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

[Mike Lister]

19 minutes ago, NZAMBOY said:

Who care about the double tax agreement when my country NZ,  doesn't charge capital gains on property sales and Thailand charges something like 39% on capital gains...big loss for me as i see it...

Thailand does NOT charge 39% capital gains on the sale of property! Capital Gains in Thailand are charged at personal Income tax rates, this means you pay pay tax on a stepped scale, anywhere from 0% to 30%. If the capital gain was a million baht, the effective tax rate would about 14%.

[NZAMBOY]

15 minutes ago, HappyExpat57 said:

 

Who "care?" I certainly don't. Why did you direct this at me?

 Apologies...not meant for you specifically, just the chart...

[HappyExpat57]

Just now, NZAMBOY said:

 Apologies...not meant for you specifically, just the chart...

 

Got it. No worries. 😉

[JackGats]

5 hours ago, nottin said:

I think it is safe to say in order to be a tax resident you must have a tax ID. You can be a resident in Thailand because you spend most of the year in Thailand, but that alone doesn't make you a tax resident....

You are a tax resident if you stay in TH at least 180 (or 183) days in a single tax year. If you stay in TH 180 days but have no tax ID you are a tax resident avoiding (evading?) taxes. Not being registered as a tax-payer and not  filing taxes doesn't protect you from legally being considered a tax resident.

[Mike Lister]

@nottin not having a tax ID does not negate your status as a tax resident, nor does it excuse you from filing a return. 

[Sato]

44 minutes ago, stat said:

There is no worldwide rule... Every country has its own laws. So your focal point of life as a tie breaker is not correct.

Of course there is no worldwide rule.

This is what I was saying.

Every country is making there own Tax  rule (and not OECD). Tax sovereignty is an important thing of a sovereign country.

And the tax rule of my home country (Switzerland) is: you pay tax where your focal point of life is. How you come to the idea to say this not correct without even know from which country I am ?

 

By the way .. it is for a RD much more clever not to determine in day's from when on you have to pay tax.

When a RD say's you have to pay tax after 180 day you can easaly life just 179 day in this country, 90 Day in another and 96 Day in a 3rd country and pay nowhere tax.

 

Switzerland would now say your focal point of life is Switzerland as you spent most of the time (179 day in this example) in there.

[quake]

2 hours ago, MangoKorat said:

Maybe it hasn't sunk in with them yet?

[Captain Monday]

11 hours ago, Mike Teavee said:

 

 

Can I ask which country you guys are from & whether not being Tax Resident elsewhere means by default you are Tax Resident in your home country. 

 

The reason I ask is that I plan on doing every 3rd year as a Non-Tax resident in Thailand during which I'll bring in enough money to support me for the next 3 years, BUT I don't want this to mean that I default to becoming tax resident in my home country (UK).

 

As an aside, the Tax Residency threshold in the UK operates on a sliding scale depending on how long you've been Non-UK Tax Resident & how many "Economic Ties" you have there. I can spend up to 89 days in the UK as I have 2 "Economic Ties" there, but if I had the full (4) "Economic Ties" it would be 45 days as I've been Non-UK Tax Resident for > 3 years & 16 days if I hadn't.

 

 

In my case it does not matter

For a citizen or “US person” you either have to file a tax return or not addressing all global income. Most people who have an income must file. Of course there are all kinds of exclusions and deductions but there is no concept of “tax residency” in the US context 

 

 

[Ben Zioner]

2 hours ago, Karma80 said:

True. But then thousands of people working in co-working spaces as digital nomads can't and would be liable for tax.

5% of Thai people actually pay tax regularly. 95% of people don't pay tax at all.

When you put it into perspective, taking money out of an ATM with an overseas card, in a sea of millions of tourists, is not even on the RD radar this century.

They can do it tomorrow if they want, through a rule that requires tax residents to disclose overseas bank accounts and supply statements on request.

[stat]

2 hours ago, HappyExpat57 said:

 

I've been paying taxes since I was 12 years old (paperboy for the San Francisco Chronicle). I've been audited and have been an assistant to an accountant. I have a clear idea of what taxes are about, and you're not my friend, buddy (South Park reference).

Happy for you that you think you have a clear idea about taxes in general and especially about the new directive! You are the only one then who knows what will happen and I am happy that Thai RD will not tax your remittance.

[stat]

1 hour ago, Sato said:

Of course there is no worldwide rule.

This is what I was saying.

Every country is making there own Tax  rule (and not OECD). Tax sovereignty is an important thing of a sovereign country.

