Understanding Thailand’s New Tax Directive on Foreign Income

[webfact]

The Revenue Department of Thailand recently issued Directive No. 161/2566, dated September 15, stipulating that individuals with foreign-sourced income must include it in their tax calculations for the year they repatriate the income to Thailand. The directive takes effect from January 1, (2024).

 

The directive is grounded in Section 41 Paragraph 2 of Thailand’s Revenue Code, which establishes the principle that tax obligations are determined by one’s residence in Thailand. According to the section, anyone residing in Thailand for at least 180 days within a tax year and generating income abroad from employment or assets must include that income when filing taxes if the money is brought into Thailand within the same tax year.

 

The government’s primary goal with this directive is to close legal loopholes and increase tax revenue. However, this well-intended policy is not without its challenges.

 

by Cod Satrusayang

 

Full story: THAI ENQUIRER 2023-10-02

 

- 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.

 

Get our Daily Newsletter - Click HERE to subscribe

[Middle Aged Grouch]

The main thing to understand is that rules and laws change on the mood and overnight. Not worth taking the risk any any large investment or to long stay. Better start to consider Vietnam, Philippines. India, Malaysia, Cambodia etc to retire....

[JBChiangRai]

I said this was their intention all along.

 

Simply closing the tax-free remit following year loophole.

[JBChiangRai]

Just now, Middle Aged Grouch said:

The main thing to understand is that rules and laws change on the mood and overnight. Not worth taking the risk any any large investment or to long stay. Better start to consider Vietnam, Philippines. India, Malaysia, Cambodia etc to retire....

If you earn money tax-free overseas and have been remitting it the following year to avoid tax then yes, otherwise chillax, it's not aimed at you.

[smedly]

22 minutes ago, Middle Aged Grouch said:

The main thing to understand is that rules and laws change on the mood and overnight. Not worth taking the risk any any large investment or to long stay. Better start to consider Vietnam, Philippines. India, Malaysia, Cambodia etc to retire....

bye bye

[smedly]

21 minutes ago, JBChiangRai said:

If you earn money tax-free overseas and have been remitting it the following year to avoid tax then yes, otherwise chillax, it's not aimed at you.

correct

 

 

[Denim]

9 minutes ago, smedly said:

bye bye

Bye. Drop your keys off at reception.

 

 

Edited October 2, 2023 by Denim
spelling

[JRG23]

When you consider all the millions of international banking transfers it makes it almost impossible to enforce effectively. It'll be a right mess if they do introduce this.

[redwood1]

This whole thing is such a multi layered complex mess...

I will tell you what is going to happen...

 

They will come out and say folks this whole thing was just one big misunderstanding...

 

What me ment was XXXXX so no extra taxes are due...

[JBChiangRai]

23 minutes ago, JRG23 said:

When you consider all the millions of international banking transfers it makes it almost impossible to enforce effectively. It'll be a right mess if they do introduce this.

It's already in effect for income remitted in the same year earned (has been for many years), what's new is closing the loophole of remitting it the following year.

 

As before, it's practically impossible to enforce it, but it does give them the right to challenge a large incoming transfer and ask you to prove you paid tax on it, but it's not farang's they are after, it's rich Thais exploiting the loophole, but I dare say, transferring from a privacy oriented tax haven might raise a few flags.

[quake]

4 hours ago, smedly said:

bye bye

That's the new song for the ladies of Thailand. 

 

 

[StayinThailand2much]

56 minutes ago, JRG23 said:

When you consider all the millions of international banking transfers it makes it almost impossible to enforce effectively. It'll be a right mess if they do introduce this.

I don't think they care. They will just get whatever they can lay their hands on, and the transfers that are not taxed due to their inadequate system will be spared. Taxation equality - unlikely...

[spidermike007]

They are simply too disorganized, nor smart enough, nor well staffed enough, and incapable of enforcing this, to any meaningful degree. I would not worry about it. They will question a large incoming wire transfer here and there. That is likely about it. After all it is PT and the army. We cannot expect much in the way of competence.

[ukrules]

5 hours ago, JBChiangRai said:

I said this was their intention all along.

 

Simply closing the tax-free remit following year loophole.

It's not a loophole, it's enshrined in law as part of an act of parliament nearly 40 years ago.

 

Why are so many people here brainwashed into thinking this is some oversight, way of cheating the system / a loophole - it's not.

 

It's not some oversight that someone missed when drafting the law - it was carefully inserted into the law without ambiguity and provided a deliberate way for those who keep funds overseas and perhaps generate earnings from those funds or assets purchased with those funds to bring them back without having to pay any tax.

 

What they want to do is change the law without going through the process of changing the law - which is not really possible - and is the reason why it should fail.

