are going to get any answers here.

 

Ask a professional accounting firm for their professional opinion.

[Jenkins9039]

22 hours ago, retiree said:

I'd imagine that these points will be raised when the new ruling, 161/2566 (2023), is challenged in court by a Thai taxpayer.

Challenged in court lol

 

[topt]

On 9/27/2023 at 6:45 PM, retiree said:

The refs I have for Resolution 2/2528 are:

Thanks for posting as I don't remember ever seeing this reference before when the subject has come up (which it has often) and it just seemed to be the "accepted practice".

Curious though why you want a factual explanation - or are you just curious?

[retiree]

Yes, curious, and hoping some lurker on this list has access to a law library.  Not sure that Baker / McKenzie does pro bono legal research, or that I could afford them otherwise. 

 

Given the wording of the law, the 2/2528 ruling seems counterintuitive to me -- but I don't know the argument that were advanced in its favor. 

 

There was turmoil at the time.  The baht was untethered from the dollar and tied to a (dollar-dominated) basket of currencies in 1984, which led to an immediate devaluation from 23 to 27 baht / dollar, and considerable pain for those who had not hedged dollar-denominated loans, as well as those who had planned US purchases, including military equipment.   It was followed by an attempted coup in 1985.    One would imagine that the 2/2528 ruling was influenced by the political situation of the times, and how it might be advantageous to some hurt by the devaluation, but I'm not seeing exactly the reasoning the Tax Court might have followed (which I think will be helpful in predicting where the new ruling will go).  

 

A new post in another thread refers to the topic, and points to this article (Chrome translate works pretty well).  However, the background of 2/2428 is not addressed.  The article does note that there will probably be taxpayers who disagree and take the case to the tax court.   And in my opinion implies that the expat community is a minor player in any turbulence ahead, in comparison to overseas investors in Thailand, and to Thais with investments overseas. 

 

https://www.bangkokbiznews.com/finance/investment/1091100

 

https://aseannow.com/topic/1306896-thai-government-to-tax-all-income-from-abroad-for-tax-residents-starting-2024/?do=findComment&comment=18385407

[ukrules]

It is not easy to find information about this and why it came into being. I have been looking myself.