And the tax rule of my home country (Switzerland) is: you pay tax where your focal point of life is. How you come to the idea to say this not correct without even know from which country I am ?

 

By the way .. it is for a RD much more clever not to determine in day's from when on you have to pay tax.

When a RD say's you have to pay tax after 180 day you can easaly life just 179 day in this country, 90 Day in another and 96 Day in a 3rd country and pay nowhere tax.

 

Switzerland would now say your focal point of life is Switzerland as you spent most of the time (179 day in this example) in there.

Swiss law and Thai law however can and will have opposing views about residency and neither country does care what the others view is. For example Germany stipulates 1 day with an abode in GER and you are liable to pay worldwide taxes. Why should anybody other then swiss care for how the swiss determine residency? What is the link with the thai law? There is none sorry.

[Sato]

1 minute ago, stat said:

Swiss law and Thai law however can and will have opposing views about residency and neither country does care what the others view is. For example Germany stipulates 1 day with an abode in GER and you are liable to pay worldwide taxes. Why should anybody other then swiss care for how the swiss determine residency? What is the link with the thai law? There is none sorry.

When you respond to a post who was a respond to another post then you should read this post too otherwise you should better not comment.

[The Cyclist]

16 minutes ago, stat said:

Happy for you that you think you have a clear idea about taxes in general and especially about the new directive! You are the only one then who knows what will happen and I am happy that Thai RD will not tax your remittance.

 

Glad to hear that the part in bold has finally sunk in.

 

Took a while 😂😂

[Barnet1900]

14 hours ago, john11k said:

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,  

 

They won't acknowledge it. It's 100pc true what you say but they'll always bite the nose off to spite their greedy faces.

 

Look how they treated ex-pats during COVID. We were contributing to the economy when tourists were gone. They did everything in their power to make their ingratitude evident.

 

I'll never forget the countless times they tried to get us back on home soil despite what local businesses were saying.

 

Let's face it, it only takes one idiot at the top for everyone to follow.

 

I'd love to see our home countries come out and give a warning about the repercussions of retiring or relocating to a country where they can change the laws without any logic or reasoning at the drop of an imbecile's hat. See how they react to that.

 

They're completely clueless.

[Sato]

19 minutes ago, Ben Zioner said:

They can do it tomorrow if they want, through a rule that requires tax residents to disclose overseas bank accounts and supply statements on request.

Correct. Even more.

Thailand is since last year part of the automatic exchange of information (AEOI) and will get from your bank of your home country information of your bank account (as long as you told your bank that you live abroad).

Which date the account has been created, account balance, total amount of ingoings and outgoings.

Even if thailand may not be ready today with their IT systems and may not be able to process the data now they receive this informations allready today and as soon as they have their IT systems in place they will then process this informations and compare with what you declared in your tax declarations years ago.

[Dogmatix]

The article by Prof Kittipong that the OP Thai Examiner article is based on was published in Thai Krungthep Thurakit on 29 September 2023  https://www.bangkokbiznews.com/finance/investment/1091100# . The Examiner quotes and paraphrases from it extensively.  The Examiner article is well written but I find it misleading that the author didn't fully attribute his source as being the 29 September KT article.  I searched in English and in Thai and Prof Kittipong has not published anything publicly on the topic since 29 September and, since the article was published there has been no response from the Revenue Department or the Ministry of Finance.  So I think the Examiner, by rehashing an old article without attributing the original publication or the date of it, has provided some false hope to English speakers that it was a new article from Prof Kittipong that might generate some reaction from the RD which is clearly not the case.

[Guavaman]

8 minutes ago, Dogmatix said:

So I think the Examiner, by rehashing an old article without attributing the original publication or the date of it, has provided some false hope to English speakers that it was a new article from Prof Kittipong that might generate some reaction from the RD which is clearly not the case.

[Dogmatix]

3 hours ago, VBF said:

Has anyone considered that the originator of the linked article is  "A former chairman of Baker McKenzie, an international law firm with offices in Thailand and a member of the National Reform Council"

He's not a member of government and the article actually states:  "New regulation changes an interpretation which disregards when money was earned abroad and taxes all income if not already taxed by treaty countries"

 

So a little early to be worrying as if it was an actual change in the law?

 

That is technically correct but the RD's wishy washyQ&A piece soon after the announcement admitted that it was not a law but said that it is a directive to tax officials on how to reinterpret the law and advise tax payers. Then it said taxpayers had a duty to follow the law, implying that they have to comply with this half baked legal reinterpretation. The problem is that the RD can be vindictive and authoritarian and, if taxpayers are targeted by them, their recourse is to sue in the Central Tax Court which may not be realistic for many and normally takes years.