[hotchilli]

5 hours ago, smedly said:

bye bye

PH is looking better all the time.

[khunPer]

5 hours ago, JBChiangRai said:

If you earn money tax-free overseas and have been remitting it the following year to avoid tax then yes, otherwise chillax, it's not aimed at you.

If you live in Thailand from your already income taxed savings abroad, it's certainly aimed at you...

[khunPer]

2 hours ago, JRG23 said:

When you consider all the millions of international banking transfers it makes it almost impossible to enforce effectively. It'll be a right mess if they do introduce this.

Hmm – withhold a 15% temporary tax at incoming bank source – just like interest – which you can claim back when doing your tax return statement, if you're under the income taxation limit...

[garzhe]

42 minutes ago, spidermike007 said:

They are simply too disorganized, nor smart enough, nor well staffed enough, and incapable of enforcing this, to any meaningful degree. I would not worry about it. They will question a large incoming wire transfer here and there. That is likely about it. After all it is PT and the army. We cannot expect much in the way of competence.

I agree. The tax authorities don't possess the necessary expertise to efficiently handle tax matters for foreigners from many countries who bring money into Thailand from various sources, some with dual taxation agreements and some without. I had an experience when I visited the tax office four years ago to register for taxes as I was renting out a property in Thailand. When I inquired about the necessity of registering for tax as a foreigner, their response was, "It's up to you."

[proton]

2 hours ago, JRG23 said:

When you consider all the millions of international banking transfers it makes it almost impossible to enforce effectively. It'll be a right mess if they do introduce this.

whats to stop banks deducting tax on foreign transfers?

[beammeup]

1 minute ago, proton said:

whats to stop banks deducting tax on foreign transfers?

not all foreign transfers are made by tax residents

[Srikcir]

31 minutes ago, khunPer said:

Hmm – withhold a 15% temporary tax at incoming bank source – just like interest – which you can claim back when doing your tax return statement, if you're under the income taxation limit...

You do raise a possible issue...if the bank withholds income tax on all foreign deposits. It shouldn't regardless of the wire source, foreign bank-to-Thai bank, Government-to-Thai bank. Money is fungible meaning it has no character other than being currency.

I'm going to contact my bank in particular as my foreign sourced funds are tax-exempt by the terns of my visa.

[freeworld]

1 minute ago, Srikcir said:

You do raise a possible issue...if the bank withholds income tax on all foreign deposits. It shouldn't regardless of the wire source, foreign bank-to-Thai bank, Government-to-Thai bank. Money is fungible meaning it has no character other than being currency.

I'm going to contact my bank in particular as my foreign sourced funds are tax-exempt by the terns of my visa.

Oh my goodness.

[freeworld]

6 hours ago, JBChiangRai said:

I said this was their intention all along.

 

Simply closing the tax-free remit following year loophole.

If it ever existed.

[JBChiangRai]

1 hour ago, ukrules said:

it was carefully inserted into the law without ambiguity and provided a deliberate way for those who keep funds overseas and perhaps generate earnings from those funds or assets purchased with those funds to bring them back without having to pay any tax.

 

 

It has created a loophole because it is being used in ways not intended.

 

it is a loophole for those people who are using it to avoid paying tax anywhere.

 

 

Edited October 2, 2023 by JBChiangRai

[ukrules]

4 minutes ago, JBChiangRai said:

It has created a loophole because it is being used in ways not intended.

 

it is a loophole for those people who are using it to avoid paying tax anywhere.

Wrong - that was 100% the intention of the original law which is exactly why it's not a loophole.

[DTL2014]

however i would like clarity on income v investment.Usually if one has a registered company , any money brought in is considered investment in the running of a thai company.

[TroubleandGrumpy]

7 hours ago, JBChiangRai said:

If you earn money tax-free overseas and have been remitting it the following year to avoid tax then yes, otherwise chillax, it's not aimed at you.

Just because it is not aimed at you, does not mean you will not be 'hit'.

The devil will as alwauys be in the detail - none of which we have at this time.

If the Thai RD implements this new rule and targets all bank tranfers into Thailand, it will hit us all. 

[DJ54]

Thinking of buying some KY stock…..

[TroubleandGrumpy]

7 minutes ago, ukrules said:

Wrong - that was 100% the intention of the original law which is exactly why it's not a loophole.

Correct. And that has been ratified by several Court rulings over the last 30 years.

I read an excellent article to that regards on a Thai publication website over the weekend.

[madmitch]

Made my mind up that I won't return to Thailand on a full time basis when my daughter finishes her education here in the UK. I'll spend a few months in Thailand on a tourist visa but no more retirement extensions.