Understanding Thailand’s New Tax Directive on Foreign Income

[DrPhibes]

On 10/2/2023 at 8:22 AM, 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.

Well, this was the "loophole" I was using to make absolutely sure I would not be on the hook for Thai taxes.  No real matter, we were leaving the country anyway given the rest that's going on here.  Will sit overseas for a couple of years and see how it goes.

[Eloquent pilgrim]

18 minutes ago, Sheryl said:

To my reading, it potentially would IF (1) the foreigner is considered a nonresident for tax purposes in his home country so did not make a tax declaration on it in that country and (2) the relevant tax treaty does not specifically state that this type of pension cannot be taxed in Thailand. Some tax treaties do say that but usually only regarding government sourced pensions.

 

In fact, the above is already the law, if bringing the pension in immediateyly, but not usually enforced. Whether enforcement will change remains to be seen. 

Thanks Sheryl. It would seem, like so many issues here, to be rather ambiguously worded; probably not helped by having passed through the process of translation. I guess it will become clearer once it has been implemented in January, and we start to see people being affected by it, or not.

[TroubleandGrumpy]

3 hours ago, Liverpool Lou said:

The OP does not state that will be the case, it specifically states that only income from employment or assets may be liable.

I agree.  However, according to my advice from legal/tax expert, all income earned abroad is potentially taxable in Thailand if you are a tax resident. He also said no one knows the details, and probably wont until some time next year.

[Liverpool Lou]

18 hours ago, Sheryl said:

19 hours ago, Liverpool Lou said:

The OP does not state that will be the case, it specifically states that only income from employment or assets may be liable.

Actually the OP completely fails to discuss the tricky issue of savings - how defined and whether taxable.

Yes, I am well aware of that.  I did not suggest that it did make any other definitions.  Actually.

[retiree]

Apologies for the long post.  Section 40, below, defines assessable income.  I have removed the footnotes and added bullet points to make it easier to plow through.    Some of the divisions (such as (6) Income from liberal professions,...) are presumably laid out explicitly because they are allow specific standard exemption / deduction rates (e.g. for (6) it's 30% except for doctors, who get 60%).    See sections 42 though 48 bis for more details on how exemptions are calculated; some of the exact figures are found elsewhere.  Section 42 paragraphs 27 and 28, which define the gift exemptions, may be of particular interest.  

https://www.rd.go.th/english/37749.html#section42 

 

https://www.rd.go.th/english/37749.html#section40

Section 40 Assessable income is income of the following categories including any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer.

 

(1) Income derived from employment, whether in the form of salary, wage, per diem, bonus, bounty, gratuity, pension, house rent allowance, monetary value of rent-free residence provided by an employer, payment of debt liability of an employee made by an employer, or any money, property or benefit derived from employment.⁴

 

(2) Income derived from a post or from performance of work, whether in the form of fee, commission, discount, subsidy, meeting allowance, gratuity, bonus, house rent allowance, monetary value of rent-free residence provided by a payer of income, payment of debt liability of a taxpayer made by a payer of income, or any money, property or benefit derived from a post or from performance of work, whether such post or performance of work is permanent or temporary.

 

(3) Fee of goodwill, copyright or any other rights, annuity or annual payment of income derived from a will, any other juristic act, or court decision.

 

(4) Income that is:

• (a) Interest on a bond, deposit, debenture, bill, loan whether with or without security, the part of interest on loan after deduction of withholding tax under the law governing petroleum income tax, or the difference between the redemption value and the selling price of a bill or a debt instrument issued by a company or juristic partnership or by any other juristic person and sold for the first time at a price below its redemption value. Such income also includes income assimilated to interest, benefit or other consideration derived from the provision of a loan or from a debt-claim of every kind whether with or without security. ⁵

• (b) Dividend, share of profits or any other gain derived from a company or juristic partnership, a mutual fund or a financial institution established under a specific law in Thailand for the purpose of providing a loan in order to promote agriculture, commerce or industry; the part of dividend or share of profits after deduction of withholding tax under the law governing petroleum income tax.
• For the purpose of income calculation under paragraph 1, if a lawful child who is a minor derives income and the marital status of the parents exists throughout the tax year, the income of the child shall be treated as income of the father. However, if the marital status of the parents does not exist throughout tax year, the income of the child shall be treated as income of the parent who exercises parental power, or of the father if both parents jointly exercise parental power.
• The provisions of paragraph 2 shall apply mutatis mutandis to an adopted child who is a minor deriving income.
• (c) bonus paid to a shareholder or partner of a company or juristic partnership;
• (d) a decrease of the capital holdings in a company or juristic partnership which does not exceed the total amount of profits and reserves;
• (e) an increase of capital holdings in a company or juristic partnership that is determined from the total amount of profits or reserves;
• (f) a benefit derived from the amalgamation, acquisition or dissolution of a company or juristic partnership and having the monetary value which exceeds the capital;
• (g) gains derived from transfer of partnership holdings or shares, debentures, bonds, or bills or debt instruments issued by a company or juristic partnership or by any other juristic person.⁶

(5) Money or any other gain derived from:

• (a) rent of property,
• (b) breach of a hire-purchase contract,
• (c) breach of an installment sale contract, where the seller regains the property sold without paying back the money or gains already received.
• In the case of (a), if an assessment official has reason to believe that the taxpayer underreports the amount of income, he shall have the power to assess the income according to the reasonable rent of property under normal circumstances, and the amount so assessed shall be deemed assessable income of the taxpayer. In such case, the taxpayer may appeal against the assessment and shall apply the provisions on appeals under Part 2, Chapter 2, Title 2 mutatis mutandis.
• In the case of (b) and (c), all the money and gains received from the date of entering into contract to the date of breaching the contract shall be deemed assessable income of the year of which the contract is breached.

(6) Income from liberal professions, namely, laws, arts of healing, engineering, architecture, accounting, fine arts or other liberal professions as prescribed by a Royal Decree;

 

(7) Income derived from a contract of work where the contractor has to provide essential materials besides tools;

 

(8) Income from business, commerce, agriculture, industry, transport or any other activity not specified in (1) - (7).

 

The amount of tax under paragraph 1, which is paid for by the payer of income or by any other person on behalf of taxpayer on any category of income or in whichever tax year, shall be treated as income of the same category and of the same tax year as the income where payment of tax is made.