More details on Thai taxation of overseas income

[deejai33]

15 minutes ago, TroubleandGrumpy said:

Careful - international deposits are recorded - and the wife might be required to pay income tax on all of that money she was 'paid' by you.  I thought the same thing - but it also has hairs on it.

Yes, he's just passing the tax issue onto a relative(s).   They now have the foreign income to push them over tax threshholds.

 

All these ways people suggest to evade thai tax, are risky as it is clear you are trying to evade tax.  Maybe low risk of getting caught, maybe not depending on technology.

[MeePeeMai]

9 minutes ago, TroubleandGrumpy said:

However, wait until mid-late 2024 when (hopefully) Thai RD has provided clarifications and details of the process

No thanks, you'll be a hooked fish under their thumb after June 27th.  Unless it is satisfactorily clarified and resolved prior, I'll be leaving Thailand prior to that date (and returning sometime in 2025).  

[TroubleandGrumpy]

The first question is 'Do I need to do an annual tax return in Thailand in 2025 because I am a tax resident and I have money coming in from overseas'.

If the official Thai RF answer is NO - then all is good. 

If the official Thai RF answer is YES - then it is not good. 

The second question is 'Do I need to do an annual tax return in Thailand in 2025 because I am a tax resident and I have money coming in from overseas, but none of that is taxable in Thailand (as per DTA etc.)'.

If the official Thai RF answer is NO - then all is great. 

If the official Thai RF answer is YES, we tell you what applies under the DTA - then it is not good.

 

Some time later in 2024 we will know if this is all good, or if this is not good and we are (most) in trouble.

[CTwelve]

1 minute ago, BE88 said:

I don't agree, if I have a bank account in my country and the certainty that all taxes have been paid, only if you have an undeclared account in some tax haven it is very likely that you have not paid taxes.

But generally for people with a normal standard of living the question doesn't even arise.

Even if everyone who lives in Thailand needs to fill in an annual tax report then just declare it as 'savings' 'tax already paid'.  Same for pensions. 

 

All seems likely a storm in a tea cup.

[VBF]

12 minutes ago, BE88 said:

<snip>

And how could you prove that it is only a saving from previous years and not a profit????

 

By showing the money was held for a period of time, perhaps?

[TroubleandGrumpy]

1 minute ago, MeePeeMai said:

No thanks, you'll be a hooked fish under their thumb after June 27th.  Unless it is satisfactorily clarified and resolved prior, I'll be leaving Thailand prior to that date (and returning sometime in 2025).  

Yes you will be a tax resident then, and for those planning to return to Thailand for short periods (after Jan 1 2025), you are right and it would be wise to leave before that date in June. 

[metisdead]

A post and a reply with derogatory trolling comments in violation of our Community Standards have been removed.

[smedly]

this is unworkable

 

my pensions are long term savings

 

time to look for somewhere else to live, they are blowing in the wind with this, are we going to have to leave every 180 days to avoid this - ### them

[TroubleandGrumpy]

15 minutes ago, CTwelve said:

No need to worry imo. This is only going to be a concern for those who are legit evading paying income tax. 

The announcement only suggests they are aiming to close the loophole that allows Thai Tax residents including foreigners to avoid paying any income tax by leaving that income outside of the country for a year. That is it.

They might eventually require foreigners to file / declare yearly income, but they haven't announced that.

Yes that is who they are after - those using that loophole already.

But whop else will they catch in the net is the question and also the problem.

Until it is clear how they are going to apply this new rule, if it goes ahead, it is not 'all clear'. 

[Purdey]

It isn't clear for sure. Money transferred to Thailand from overseas was likely from bank A overseas to Bank B in Thailand. How can bank B ascertain that the money was earned income not savings? If I have an account overseas that was used to keep savings and earn interest, does the Thai bank deduct tax automatically?

Why would we have to prove it is not earned income? Why shouldn't the Thai government have to prove it was?

[deejai33]

31 minutes ago, BE88 said:

I don't agree, if I have a bank account in my country and the certainty that all taxes have been paid, only if you have an undeclared account in some tax haven it is very likely that you have not paid taxes.

But generally for people with a normal standard of living the question doesn't even arise.

I agree that for most people, money in savings accounts has been taxed by 'home' country.   

 

But you read here about:

 

1. Rental income from renting out your house in another country.  Sometimes its taxed by 'home' country, sometimes not.  Australians mentiin that.

 

2. Dividends.  For UK non-uk tax resident expats, dividends are not taxed in UK.  

 

3. Interest on savings. Might or might not be taxed yet.

 

4. Tax haven money, as you say.

 

So all these sources could accumulate in a 'savings' account.  And yet never been taxed.

