Why foreigners should not be worried by the new modification to the revenue code in Thailand

[ThaiLawOnline]

 

I have been asked about 10 times this week about the modifications regarding taxes. I am not sure if it should be under immigration and visa but my experience tells me that immigration will ask for tax documents in the future. But do not worry and I explain.

 

The new amendment to the Revenue Code in Thailand, which will come into effect on January 1, 2024, requires tax residents of Thailand to declare all of their overseas income, regardless of where it is earned. However, this does not necessarily mean that foreigners will have to pay more taxes in Thailand.

Under double taxation treaties (DTTs), Thailand has agreements with many countries to avoid double taxation on income. This means that if a foreigner is already paying taxes on their overseas income in another country, they may be exempt from paying taxes on that income in Thailand.

To take advantage of a DTT, foreigners will need to declare their overseas income to the Thai Revenue Department and provide documentation to prove that they have already paid taxes on that income in the other country.

 

Thailand has 61 double taxations treaties and they are here:

https://www.rd.go.th/english/766.html

 

Difference between declaring and paying taxes

Declaring taxes means reporting your income to the tax authorities. Paying taxes means actually remitting money to the government.

Under the new amendment to the Revenue Code, all tax residents of Thailand will be required to declare their overseas income, regardless of whether or not they are exempt from paying taxes on that income. However, foreigners who are exempt from paying taxes on their overseas income will not actually have to pay any taxes to the Thai government.

 

Here are some examples:

• A foreigner who lives in Thailand and works for a company in Europe will need to declare their overseas income, even if that income is from a foreign employer. However, if the foreigner is already paying taxes on that income in their home country, they may be exempt from paying taxes on that income in Thailand.
• A foreigner who lives in Thailand and owns a rental property in another country will need to declare the rental income from that property to the Thai Revenue Department. However, if the foreigner is already paying taxes on the rental income in the other country, they may be exempt from paying taxes on that income in Thailand. I personally know people from a country X, having a property in country Y and getting the incomes from AirBNB in Thailand, the country Z. That might change things for people like that.
• A foreigner who lives in Thailand and invests in foreign stocks will need to declare the capital gains from those investments to the Thai Revenue Department. However, if the foreigner is already paying taxes on the capital gains in the country where the stocks are traded, they may be exempt from paying taxes on those capital gains in Thailand.
• If you earn incomes from crypto, it is obvious that the Thai government and other countries, what to control the gains and tax you. They also want to stop loopholes as you can live in Thailand, get money into your bank account and nobody checks where it comes from if you are under the radar, or limits the governments check.

 

Foreigners who live in Thailand should not be worried by the new modification to the revenue code. The new amendment simply requires tax residents of Thailand to declare all of their overseas income. However, foreigners who are exempt from paying taxes on their overseas income will not actually have to pay any taxes to the Thai government. A tax resident is someone living in the country to more than 180 days.

 

I have a work permit in Thailand for 19 years. Before I got permanent residency and after the years around 2010, immigration was checking if I was paying taxes in Thailand. I expect the same but it is too early to know what documents they will ask, or if we will have to translate these documents. I do foresee a lot of bureaucracy.

 

If you are unsure whether or not you are exempt from paying taxes on your overseas income in Thailand, you should consult with a qualified tax advisor. And I will be honest, I am not a tax advisor. If you do crypto or have large incomes and wish to stay under the radar, I can not advise you to setup a company in Dubai or Isle of Man, but let's say that many rich people do it.

 

Dot ask me what will happen, this is Thailand and you never know.  :)

[spidermike007]

Good information. Thanks.

[Neeranam]

9 minutes ago, ThaiLawOnline said:

If you are unsure whether or not you are exempt from paying taxes on your overseas income in Thailand, you should consult with a qualified tax advisor. And I will be honest, I am not a tax advisor.

Exactly, I will be consulting a  Thai accountant, not a foreign lawyer. 

[quake]

Op is not the RD

or the government

Read what you want into it all.

Happy tax Thailand.

 

[UWEB]

Don't believe any what is written above. Doing all the work and than not let you pay Tax? BS.

[ThaiLawOnline]

12 minutes ago, Neeranam said:

Exactly, I will be consulting a  Thai accountant, not a foreign lawyer. 

Very relevant comment. I suggest Alan Lonie from Asia Accounts.

