Change in the tax law does target expats living in Thailand and extends reporting obligations

[webfact]

A former chairman of Baker McKenzie, an international law firm with offices in Thailand and a member of the National Reform Council has come out strongly against a recent move by the Revenue Department to change a 38-year regulation applicable to foreigners with overseas income on several grounds including the legality of the order and its broader impact on the Thai economy moving forward.

Top lawyer and former member of the National Reform Council, along with others, calls for a new Revenue Code and for Thailand to compete with World tax havens such as Singapore and Hong Kong. They condemn the current move as a backwards step for the country and its tired economy.

A former Chairman of a prestigious international law firm in Bangkok has warned that a new taxation directive issued by the Revenue Department targeting foreign income sources faces a legal challenge and will create more reporting obligations and confusion.

 

The order published on September 15 2023, altering a 38-year-old interpretation, is a definite step by the government to widen the tax base, meaning more significant reporting requirements, at the very least for expats living in Thailand. Kitipong Urapeepattanapong, along with other legal experts, including a Supreme Court judge, is calling on the Thai government to overhaul the tax system thoroughly to make it competitive with Hong Kong and Singapore.

Former Chairman of Baker McKenzie in Thailand, Mr Kitipong Urapeepattanapong, warns that the September directive issued by the Revenue Department, rescinding a previous legal interpretation that stood for 38 years, means more reporting for foreign residents and Thai nationals investing abroad as well as confusion. He predicts taxpayers will challenge the new measure in court. Along with other experts and even a former Supreme Court judge, the top legal practitioner cites the move as a retrograde one for the economy.

 

by Joseph O' Connor

 

Full story: Thai Examiner.com 2023-11-06

 

- 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.

 

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[Shop mak]

"Indeed, Mr Kitipong suggests that Section 41, Paragraph 2 of the country’s Revenue Code gives minimal scope to the Thai government to tax any income from abroad by pointing out that the existing provision does not specify that income earned in foreign countries outside the jurisdiction of the Kingdom is subject to tax at all"

 

"Mr Kitipong suggests that if the new resolution goes ahead on January 1 2024, it will likely lead to a challenge in court, which will throw the country’s income tax collection process into confusion."

 

Seen the huge interest on this forum, I strongly suggest people read the full story.

It seems unlikely that this will take effect from 1 Jan 2024. 

[Puccini]

27 minutes ago, webfact said:

A former chairman of Baker McKenzie, an international law firm with offices in Thailand and a member of the National Reform Council has come out strongly against a recent move by the Revenue Department to change a 38-year regulation applicable to foreigners with overseas income on several grounds including the legality of the order and its broader impact on the Thai economy moving forward...

 

This is an excellent news articles. The explanations of Mr Kitipong Urapeepattanapong match my own views and concerns about this recent Revenue Department Order.

[Captain Monday]

What is the definition of ”Living In”　？

[Gknrd]

It will go into effect , it won't matter if it is challenged in court or not. 

Nightmare to be  enforced or not, it does not matter. 

My guess is they will have authorized tax officials that you will have to get signed off on before you go to immigration for an extension of your visa.

 

[Gknrd]

10 minutes ago, Captain Monday said:

What is the definition of ”Living In”　？

Just like allot of other counties.. 180 days.

[Captain Monday]

14 minutes ago, Gknrd said:

Just like allot of other counties.. 180 days.

Then to nothing to concern myself with as  I do not spend 180 days/year in any country.

 

regards,

 

Captain Monday 

 

 

Constant international travel

[Gknrd]

Just now, Captain Monday said:

Then to nothing to concern myself with as  I do not spend 180 days/year in any country.

 

regards,

 

Captain Monday 

 

 

Constant international travel

Same here.

[PingRoundTheWorld]

58 minutes ago, Shop mak said:

It seems unlikely that this will take effect from 1 Jan 2024. 

Knowing Thailand, it's very likely to take effect, then be reversed almost immediately when they realize they can't enforce it (not to mention the legal challenges to come). Trying to actually enforce this will result in a mass exodus of expats and huge amounts of money - no one wants to pay extra taxes on money that's already been taxed, nor have to report and prove that it was already taxed. And that's the real question: if and how are they going to enforce it? will all tax residents have to report? As usual big confusion and zero clarity.

[john11k]

All the foreigners/ expats living in Thailand are spending all there money in Thailand ,   Chances are they will now leave and spend it else where. 
I’ll never get over the thinking behind these sort of brainless laws,  

 

[HappyExpat57]

I believe most people here are safe - for now.

 

"At the time of writing, Thailand has concluded 61 double tax agreements with countries worldwide.