 

The other factor is what rate of tax has been paid in home country.  Could be lower than thai rate, leading to tax on 'savings'.

Edited October 4, 2023 by deejai33

[CTwelve]

4 minutes ago, TroubleandGrumpy said:

Yes that is who they are after - those using that loophole already.

But whop else will they catch in the net is the question and also the problem.

Until it is clear how they are going to apply this new rule, if it goes ahead, it is not 'all clear'. 

Yes, but they are not going to bypass international tax treaties. That would be a political and ethical disaster for Thailand and destroy foreign relations.

 

If you paid tax on your income they will not go for it again.

 

 

Edited October 4, 2023 by CTwelve

[VBF]

2 hours ago, Mike Teavee said:

Your UK Pension will always be taxed in the UK though the 1st £12,570 will be taxed at 0% rate (subtly different than saying it's "Tax Free" but the end result is the same). 

<snip>

To be perfectly accurate (if a little pedantic)  your UK income is regarded as the total of [earned income + unearned income (interest, dividends etc) + pension] received in the relevant tax year (April - April)

 

Then the personal allowance  (£12,570 in this example) is deducted and taxed at 0%, so effectively tax-free and the remainder is taxed at various rates depending upon your personal and financial circumstances and the "tax bands" at the time. This ignores any allowances that may apply from time to time.

Edited October 4, 2023 by VBF

[lordgrinz]

Show of hands, how many people are willing to give detailed tax information from their foreign homelands to the IO  (Royal Thai Police)? Anyone raising their hands please schedule a lobotomy.

[BE88]

6 minutes ago, CTwelve said:

Even if everyone who lives in Thailand needs to fill in an annual tax report then just declare it as 'savings' 'tax already paid'.  Same for pensions. 

 

All seems likely a storm in a tea cup.

Logic would prove you right, but Thai logic?

 

5 minutes ago, VBF said:

By showing the money was held for a period of time, perhaps?

With a savings account you shouldn't have any problems but if you have a tax declaration from your country it would be better, if you don't have one it's all subject to checks with probable requests for tax assistance from your country.

 

[John Drake]

4 hours ago, CTwelve said:

 

The main concern I have is for reporting actual income. This then opens up a massive can of worms about the business, the employment type etc which was one of the main selling points of the Elite Visa. 

 

They've just doubled the price of the Elite Visa so this would be a double hammer blow for attracting wealthy tourists which I suspect is not what they are aiming for... I guess we will have to wait and see.

 

 

That does sound as if the people this tax revision most likely hurts are the "quality retirees" Thailand claimed it wanted so much. Elite and LTR sound like they could be put on the rack for this. The small end guys not so much--just the new people bringing in their 800K for retirement extensions who it seems will have that taxed. And then they'll need to top off what was taxed to get back to the 800K. But then the top off will be taxed too. It's like going into a store in the USA where you need to calculate the sales tax before you buy an item and make sure you have enough money.

[VBF]

2 minutes ago, BE88 said:

Logic would prove you right, but Thai logic?

 

With a savings account you shouldn't have any problems but if you have a tax declaration from your country it would be better, if you don't have one it's all subject to checks with probable requests for tax assistance from your country.

 

I can just imagine how useful that would be with the UK or US or other Western governments own bureaucracy and privacy rules ????

[Srikcir]

33 minutes ago, TroubleandGrumpy said:

Not when/if the Immigration requires an annual tax clearance as one of the conditions for renewal.

And there are so many other ways thius can go wrong for Expats.

However, wait until mid-late 2024 when (hopefully) Thai RD has provided clarifications and details of the process.

 

PS - some say I am over-reacting. Yes that is probably true. BUT I have had many years of expoerience in dealing with Govt Depts in Aust (especially ATO) and I know about many people who got caught out.  And you do not want to get caught out by the Thai RD - much harsher penalties than ATO.

Stay across it and stay informed - by end 2024 we will know how bad or good it really is.

Thailand Revenue Department has an online form in English for suggestions on their regulations and practices. Ask for clarifications and/or confirmation of proposed tax policy, see if they respond that will be by email. 

[MeePeeMai]

41 minutes ago, CTwelve said:

 

As long as you paid tax on the income (either at home or in Thailand) then there's surely no issue.

Well for example, a single filing US citizen has a personal exemption of $13,850 meaning that the first $13,850 of his/her income is not taxed in the USA.

 

Thailand will see this and might want to tax that portion of your income since no tax was paid (minus the measly 150,000 baht personal exemption that Thailand affords us single folks).

