Some thoughts on the taxation of income brought into Thailand starting in 2024 (US citizen perspective only)

[jaideedave]

1 hour ago, deejai33 said:

My guess is that withdrawing thai baht in thailand from a foreign account will be regarded as remitting foreign income to thailand.

 

The net effect is the same.  The resident, for tax purposes, has just got 20,000 baht in his hands in thailand from a thai bank machine.  All monitorable by thai banks.

 

Worse, you could be accused of trying to evade thai tax.  Which is true !

 

What if I was a tourist? How would RD differentiate between a pensioner or someone on a 2 week vacay ?

[deejai33]

1 hour ago, MJCM said:

I tend to  agree, but for computers nowadays it's not that difficult to link name, visa status and amount withdrawn over a year from an ATM (with an overseas ATM card) together that is just linking database together.

 

Also bringing in Cash is not that safe as you need to exchange it and when exchanging it, what do they need? Your Id (passport)

 

 

Yes, and its a subset of transactions that would be looked into first.

 

'Select surname,first name, passport number, homecountry,age,  from immigration database where sum(days in thailand)>180 and year=2024'.   That gets you tax residents for 2024.

 

'Select passport number, total remitted  from bank summary database where total> 1m baht.

'Join to taxresident table on passportnumber'.   

 

Use the list to ask the tax residents to state how much they remitted.  If their answer differs from computer, call them in to investigate.  And randomly ask a few to show income was taxed appropriately.  

 

Could try similar matching on ATM withdrawls, but less unique ids to match with.  Exchange booths easier as have passport number as you say.

 

Not perfect, but could be refined.

 

Edited October 8, 2023 by deejai33

[MeePeeMai]

Here's something to think about,

 

It's well known that many of the ultra rich in the USA don't have much, if any "taxable income".  They live off of debt and loans since borrowed money is not currently taxed in the USA (it is not income, it is a loan).  They will often take loans out on properties (never selling) or borrow money using stocks/gold or silver/real property/art collections etc. as collateral and use this borrowed money to live off of (to avoid taxes).  When the asset values increase and as the debt to value ratio decreases on their collateral, they simply refinance or borrow more money etc... and pay off old loans with new (borrowed) money.

 

This of course becomes more difficult (and expensive) in the current environment of FED rate increases and the bond market (monetary policy) but is still done regardless.

 

For those with an American Express card (for example) or other means to get a credit advance or loan here in Thailand, you might be able to get a large cash advance from an AmEx or other credit card here a few times a year to live off and simply pay back the "loan" balance on your credit card by using your USA checking account.

 

This would not be taxable income coming into Thailand, this would be a loan on your credit card.  I realize that their are fees for cash advances but if the balance is paid in full every month on the credit card then there is no interest on the loan amount and my card AmEx gold card has no limit and I have previously taken out 20k USD in cash advance while in Indonesia (a phone call and approval was required of course).

 

For those who might be caught in a dragnet of Thai taxes, by using a US credit card for as many purchases as possible, paying the balance monthly from a US checking account and/or utilizing loans and cash advances from a credit card might help ease the tax burden of money over the 150k/190k Thai exemption thresholds.

 

Some folks have a HELOC (home equity line of credit) available or some may have money from a second mortgage or cash out from a first mortgage still in an account.  This is loan money, NOT income, so sending this money to Thailand should not be taxed in my opinion. There is of course interest due on long term loans (if not paying the balance in full) but by borrowing money on a HELOC and transferring that loan money to Thailand, then using one's income in the USA to pay back the loan, one could essentially live in Thailand on borrowed money.

 

One would need to do a cost analysis to see if it might help or not and as far as I know, Thailand does not tax residents on money obtained through a loan.

 

Just thinking out load.

[JimGant]

Geez, it's so obvious that Thailand is now caught up by its short and curlies, with a procedure that will never work -- because of the REMITTANCE aspect of their approach to taxation. And the remittance aspect of taxation was established years ago to allow Thai fat cats an avenue for tax avoidance. So, if Thailand wants to realize more tax revenue -- and why wouldn't they -- then drop the remittance aspect, and just concentrate on "foreign assessable income."