 

QUESTION #11

Is Revenue Department Order No. P.161/2023 a Law or not?  Are taxpayers under a legal obligation to comply with this order or not.

ANSWER:

It is not a law. It is an order explaining the meaning of the Revenue Code Section 41 paragraph 2. Taxpayers have a duty to comply with the law in paying taxes. Thus the this type P. administrative order from the director-general of the Revenue Department is considered a guideline for Revenue Department staff to follow in order for them to provide advice to taxpayers, so they may follow the law correctly.

RD Order 161 2566 Q&A TH.pdf

[puck2]

We all have our experience how many, many immigration office(r)s have „their own interpretation of the immigratioon laws or decrees.“ And now the more complicated tax-laws?

 

The tax laws are much, much more complicated than the immigration laws. Now the Thai tax offices should be able to read and understand all the DTAs (double tax agreements) of more than 60 states –

We all have our experience how many, many immigration office(r)s have „their own interpretation of the immigratioon laws or decrees.“ And now the more complicated tax-laws?

 

The tax laws are much, much more complicated than the immigration laws. Now the Thai tax offices should be able to read and understand all the DTAs (double tax agreements) of more than 60 states – hahahaha. If you and the Thai government believe, that the tax officers could deal with these complicates „falang §§s“, than you can also believe that I could walk over the ocean from here in Thailand to San Francisco in the USA without sinking down.

 

Maybe that's the reason why they say: we tax the money you transfer to Thailand. That means, they must not be able to understand all the falang-Tax-laws. But this solution would exclude the check which tax is higher, the Thai- or the Falang-Tax???

 

These are only a few reasons, why the Thai government should think about this idiotic new idea to tax as much farangs as possible, without being able to oversee the results of the end of the tax-drama!

 

When I read here in this thread that the Thai government could solve this problem by nominating another tax expert for the new problem in every province, I nearly died for laughing. 70 erxperts in each big province would nearly not be enough!

 

 If you and the Thai government believe, that the tax officers could deal with these complicates „falang §§s“, than you can also believe that I could walk over the ocean from here in Thailand to San Francisco in the USA without sinking down.

 

Edited November 6, 2023 by puck2

[Guavaman]

5 minutes ago, Dogmatix said:

It is an order explaining the meaning of the Revenue Code Section 41 paragraph 2. Taxpayers have a duty to comply with the law in paying taxes. Thus the this type P. administrative order from the director-general of the Revenue Department is considered a guideline for Revenue Department staff to follow in order for them to provide advice to taxpayers, so they may follow the law correctly.

 

Like it or not, this clearly refutes the poster and other wishful readers that: "the RD has not provided any guidance to district RD officials". The Order has already been officially been announced, thus requiring execution by the responsible officials at regional, provincial, and district levels. 

 

In the Thai bureaucracy, an order issued by a Director-General is similar to an order from a military officer to his subordinates. Failure to implement the order is subject to prosecution for malfeasance. 

[fulhamster]

17 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.

 

That would be a nightmare at Jomtien.

Would it apply to those using agents -- if not another reason to do so

[fulhamster]

14 hours 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 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.

If so, there would appear to be an obvious solution

 

[fulhamster]

1 hour ago, Sato said:

Correct. Even more.

Thailand is since last year part of the automatic exchange of information (AEOI) and will get from your bank of your home country information of your bank account (as long as you told your bank that you live abroad).

Which date the account has been created, account balance, total amount of ingoings and outgoings.

 

Made more complicated by some UK banks closing accounts for those not living in the UK.

[Guavaman]

4 minutes ago, fulhamster said:

That would be a nightmare at Jomtien.

Would it apply to those using agents -- if not another reason to do so

If the Thai govt. is hiring tax lawyers for every province in a free market society, one would expect that local entrepreneurs will also be hiring tax lawyers for every province to meet the new demand. 

Continued evolution of the legal/financial infrastructure in this developing country. 

[Pinot]

Nothing has changed.