Armenia	Hungary	Poland
Australia	India	Romania
Austria	Indonesia	Russia
Bahrain	Israel	Seychelles
Bangladesh	Italy	Singapore
Belarus	Japan	Slovenia
Belgium	Korea	South Africa
Bulgaria	Kuwait	Spain
Cambodia	Laos	Sri Lanka
Canada	Luxembourg	Sweden
Chile	Malaysia	Switzerland
China	Mauritius	Taipei
Cyprus	Myanmar	Tajikistan
Czech Republic	Nepal	Turkey
Denmark	Netherlands	Ukraine
Estonia	New Zealand	United Arab Emirates
Finland	Norway	United States of America
Germany	Oman	Uzbekistan
Great Britain and Northern Ireland	Pakistan	Vietnam
Hong Kong	Philippines"

 

https://www.belaws.com/thailand/double-tax-agreements/

[alanrchase]

1 hour ago, Captain Monday said:

Then to nothing to concern myself with as  I do not spend 180 days/year in any country.

 

regards,

 

Captain Monday 

 

 

Constant international travel

 

You may want to read this first. Depending on your nationality it may or may not affect you.

 

https://www.linkedin.com/pulse/tax-resident-nowhere-kathleen-di-paolo?utm_source=share&utm_medium=member_mobile_web&utm_campaign=copy

[Srikcir]

1 hour ago, Gknrd said:

Just like allot of other counties.. 180 days.

I also read that it's an aggregate of 180 days in a calendar year. 

[hotchilli]

2 hours ago, Shop mak said:

"Indeed, Mr Kitipong suggests that Section 41, Paragraph 2 of the country’s Revenue Code gives minimal scope to the Thai government to tax any income from abroad by pointing out that the existing provision does not specify that income earned in foreign countries outside the jurisdiction of the Kingdom is subject to tax at all"

 

"Mr Kitipong suggests that if the new resolution goes ahead on January 1 2024, it will likely lead to a challenge in court, which will throw the country’s income tax collection process into confusion."

 

Seen the huge interest on this forum, I strongly suggest people read the full story.

It seems unlikely that this will take effect from 1 Jan 2024. 

Hope so... My government pension starts in 2025 so I have a year to go for this to settle.

If during 2024 this is set in stone I will be moving out of Thailand after 15 years here.

[hotchilli]

2 hours ago, Captain Monday said:

What is the definition of ”Living In”　？

180 days in Thailand.

[Autonuaq]

1 hour ago, Captain Monday said:

Then to nothing to concern myself with as  I do not spend 180 days/year in any country.

 

regards,

 

Captain Monday 

 

 

Constant international travel

 

 

With all respect to your view on things, you can make it very hard for yourself. Hard because the revenue office just can file and claim your world income falls in Thailand. Then it is up to you to proof otherwise.

 

Especially with your claim as you made here you make is very easy for them or any other country. The 183 days makes it easy for a person to proof his residence and with this where his world income had to be defined.

When you stay 4 months in one country that also can make it easier to point to a certain country that is where your world income falls.

 

The way you present all, based on my firsthand experiences, when asked me, is that you make it hard for yourself.

The world is global, and in the infomration age the information is floating between governments.

 

 

[Skipalongcassidy]

This situation begs the question as to why Thailand insists on inventing the wheel all over again... is it pride or ignorance that blinds them to other tried and true systems that are up and running with all the bugs already dealt with. Asking for a friend.

[Srikcir]

Why not just increase the cost for foreign "resident" type visas and/or visa extensions (ie., the more the extensions the higher the fee). Maybe free re-entries.

I would think this would involve less legal and financial complications for long-stay foreigners and the government. The cost to foreign residents would be predictable. International double taxation treaties would not be unaffected.

[XJPSX]

2 hours ago, Gknrd said:

It will go into effect , it won't matter if it is challenged in court or not. 

Nightmare to be  enforced or not, it does not matter. 

My guess is they will have authorized tax officials that you will have to get signed off on before you go to immigration for an extension of your visa.

 

It will not go ahead period.

They can’t even manage a law to determine if pot is is illegal or not.

It will also effect a lot of wealthy Thais more than the average expat.

[Skeptic7]

The shallow ineptitude, greed, lack of foresight, innovation and responsibility of this country is astounding. Always dreaming up another stupid new scheme to pick the pockets of others not responsible and bite the hands that feed it.

[4MyEgo]

It's all a big mistake and will only be for Thai Citizens, like in other countries.

 

Watch this space.

[Homburg]

7 minutes ago, Skeptic7 said:

The shallow ineptitude, greed, lack of foresight, innovation and responsibility of this country is astounding. Always dreaming up another stupid new scheme to pick the pockets of others not responsible and bite the hands that feed it.