 

Anyway, as one example of just going to taxing foreign income, irrespective of remitted, or not -- and why it's doable, practical, and a money earner:

 

As a US citizen, living full time in Thailand, the DTA says that my IRA proceeds are first priority taxable by the country of my residence, i.e., Thailand. But since their existing rule said, no it wasn't taxable, because it was remitted in a later year than derived -- well then, the US, using its "saving clause" in the tax treaty, says: Thank you, Thailand, we'll collect the taxes on this IRA, with no tax credit payable, since you stupidly didn't tax it.

 

Thus, a smart Thailand would assess the current world of data exchange, particularly CRS and FATCA - where you now can see foreign income of your tax residents -- and come to the conclusion that: It's smarter, more practical, and more efficient to tax foreign derived income -- full stop -- without a remittance requirement to it. Yes, I'd then probably have to file my IRA proceeds as income on a Thai tax return (using the honor system, but backed up with FATCA data) -- but I'd get this all back, as a credit, when I file my US tax return. And Thailand would get the taxes they're entitled to via the treaty, which is fair. I could handle that.

 

As for the Thai fat cats? Well, they'll no longer have an "out" to deny foreign income via the remittance ruse. And that's why, I'm afraid, the remittance aspect of any new Thai approach to taxation -- won't be dropped. Sigh.

[Thailand J]

My Roth IRA contributions were from work in US when I wasn't in Thailand 180 days a year. Definitely tax free if I bring the distribution into Thailand anytime.

But only 1/3   in the account is from contributions, 2/3  is stock appreciation ( capital gain).

 

 

[deejai33]

13 minutes ago, jaideedave said:

What if I was a tourist? How would RD differentiate between a pensioner or someone on a 2 week vacay ?

Use the data about your entry and exit from thailand.  Easy to identify tax residents.  >180 days per calendar year.  

[MJCM]

21 minutes ago, deejai33 said:

Yes, and its a subset of transactions that would be looked into first.

 

'Select surname,first name, passport number, homecountry,age,  from immigration database where sum(days in thailand)>180 and year=2024'.   That gets you tax residents for 2024.

 

'Select passport number, total remitted  from bank summary database where total> 1m baht.

'Join to taxresident table on passportnumber'.   

 

Use the list to ask the tax residents to state how much they remitted.  If their answer differs from computer, call them in to investigate.  And randomly ask a few to show income was taxed appropriately.  

 

Could try similar matching on ATM withdrawls, but less unique ids to match with.  Exchange booths easier as have passport number as you say.

 

Not perfect, but could be refined.

 

 

Sorry to say, but you are spot on, but that said if the RD (Tax) and IO (Immigration) databases are linked like this, we are all up for the slaughter (and for the tax man it is not proven until guilty, but prove you are NOT guilty)

 

But I am the only the one who finds it a coincidence that the THB FALLS and this c... f...k happening?

 

Edited October 8, 2023 by MJCM
changed rises to FALLS

[Mike Lister]

3 minutes ago, MJCM said:

 

Sorry to say, but you are spot on, but that said if the RD (Tax) and IO (Immigration) databases are linked like this, we are all up for the slaughter (and for the tax man it is not proven until guilty, but prove you are NOT guilty)

 

But I am the only the one who finds it a coincidence that the THB rises and this c... f...k happening?

 

THB has fallen, as in weakened, not risen, as in gained.

Edited October 8, 2023 by Mike Lister

[MJCM]

6 minutes ago, Mike Lister said:

THB has fallen, as in weakened, not risen, as in gained.

MY bad!! I will edit my post!

 

Edited

Edited October 8, 2023 by MJCM

[jacko45k]

24 minutes ago, jaideedave said:

What if I was a tourist? How would RD differentiate between a pensioner or someone on a 2 week vacay ?

Two week tourists don't pay tax.....

[MJCM]

38 minutes ago, jaideedave said:

What if I was a tourist? How would RD differentiate between a pensioner or someone on a 2 week vacay ?