[NoDisplayName]

It all comes down to implementation.  It would be easy for the government to decree a 15% withholding on all incoming foreign deposits be collected by banks.

 

At the end of the tax year, it will permitted to apply for reimbursement.  But then what sort of documentation will be required to "prove" the imported funds were previously taxed?

[Ben Zioner]

Haven't  paid income tax since  1991 and intend to  continue to do so, as above.

 

And of course I have always been legal.

[retarius]

One problem I foresee is timing. I pay US taxes and instead of April 15th each year we get until October 15th to file them. So later this month, I will file taxes in the US for 2022. This may be OK if Thailand will wait until 2005 to collect 2003 taxes. Somehow, I think they'll want you to pay and then file it back. I'm sure this would be a paperwork nightmare. 

 

Thai taxes are a good deal lower than the 36% (+10%) marginal rate that I pay in the US. The US allows my to write off any Thai taxes paid, BUT only to the rate of tax that I would pay in the US. I suspect that I would not be liable for taxes in Thailand under the current treaty assuming my income/deductions don't change much . For example if I paid 25% tax in Thailand but my tax rate in the US was only 20% then I would only be able to write off the Thai tax paid and would owe 5% US tax. All sounds good from this perspective, unless I have to shell out presumptive taxes here on 3 to 4 million baht, and then claim it back sometime later when I have filed my US taxes. I cannot remember whether the US issues receipts for taxes paid. I think not, but I usually get a small refund. I wonder how to go about claiming taxes paid here (because of timing issues) without a receipt. 

 

I am fortunate to have other residences in other tax jurisdictions and have decided to ensure I am not resident for taxes here in Thailand. I understand the time allowed in Thailand is 180 days so I must spend 185 days out of the country (maybe 187 depending on how they count the days). The other option is to move as I am sick of being a 'target' here, as a foreigner. . 

[liddelljohn]

none of it will affect me  so not worried

[freeworld]

31 minutes ago, NoDisplayName said:

It all comes down to implementation.  It would be easy for the government to decree a 15% withholding on all incoming foreign deposits be collected by banks.

 

At the end of the tax year, it will permitted to apply for reimbursement.  But then what sort of documentation will be required to "prove" the imported funds were previously taxed?

Sorry to say but that is ridiculous. Nowhere else does this happen transfer money and it gets taxed.

 

The bank will report foreigners account to the RD, balance and deposits, that is already part of CRS/FATCA, they have the residential address and can contact the home country to get information if tax was paid or not.

 

If tax is owed, the onus is on the resident to fill in a tax form and submit it with all evidence. If the resident does not submit a tax return then the Revenue dept will then decide if tax is owed or not and it wants to take money out of the tax payers  bank account. Of course laws are needed for all this as it exists in other countries.

 

Anyway, this tax business is more focused on Thai/Foreign businesses and wealthy people moving large sums of money.

 

Its all a big hullabaloo about nothing, there is nothing yet definite, the tax season for next year is not even started, RD and the big accountants still have a lot of details to iron out.

[QuantumQuandry]

And what would happen to money that is earned in another country but is tax exempt due to the laws of that country?  In America, Government Bonds and Disability compensation, for example.

 

What about Roth IRAs, which are taxed on the original amount but not on the gains?

 

Somehow the OP makes me more concerned, not less lol

[freeworld]

29 minutes ago, QuantumQuandry said:

And what would happen to money that is earned in another country but is tax exempt due to the laws of that country?  In America, Government Bonds and Disability compensation, for example.

 

What about Roth IRAs, which are taxed on the original amount but not on the gains?

 

Somehow the OP makes me more concerned, not less lol

Obviously, those are the laws in that country. One comes to reside in Thailand it is Thailand laws. One will have to get the Thai and authorities of other countries to update/amend their DTA to exclude, clarify the incomes to tax. How does one think it works in other countries?

 

There is nothing to concern, the tax season is not even started.

[jaywalker2]

Although double taxation treaties exist, they don't always cover all of the income a person might generate. When I worked in Japan, for example, I was allowed a flat $70,000 income deduction. Anything I earned in excess of that would be taxed by both the U.S and Japan. This has always been a problem for U.S. citizens working overseas.

 

Currently, I have to file U.S. taxes. Now I'll have to file Thai taxes as well even though I haven't generated any income at all in Thailand? This is a complication that most retirees don't want.