So just like every other country really.

[Jeffrey346]

2 hours ago, PingRoundTheWorld said:

Knowing Thailand, it's very likely to take effect, then be reversed almost immediately when they realize they can't enforce it (not to mention the legal challenges to come). Trying to actually enforce this will result in a mass exodus of expats and huge amounts of money - no one wants to pay extra taxes on money that's already been taxed, nor have to report and prove that it was already taxed. And that's the real question: if and how are they going to enforce it? will all tax residents have to report? As usual big confusion and zero clarity.

They will enforce it. In fact, the Revenue Department is in the process of hiring 70 Lawyers.. One in each province to assure tax collection.

[MangoKorat]

57 minutes ago, HappyExpat57 said:

I believe most people here are safe - for now.

 

"At the time of writing, Thailand has concluded 61 double tax agreements with countries worldwide.

Armenia	Hungary	Poland
Australia	India	Romania
Austria	Indonesia	Russia
Bahrain	Israel	Seychelles
Bangladesh	Italy	Singapore
Belarus	Japan	Slovenia
Belgium	Korea	South Africa
Bulgaria	Kuwait	Spain
Cambodia	Laos	Sri Lanka
Canada	Luxembourg	Sweden
Chile	Malaysia	Switzerland
China	Mauritius	Taipei
Cyprus	Myanmar	Tajikistan
Czech Republic	Nepal	Turkey
Denmark	Netherlands	Ukraine
Estonia	New Zealand	United Arab Emirates
Finland	Norway	United States of America
Germany	Oman	Uzbekistan
Great Britain and Northern Ireland	Pakistan	Vietnam
Hong Kong	Philippines"

 

https://www.belaws.com/thailand/double-tax-agreements/

As I understand it, and I may well be wrong - double tax agreements don't prevent you from being taxed in Thailand.  My understanding is that if the amount of tax you paid in your home country is less than you would have paid in Thailand - you will have to pay the difference.  That might not be the case in many situations but one group that may well be affected is those on a pension.  For example, if your UK pension is less than the UK tax threshold - which many are, you don't pay tax on it in the UK.  However, even the basic UK pension is over the Thai tax threshold and therefore, according to my understanding and what I've read, it will be taxable if you bring it into Thailand.

[HappyExpat57]

Just now, MangoKorat said:

As I understand it, and I may well be wrong - double tax agreements don't prevent you from being taxed in Thailand.  My understanding is that if the amount of tax you paid in your home country is less than you would have paid in Thailand - you will have to pay the difference.  That might not be the case in many situations but one group that may well be affected is those on a pension.  For example, if your UK pension is less than the tax threshold - which many are, you don't pay tax on it.  However, even the basic UK pension is over the Thai tax threshold and therefore, according to my understanding and what I've read, it will be taxable.

 

I placed the laugh emoticon - I have trouble imagining how they will ever figure that out!

[klauskunkel]

3 hours ago, webfact said:

will create more reporting obligations and confusion

it seems to me that these are regularly occurring outcomes of new laws, schemes and "reforms", almost as if these results are desired... To what end I wonder, hmm, more corruption opportunities? 

The government doesn't do this for the benefit of the country or people, it's for the benefit of the government (which was not elected by the people)

[HappyExpat57]

1 minute ago, klauskunkel said:

it seems to me that these are regularly occurring outcomes of new laws, schemes and "reforms", almost as if these results are desired... To what end I wonder, hmm, more corruption opportunities? 

[I added this emphasis]

 

That's a uniform understanding on ALL laws. The corruption is the quiet part they never say out loud.

[Homburg]

4 minutes ago, MangoKorat said:

As I understand it, and I may well be wrong - double tax agreements don't prevent you from being taxed in Thailand.  My understanding is that if the amount of tax you paid in your home country is less than you would have paid in Thailand - you will have to pay the difference.  That might not be the case in many situations but one group that may well be affected is those on a pension.  For example, if your UK pension is less than the tax threshold - which many are, you don't pay tax on it in the UK.  However, even the basic UK pension is over the Thai tax threshold and therefore, according to my understanding and what I've read, it will be taxable if you bring it into Thailand.

The way that I would expect this to work is that you compute total Thai taxes due on your gross income, you are then allowed to deduct from that total any taxes already suffered, leaving a net amount payable in Thailand.  Please note that if the taxes paid elsewhere exceed the Thai taxes then no refund is due!

[ChipButty]

How would they tax all these digital nomads seems like everyone I meet recently is working on line, 

[CFCol]

2 hours ago, Gknrd said:

Just like allot of other counties.. 180 days.

The UK double taxation agreement clearly states 183 days.