 

That is just one example, here's another one for you - For those of us who have rentals back in the USA, our annual rental income is subject to income tax minus the itemized deductions i. e. Property taxes paid, utilities paid, insurance for the rentals, maintenance and repairs, landscaping costs, property management fees paid etc.  

 

So there is gross income, adjusted gross income and then taxable income.  I don't want to live off of hopium that the Thai RD will accept and acknowledge only the taxable portion of this income. 

 

If they were to dig deep and try to gain access to our foreign tax paperwork this could be a nightmare from hell.

[JimTripper]

It opens up the possibility of freezing accounts as well. Many people may ignore the rules but the retirement account gets frozen one day after years of not filing taxes for arrears amounts due or not understanding how to file at all. Since the money is in country funds are easily frozen or debited out.

 

Could be one reason they require retirement funds in a Thai bank, and not just any bank.

Edited October 4, 2023 by JimTripper

[TroubleandGrumpy]

12 minutes ago, CTwelve said:

Yes, but they are not going to bypass international tax treaties. That would be a political and ethical disaster for Thailand and destroy foreign relations.

If you paid tax on your income they will not go for it again.

 

DTAs dont work like that - you get a credit for tax paid already in home country (which you have to prove).

 

But I do agree - I just wish they would clearly state that Expats pensions and savings do not apply.

[TroubleandGrumpy]

3 minutes ago, Srikcir said:

Thailand Revenue Department has an online form in English for suggestions on their regulations and practices. Ask for clarifications and/or confirmation of proposed tax policy, see if they respond that will be by email. 

Did that already - last week - no response ????

 

[BE88]

16 minutes ago, deejai33 said:

I agree that for most people, money in savings accounts has been taxed by 'home' country.   

 

But you read here about:

 

1. Rental income from renting out your house in another country.  Sometimes its taxed by 'home' country, sometimes not.  Australians mentiin that.

 

2. Dividends.  For UK non-uk tax resident expats, dividends are not taxed in UK.  

 

So both these sources could accumulate in a 'savings' account.  And yet never been taxed.

 

3. Tax haven money, as you say.

 

The other factor is what rate of tax has been paid in home country.  Could be lower than thai rate, leading to tax on 'savings'.

I agree with a previous comment that the Thai government has created many tax accountant positions.

Everything remains in absolute fog in many cases and therefore they will try to bring in as much capital as possible in these situations.

 

Absolutely not, if you have already paid your taxes it would be against international conventions to make you pay another Thai tax on the same capital.

 

[Dogmatix]

2 hours ago, Iamloki said:

I'm curious... does Thailand have a standard deduction in lieu of itemized deductions?

Or, do they consider the taxable income as that amount taxed in the source country?

Thailand does have itemized deductions in addition to the standard deduction. There are a lot: for elderly parents, kids, childbirth expenses, charitable donations, life and health insurance premiums, investing in retirement funds, sometimes a special promotion for buying consumer goods. There is also big 190k deduction for over 65s.

[John Drake]

1 minute ago, Dogmatix said:

There is also big 190k deduction for over 65s.

I wonder about this. Will they allow it for foreigners. I know when I became eligible for the senior pass on the BTS, I was denied it because I was foreigner. Sure taxes are a lot different, but . . . 

[Klonko]

Is there evidence that Thai RD applies LIFO and not FIFO.

[digger70]

11 hours ago, NanLaew said:

That is NOT the way a "double tax agreement" works.

 

If tax has already been paid in the country where the money comes from, it does not need to be deducted again on receipt in Thailand.

 

I am sure that in their mangling of their language means to say that the amount of tax paid in the source country can be deducted from the amount of any tax owed in Thailand.

Maybe they just don't know what they are doing Yet .

One thinks that they sorted 100% ( if they can) Before making this public.

But this is Thailand and one must expect this rigmarole.

[Yumthai]

7 minutes ago, Dogmatix said:

There is also big 190k deduction for over 65s.

It's not a deduction, people of 65 yo or older are exempted on income up to 190K THB instead of the usual 150K THB.

[fusion58]

9 hours ago, jacko45k said:

It would all get rather difficult if one was required to 'prove it' by Thai authorities.

Especially when we’re talking about a bureaucracy populated by half-wits who are too lazy to learn English.

[jcojco]

10 hours ago, Thailand J said:

If you file tax in US on US source capital gain or dividends, there is a standard deduction of $13850 and another $44625 taxed at 0%. $58475 tax free.

There is no tax credit you can claim if you bring that into Thailand and will have to pay tax in full.

you are totally right.  Most people don't seem to realize that, while they think safe because the existence of a double treaty, in most cases, due to the difference of the exempt income bracket, they will have to pay full tax amount in Thailand.