 

Furthermore, one of the selling points of pricey long-term visa schemes was that foreigners who purchased these visas wouldn't have to pay tax in Thailand. Imagine if you have to prove that you earn at least $80,000 a year to qualify for such a visa and then find out that you'll have to pay taxes on that income!

 

Also, how are you supposed to prove that you paid taxes on any money you transfer from overseas? Your income tax report only specifies how much you earned in income or capital gains for a single year. But if you're tranfering money from a saving or checking account, how are you supposed to proved that the money has already been taxed?

 

If this goes through, it will be a huge headache to foreigners in Thailand and offer little benefit to the government.

[freeworld]

"A foreigner who lives in Thailand and owns a rental property in another country will need to declare the rental income from that property to the Thai Revenue Department. However, if the foreigner is already paying taxes on the rental income in the other country, they may be exempt from paying taxes on that income in Thailand. I personally know people from a country X, having a property in country Y and getting the incomes from AirBNB in Thailand, the country Z. That might change things for people like that."

 

Why would the foreigner need to report the income from a foreign rental property if they do not bring the income to Thailand? Of course if that income is brought into Thailand it is taxable or if tax was already paid they would have some document to submit to RD at the end of the tax year.

[Happy happy]

1 hour ago, ThaiLawOnline said:

 

I have been asked about 10 times this week about the modifications regarding taxes. I am not sure if it should be under immigration and visa but my experience tells me that immigration will ask for tax documents in the future. But do not worry and I explain.

 

The new amendment to the Revenue Code in Thailand, which will come into effect on January 1, 2024, requires tax residents of Thailand to declare all of their overseas income, regardless of where it is earned. However, this does not necessarily mean that foreigners will have to pay more taxes in Thailand.

Under double taxation treaties (DTTs), Thailand has agreements with many countries to avoid double taxation on income. This means that if a foreigner is already paying taxes on their overseas income in another country, they may be exempt from paying taxes on that income in Thailand.

To take advantage of a DTT, foreigners will need to declare their overseas income to the Thai Revenue Department and provide documentation to prove that they have already paid taxes on that income in the other country.

 

Thailand has 61 double taxations treaties and they are here:

https://www.rd.go.th/english/766.html

 

Difference between declaring and paying taxes

Declaring taxes means reporting your income to the tax authorities. Paying taxes means actually remitting money to the government.

Under the new amendment to the Revenue Code, all tax residents of Thailand will be required to declare their overseas income, regardless of whether or not they are exempt from paying taxes on that income. However, foreigners who are exempt from paying taxes on their overseas income will not actually have to pay any taxes to the Thai government.

 

Here are some examples:

• A foreigner who lives in Thailand and works for a company in Europe will need to declare their overseas income, even if that income is from a foreign employer. However, if the foreigner is already paying taxes on that income in their home country, they may be exempt from paying taxes on that income in Thailand.
• A foreigner who lives in Thailand and owns a rental property in another country will need to declare the rental income from that property to the Thai Revenue Department. However, if the foreigner is already paying taxes on the rental income in the other country, they may be exempt from paying taxes on that income in Thailand. I personally know people from a country X, having a property in country Y and getting the incomes from AirBNB in Thailand, the country Z. That might change things for people like that.
• A foreigner who lives in Thailand and invests in foreign stocks will need to declare the capital gains from those investments to the Thai Revenue Department. However, if the foreigner is already paying taxes on the capital gains in the country where the stocks are traded, they may be exempt from paying taxes on those capital gains in Thailand.
• If you earn incomes from crypto, it is obvious that the Thai government and other countries, what to control the gains and tax you. They also want to stop loopholes as you can live in Thailand, get money into your bank account and nobody checks where it comes from if you are under the radar, or limits the governments check.

 

Foreigners who live in Thailand should not be worried by the new modification to the revenue code. The new amendment simply requires tax residents of Thailand to declare all of their overseas income. However, foreigners who are exempt from paying taxes on their overseas income will not actually have to pay any taxes to the Thai government. A tax resident is someone living in the country to more than 180 days.

 

I have a work permit in Thailand for 19 years. Before I got permanent residency and after the years around 2010, immigration was checking if I was paying taxes in Thailand. I expect the same but it is too early to know what documents they will ask, or if we will have to translate these documents. I do foresee a lot of bureaucracy.