YOU (MAY) have to prove that you HAVE been in Thailand during 1 year (Jan 1 - Dec 31) LESS then 180 days.

 

Count your days carefully.

 

It's clear as mud currently!

Edited October 8, 2023 by MJCM

[spidermike007]

2 hours ago, Sheryl said:

Nobody is going to monitor ATM withdrawals, that is absurd, with millions of tourists each year making them.

 

However IF (still far from sure) you are required to make a tax filing in Thailand, not declaring any income coming in at all would surely raise questions since obviously you must be living on something.

Since the vast majority of us are not required to make a tax filing here, it would continue to go unseen. Perhaps only current taxpayers here will be affected. 

[Mike Lister]

Just taking a step back for a moment:

 

The proposed taxation is not aimed at foreigners who live in Thailand on retirement visa's, it's aimed at Thai nationals who repatriate earnings from overseas and others engaged in illegal activities. Why do I know this to be true? Because firstly, they have said so, secondly the numbers don't stack up to warrant foreign retirees being taxed on living expenses, there aren't enough of us to make it a worthwhile venture for the RD. Once the RD works out the mechanics of this whole thing, anyone who comes from a country that has a DTA with Thailand will be ticked and passed, as Sheryl has said repeatedly.

[MJCM]

1 minute ago, Mike Lister said:

Once the RD works out the mechanics of this whole thing, anyone who comes from a country that has a DTA with Thailand will be ticked and passed, as Sheryl has said repeatedly.

Correct, but until that is the case it's Stress Galore IMHO and with Thai's you can't say how long that is going to be the case

 

 

[VocalNeal]

I don't have time to worry about this. I'm still worried about being stopped and asked for my Big Bike license ????

[RichardColeman]

They just cannot stop their greed of other peoples money. I'd rather spend 7 months in the UK away from the family and then 5 months with them, than pay them a single baht !

 

 

[MJCM]

11 minutes ago, RichardColeman said:

They just cannot stop their greed of other peoples money. I'd rather spend 7 months in the UK away from the family and then 5 months with them, than pay them a single baht !

 

 

+1

 

That is what I am also going to do for the first year (2024) for sure

 

Ps: Please do note (I don't know about the UK) but EU is the same as Thailand with their 180 days in the year Tax Residency, so I don't know if that will affect you.

 

 

 

 

[Sheryl]

1 hour ago, Mike Lister said:

 Once the RD works out the mechanics of this whole thing, anyone who comes from a country that has a DTA with Thailand will be ticked and passed, as Sheryl has said repeatedly.

 

Actually I did not say that. I said DTAs will apply. Under terms of DTAs there are some expats who would owe tax.

 

It is quite possible that given the complexity and hassle of sorting out tax liability for retirees from countries with DTAs the RD will largely not bother - but this remains to be seen and is not guaranteed.

 

In the meantime US citizens would be well advised to limit their transfers in to income that is definitely not subject to Thai tax i.e. Social Security and (if any) government pension. If necessary, bring in lump sum of savings now before the new rules take affect. That way you are covered (from payment, not necessarily filing) no matter what.

[redwood1]

3 hours ago, connda said:

On the flip side, if they full-monty on foreign funds transfers, the government will simply shoot itself in the foot.
Short term they create a new tax revenue stream; long-term they lose foreign business and foreign-funds injected into the Thai economy.  In the end, the Thai economy suffers and domestic tax revenues take a hit.

Thais are no good at long-term planning.

 

 

The truth of the matter is the bleeding of foreign investment into Thailand by individuals and very possibly by companies is already well underway now.

 

Because of the opaque and murky nature of this tax proposal that will be dragging out for who knows how long....

 

Thailand already had a bad repution for rule changing, flip flopping and not sticking to agreements (Hopewell) ......

This tax disaster will be the staw that broke the camels back for many.......

All this will take many a year to repair to the level where farang can feel confident to buy cars and condos again..

Edited October 8, 2023 by redwood1

[dingdongrb]

2 hours ago, VocalNeal said:

I don't have time to worry about this. I'm still worried about being stopped and asked for my Big Bike license ????

Totally agree with that.