 

SangSom Coke Light...is Coke Zero okay? tsk

Edited November 6, 2023 by Pinot

[Dogmatix]

9 hours ago, Guderian said:

One big problem with this is that, regardless of legal challenges, it's probably going to take several years to understand what the implications really are on a personal level. I think a lot of people have been hoping that, as of 1/1/2024, suddenly everything would become clear, but if it's going to mean filing an annual tax return in order to be able to continue living here then the first one won't be due until 2025, after the 2024 tax year has ended. Then, as with all things in Thai bureaucracy, different offices will apply the rules as they see fit, so just like with Immigration, the whole thing will end up being a pig's ear. It will probably be 2026 before the dust settles and we understand how, broadly, they are going to implement any changes, plus what local idiosyncrasies apply to us. So we will be faced with 2 or 3 years of complete uncertainty over our tax situation, nobody will want to bring in large sums of money to buy a new car or boat or condo or house, in case in a year or two the TRD decides that you owe 30% or more tax on the amount. Expat life will, to a certain extent, grind to a halt.

 

Although I hope that they will just pull the plug on this or defer it before due date, the clock is now ticking and there has not even been any sign of the focus groups promised by the RD spokesman to assess the expected impacts on the economy.  You would think people at the top of the RD and the Finance Ministry had some common sense and would want to avoid a chaotic situation and huge disincentive to capital inflows by individual investors but this is not necessarily the case. They are probably thinking that by remaining silent the country will benefit from large remittances before the year end and then they can think about whether to clarify rules regarding DTAs etc or even dump it or delay it, or the Finance Ministry might decide to do something. It is also possible that no one will do anything even before 2024 tax returns are due and leave it as a chaotic situation with of loads of expats and Thais not knowing what they should do. That could, indeed, be left to drag on for a couple of years, given the spectacular incompetence of many Thai bureaucrats and politicians. 

 

It is quite clear that implementing the reinterpretation, as is, will not be beneficial to the Thai economy and will also be unfair vis a vis domestic taxation.  Bringing taxes on foreign source income in line with domestic taxation would definitely require some proper legislation. For example capital gains on equities should be exempted and dividends taxed at a flat rate of 10%, while tax on property sales should be a transactional tax, not a capital gains tax.  While they are at it, it might be a good idea to actually legislate that DTAs apply to individuals' income because that is not in the Revenue Code.  The DTAs exist in a vacuum as far as individuals are concerned. Although it can be argued that international treaties take precedence over Thai statutory law, Thai courts will not necessarily agree with that in all cases.  Thus Thai statutory law should specify that international treaties are applicable, as is the case in the Land Code.  There are a couple of rulings that imply that DTAs are applicable for individual taxpayers but this could be reinterpreted by another P. order like P. 161/2566. 

Edited November 6, 2023 by Dogmatix

[Karma80]

This just dropped and worth watching: 

 

[Dogmatix]

14 hours ago, Plus Esse Quam Simultatur said:

They started already more than 2 years ago this project.

Ather living here for more than 15 years and on government pension from Denmark I was suddenly called in for a meeting at the Tax office in Jomtien which covers all Banglamung area. I was ordered to bring different papers like the yearly tax payment and pension income from Denmark and bank account papers. They ran through it all and then fined me for not having reporting the last 2 years. Has been hear anything before so it was a big surprise they did this move. Denmark has a double taxation agreement with Thailand. At the same time I got a tax number so I could report the following year which I actually denied to do because the online reporting wasn't set up. I have never had an income from other places than my pension.

I was fined 400 Baht which I had to pay in the Ampur and not at the tax office.

Oh Yes they mean business with this tax for foreingers no doubt about that. Thinking differently will be a big mistake.

The concequens will be that I leave Thailand for good if they want to act silly which they always do. I live here permanently for you information 

 

 

This is quite scary. 

 

I wonder why you had to pay a fine at the amphur, rather than the RD office. I was fined and made to pay some back tax and income for my company due to a small mistake made by our accountant a few years earlier but I had to pay at the RD office. 

[Dogmatix]

11 hours ago, 4MyEgo said:

 

There is a difference between this P. directive to RD staff and proposed laws.  The plan to introduce a new transactional tax of Thai stock trades was a proposed law that got trashed by the new government a few weeks ago, blaming the Finance Ministry for not understanding the potential damage to the stock market. Of course something similar could happen with the RD blamed by the government. However, the RD has ordered staff to go ahead with this new interpretation and, if nothing else happens, that is what they will do.

[hondoelsinore]

Years back my wife and I lived in Rangsit because she owned a coffee shop there. We had a fresh market within walking distance and offered pretty decent fruits and vegetables along with food vendors. Always nice to go with our dog in the evening. One day we arrived and noticed all of the market had moved their stalls maybe 200ft. to a new slab of concrete leaving the old area filthy with oils and garbage thrown out over the years. My wife and most of the Thais were abuzz about the new market, but I noticed it was all the same vendors selling all the same stuff. I brought this to my wifes attention, but still excited she said it didn't matter because this market was new. 🙄