 

If you are unsure whether or not you are exempt from paying taxes on your overseas income in Thailand, you should consult with a qualified tax advisor. And I will be honest, I am not a tax advisor. If you do crypto or have large incomes and wish to stay under the radar, I can not advise you to setup a company in Dubai or Isle of Man, but let's say that many rich people do it.

 

Dot ask me what will happen, this is Thailand and you never know.  ????

But you have not addressed the issue of persons living here long time with retirement visas?

[freeworld]

2 minutes ago, Happy happy said:

But you have not addressed the issue of persons living here long time with retirement visas?

It does not matter what visa you have, it is tax residence which matters with tax. 180 days and more residing in Thailand one is tax resident.

[Pattaya57]

I make property rent, bank interest and shares income in Australia. No way will I be telling Thailand Tax office of this income like the OP says to do as how would they ever know? No chance!

[dick turpin]

Very good vid on You Tube by WorldTaxAndy

who seems to know what he is taking about.

[RupertIII]

I was under the impression that only income/capital gains etc. were liable to tax if remitted into Thailand, as below.

 

Order of the Revenue Department

 

Number 161/2566

 

Subject: Payment of Income Tax under Section 41 (2) of the Revenue Code

 

In order for revenue officers to use as a guideline in inspecting and advising persons residing in Thailand who have assessable income under Section 40 of the Revenue Code in the past tax year due to duties or business performed overseas or due to assets located overseas under Section 43 (2) of the Revenue Code, the Revenue Department hereby issues the following order:

 

Section 1: A person who is a resident of Thailand under Section 41 (3) of the Revenue Code and has assessable income due to duties or business performed overseas or due to assets located overseas under Section 41 (2) of the Revenue Code in the said tax year and has brought such assessable income into Thailand in any tax year, shall be required to combine such assessable income for the purpose of paying income tax under Section 48 of the Revenue Code in the tax year in which such assessable income is brought into Thailand.

 

Section 2: Any regulations, rules, orders, letters in response to inquiries, or practices that are inconsistent with this order shall be repealed.

 

Section 3: This order shall come into force for assessable income brought into Thailand from 1 January 2024 onwards.

 

Dated 15 September 2023

 

(Mr. Suwon Sangsanit)

 

Director-General of the Revenue Department

 

 

 

 

 

[TroubleandGrumpy]

I disagree with several of the points/claims made by the OP.

 

IMO there is no need to lodge a tax return in Thailand, unless you have an income that is 'taxable' in Thailand and you have to pay tax. Just because you are a tax resident does not mean you have to lodge a tax return.  Is the OP claiming that every Thai citizen currently lodges a tax return every year. No they do not - because the majority of Thais do not earn over 150K Baht per year (and many do not bother).

 

IMO unless a tax resident or citizen is required to pay taxes, then there is no need to lodge a tax return.

 

Yes I could be wrong - but if Thailand demands all Expat tax residents who do not work here (those retired or married without a work permit) have to lodge a tax return, but not all Thais have to lodge a tax return who are working, that will result in a wave of complaints about racial discrimination. Mine will be one of the first they get.

 

[freeworld]

2 minutes ago, Pattaya57 said:

I make property rent, bank interest and shares income in Australia. No way will I be telling Thailand Tax office of this income like the OP says to do as how would they ever know? No chance!

Some are even speculating all foreign bank transfer remittances are going to be taxed by the banks, haha.

[TroubleandGrumpy]

6 minutes ago, Pattaya57 said:

I make property rent, bank interest and shares income in Australia. No way will I be telling Thailand Tax office of this income like the OP says to do as how would they ever know? No chance!

The problem is that they might/can look at your money transfers into Thailand.  How they look at those bank transfers is unknown - in the past they just let it go.  Anyone bringing in a large amount of money after Jan 1 2024 is now under the threat of being 'looked at' and then asked where did those funds come from - and then to prove it was not taxable income. 

[freeworld]

1 minute ago, TroubleandGrumpy said:

The problem is that they might/can look at your money transfers into Thailand.  How they look at those bank transfers is unknown - in the past they just let it go.  Anyone bringing in a large amount of money after Jan 1 2024 is now under the threat of being 'looked at' and then asked where did those funds come from - and then to prove it was not taxable income. 

So? and why is it threat?