 

I'm much more concerned about sideswiping that car/scooter that decided to run the red light or the one that has taken the corner across the centerline. Or the one who is in my lane because they were passing a vehicle on the hill or blind corner.

 

He77 I'm more worried about getting an extra cockroach in my daily noodle soup....  ????

[Ben Zioner]

5 hours ago, MJCM said:

I tend to  agree, but for computers nowadays it's not that difficult to link name, visa status and amount withdrawn over a year from an ATM (with an overseas ATM card) together that is just linking database together.

 

Also bringing in Cash is not that safe as you need to exchange it and when exchanging it, what do they need? Your Id (passport)

 

 

Get  your THB in Singapore?

[RichardColeman]

My own view is that this is going to be rehashed along the lines of it only applying to anyone resident in Thailand (for over 180 days) with a work visa that is paid in an abroad country bank account untaxed and transfers money to live on whilst in country on a work visa - THAT would make sense as thailand would be missing out on 'in country work/tax' (hope that makes some sense)  I think I would be more concerned with this silly idea if I was on the said work visa.

 

 

 

 

 

Edited October 8, 2023 by RichardColeman

[Lorry]

4 hours ago, deejai33 said:

Select surname,first name, passport number, homecountry,age,  from immigration database where sum(days in thailand)>180 and year=2024'.   That gets you tax residents for 2024.

This database does not yet exist. 

Stamps are manually counted from copies of your passport,.

1 hour ago, Sheryl said:

 

It is quite possible that given the complexity and hassle of sorting out tax liability for retirees from countries with DTAs the RD will largely not bother - but this remains to be seen and is not guaranteed.

They have said and written that they will use the tax credit method

[Lorry]

6 hours ago, Sheryl said:

Nobody is going to monitor ATM withdrawals

ATM withdrawals are being monitored,  not sure about Thailand,  though.

 

It's certainly doable,  as MJCM writes. Maybe not in 2024 or 2025.

But you would leave a paper trail that could be used against you in 2030 or even later. 

6 hours ago, Sheryl said:

However IF (still far from sure) you are required to make a tax filing in Thailand, not declaring any income coming in at all would surely raise questions since obviously you must be living on something.

Exactly. 

Bring in a lot right now and live from it for a couple of years.

[TallGuyJohninBKK]

52 minutes ago, dingdongrb said:

He77 I'm more worried about getting an extra cockroach in my daily noodle soup....  ????

You mean the obligatory ONE just isn't enough for you??? ????

 

[Celsius]

4 hours ago, jaideedave said:

What if I was a tourist? How would RD differentiate between a pensioner or someone on a 2 week vacay ?

 

Easy. If you are a tourist, you have no business having a bank account in Thailand. If you do, expect to be taxed and it is up to you to prove you stayed less than 180 days.

[Sheryl]

39 minutes ago, Lorry said:

 

They have said and written that they will use the tax credit method

Do you have a link to that? I have not seen any official statements addressing this issue.  

[Lorry]

9 minutes ago, Sheryl said:

Do you have a link to that? I have not seen any official statements addressing this issue.  

Q10 of the QnA

 

https://aseannow.com/applications/core/interface/file/attachment.php?id=940349&key=652a2822f134d0711b1645dd1f24dd03

 

RD Order 161 2566 Q&A.pdf
418.36 kB · 5 downloads

 

Google translation on p70/71 of the main thread

 

They have also said it in their news conference,  it was in the papers. 

[deejai33]

1 hour ago, Lorry said:

This database does not yet exist. 

Stamps are manually counted from copies of your passport,.

 

You sure ? This is 2023.

 

They scan your passport at port of entry/exit.    Look at a computer screen.  Showing your details I guess, checking overstay etc.  I would think at that point a record is written saying 'this person entered/exited today'.  Why not do it ? No disc space. 555.

 

They do manually stamp passport too, yes.

 

 

Edited October 8, 2023 by deejai33

[Lorry]

37 minutes ago, deejai33 said:

You sure ?

Yes.

You don't have to make these copies yourself,  RD does it for you lest you "forget" some stamps

Edited October 8, 2023 by Lorry