[FritsSikkink]

51 minutes ago, freeworld said:

Why would the foreigner need to report the income from a foreign rental property if they do not bring the income to Thailand? 

Because when you are a tax resident, you need to declare income, doesn't matter where you keep the money.

[TroubleandGrumpy]

1 minute ago, freeworld said:

So? and why is it threat?

Are you kidding? How much do you transfer into Thailand over a year?

 

[freeworld]

6 minutes ago, TroubleandGrumpy said:

I disagree with several of the points/claims made by the OP.

 

IMO there is no need to lodge a tax return in Thailand, unless you have an income that is 'taxable' in Thailand and you have to pay tax. Just because you are a tax resident does not mean you have to lodge a tax return.  Is the OP claiming that every Thai citizen currently lodges a tax return every year. No they do not - because the majority of Thais do not earn over 150K Baht per year (and many do not bother).

 

IMO unless a tax resident or citizen is required to pay taxes, then there is no need to lodge a tax return.

 

Yes I could be wrong - but if Thailand demands all Expat tax residents who do not work here (those retired or married without a work permit) have to lodge a tax return, but not all Thais have to lodge a tax return who are working, that will result in a wave of complaints about racial discrimination. Mine will be one of the first they get.

 

Oh my goodness, how did racial discrimination enter the conversation.

 

Many Thais do not submit tax returns because many are exempted by their tax threshold.

[Sophon]

1 hour ago, NoDisplayName said:

It all comes down to implementation.  It would be easy for the government to decree a 15% withholding on all incoming foreign deposits be collected by banks.

 

At the end of the tax year, it will permitted to apply for reimbursement.  But then what sort of documentation will be required to "prove" the imported funds were previously taxed?

I agree with you, that the problem will not be if you are actually going to owe taxes to Thailand, but rather what kind of documentation will be required from you to prove that you aren't liable for taxes.

 

Thailand has double taxation agreements with most major countries. The content varies from country to country, but one recurring theme is that you will not have to pay "double tax". So if an income stream is taxable in both Thailand and your home country, then you will get a tax rebate in Thailand for the tax you have paid in your home country (or vice versa). Since the taxation in most of our home countries are more severe than the taxation in Thailand, very few of us will actually have to pay taxes here, but what kind of documentation will be required by the Thai revenue department to prove that? They will not be able to read or understand our home country tax forms/receipts, so they will probably ask for all kinds of translations and certifications to be supplied from our home country RD and/or embassies here in Thailand - documentation that you probably won't be able to get.

 

We all know how ill thought out changes to the immigration requirements are. Does anyone really think that the implementation of this spur of the moment change without any previous studies performed will be any different? It will be a nightmare for the average expat to supply whatever documents the Thai revenue department decides it needs to prove that you don't owe tax here.

 

Personally, I retired here in 2010 and have had no income since then other than some capital gains and negligible tax income, all of which has been declared and taxed according to my home country's tax rules. So in reality I have been living on savings amassed during my working life, savings from income that have already been heavily taxed. But how am I supposed to prove that to the Thai tax authorities? 

 

If they go through with this change, then it will be a nightmare for anyone living here and making regular transfers to cover their living expenses. I already have funds here in Thailand and will transfer more this year to make sure that I have enough to live on for at least a few years, until they realize that what they propose in unworkable.   

[atpeace]

Tax residency's definition is country specific.  This new regulation probably has nothing to do with Expats retiring in  Thailand.  It probably has nothing to do with Thais that reside overseas as long as they aren't tax residents and this is why the reg stipulates tax residents.   Thais that aren't tax residents will not pay taxes when remitting money from abroad.  Same types of tax regs apply in Finland in regards to tax residents and many other countries.

 

The purpose of this reg is to  to tax Thais that are tax residents that have foreign investments, property, and income.  The odds of this having anything to do with 99% of Expats residing in Thailand is miniscule.   The implementation of taxing foreign transfers to foreigners would be interesting and I would venture to say impossible to implement.   

 

 

[FritsSikkink]

6 minutes ago, TroubleandGrumpy said:

The problem is that they might/can look at your money transfers into Thailand.  How they look at those bank transfers is unknown - in the past they just let it go.  Anyone bringing in a large amount of money after Jan 1 2024 is now under the threat of being 'looked at' and then asked where did those funds come from - and then to prove it was not taxable income. 

All the people who get a visa based on income will be looked at.