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

[jerrymahoney]

On 11/6/2023 at 10:28 AM, jerrymahoney said:

OK. I have said the other mega-topic that -- as of deductions available today -- I might only have to pay about $100 per month in taxes and, due to the US-Thai DTA Article 20,  I might end up owing zero Thai taxes.

Actually my $100 monthly possible tax bill -- using only current deductions no US-Thai DTA Article 20 -- may be even less as I will have a 60,000 baht annual deduction for life insurance premium paid to a Thai Life insurer.

 

Again from the US Embassy Bangkok website:

 

"The Economic Section monitors economic, financial, energy, trade, investment, and labor trends in Thailand. The team presents U.S. views on bilateral and multilateral economic issues to the Thai government and the public."

 

So they may have something to say if it turns out that each Thai provincial RD office is allowed their own interpretation of the US-Thailand DTA.

 

https://th.usembassy.gov/embassy-consulate/bangkok/sections-offices/economic-section

Edited November 9, 2023 by jerrymahoney

[Mike Lister]

9 hours ago, Klonko said:

Good luck explaining your tax return and account statements, possibly containing taxed and untaxed funds, from your home country to your local Thai RD officer.

This is going to be an issue, which is why I think each tax district is now hiring a lawyer at each.

[rabas]

6 hours ago, stat said:

I can tell you it is very complicated to claim shelter under an DTA. But go ahead and believe  whatever you chose you are up for a big surprise.

 

Been here 37 years, not too many surprises left.  I understand the new clause because I've used its prior version in the past while consulting with the RD.  I know what it says. This will have some impact on some, not all foreign tax residents and I encourage everyone to better understand the tax laws. I will not opine as that's all this thread has.

 

I will observe that all relevant discussion and news from the RD is on their Thai language site, not a mention on the English site. 

[sirineou]

43 minutes ago, rabas said:

 

Been here 37 years, not too many surprises left.  I understand the new clause because I've used its prior version in the past while consulting with the RD.  I know what it says. This will have some impact on some, not all foreign tax residents and I encourage everyone to better understand the tax laws. I will not opine as that's all this thread has.

 

I will observe that all relevant discussion and news from the RD is on their Thai language site, not a mention on the English site. 

I am of the opinion that if it does more good than bad, doit. If it does more bad than good, dont.

And I agree that most of us, if not all, don't really know how this will apply in general, to different nationalities that Thailand has a tax agreement,and individually.

So why announce it before the specifics were ironed out? What good would it do?It certainly will not help me in making financial decisions, and I don't see how this announcement helps Thailand. 

But I can see how it could hurt Thailand.

Case and point me. But I am sure I am not unique. 

I have some money parked in US treasuries earning 4.7%.Some of it is maturing next next month and I have to make a decision to either roll it over or look for al alternate investment vehicle

I have an opportunity to with my wife buy some land as an investment ( Please no advice I know all the variables and what I am doing).

Anyway , that idea was suspender until I know better what our tax situation will be since such tax liability will eat part of the return of such investment causing it to underperform.

 

So the question is? If I was to transfer a couple of million baht from the US to Thailand for such purchase,, would I get taxed on that? and if so, at what rate?  

  If I was to transfer funds to keep in a bank accounts here (not ask why. My personal reasons) would I be taxed? and if I took that amount out of thailand  , since I already paid taxes on it, would bringing it back again would mean I get taxed on it again?  i know, an unrealistic scenario. but it helps to make a point

The  original point I made, that why do something that helps no one, but hurts many including Thailand?

If I understand this correctly, this program is implemented to help close a gap in tax revenues. 

Might it have unforeseen consequences that accomplish the opposite?  Would the loss from the decline in money being bought in from fear of taxation. be a lot more than the tax collected? 

Do they realise the multiplier effect these imported funds have in the economy as it circulates multiple times? 

Edited November 10, 2023 by sirineou

[Mike Lister]

4 minutes ago, sirineou said:

I am of the opinion that if it does more good than bad, doit. If it does more bad than good, dont.

And I agree that most of us, if not all, dint really know how this will apply in general, to different nationalities that Thailand has a tax agreement,and individually.

So why announce it before the specifics were ironed out? What good would it do?It certainly will not help me in making financial decisions, and I don't see how this announcement helps Thailand. 

But I can see how it could hurt Thailand.

Case and point me. But I am sure I am not unique. 

I have some money parked in US treasuries earning 4.7%.Some of it is maturing next next month and I have to make a decision to either roll it over or look for al alternate investment vehicle

I have an opportunity to with my wife buy some land as an investment ( Please no advice I know all the variables and what I am doing).

Anyway , that idea was suspender until I know better what our tax situation will be/ since such tax liability will eat part of the return of such investment causing it to underperform.

 

So the question is? If I was to transfer a couple of million baht from the US to Thailand for such purchase,, would I get taxed on that? and if so, at what rate?  

  If I was to transfer funds to keep in a bank accounts here (not ask why. My personal reasons) would I be taxed? and if I took that amount out of thailand  , since I already paid taxes on it, would bringing it back again would mean I get taxed on it again?  i know, an unrealistic scenario. but it helps to make a point

My original point that why do something that helps no one, but hurts many including Thailand?

If I understand this correctly, this program id implemented to help close a bag in tax revenues. 

Might it have unforeseen consequences that accomplish the opposite?  Would the loss from the decline in money being bought in from fear of taxation. be a lot more than the tax collected? 

Do they realise the multiplier effect these imported funds have in the economy as it circulates multiple times? 

Announcing the new measure before all the wrinkles are ironed out is classic Thai government. Get the headline out there and let the media identify the issues, if need be we can quietly drop it later if there are too many problems. In the meantime, we get the praise for taking bold steps.

 

If the new measure is done properly and carefully it can be a very good thing because it will tax that Thai citizen income that is now flying under the radar. But taxing the average expat pension for example is unproductive, you have to believe they already understand that because everyone else does. 

 

 

[sirineou]

3 minutes ago, Mike Lister said:

Announcing the new measure before all the wrinkles are ironed out is classic Thai government. Get the headline out there and let the media identify the issues, if need be we can quietly drop it later if there are too many problems. In the meantime, we get the praise for taking bold steps.

 

If the new measure is done properly and carefully it can be a very good thing because it will tax that Thai citizen income that is now flying under the radar. But taxing the average expat pension for example is unproductive, you have to believe they already understand that because everyone else does. 

 

 

Thank you

I did not think about the "Flying it up the flagpole to see who salutes it"  concept. You might have a point there. 

[Ricardo]

2 hours ago, sirineou said:

 

Do they realise the multiplier effect these imported funds have in the economy as it circulates multiple times? 

 

Not a widely-known concept even amongst farangs IMO, unless you've studied economics or business, the point is that introducing new funds from outside the local-economy boosts economic-activity by a factor of several-times, as it goes round-&-round businesses/people before gradually dissipating.

 

[Mike Lister]

2 minutes ago, Ricardo said:

 

Not a widely-known concept even amongst farangs IMO, unless you've studied economics or business, the point is that introducing new funds from outside the local-economy boosts economic-activity by a factor of several-times, as it goes round-&-round businesses/people before gradually dissipating.

 

Yes indeed, but if the loss through tax evasion is greater than the benefit accrued from the current volume of cash inflows, they may see that  taxing the inflows is the more cost effective path. And this is the problem, we don't have sight of the volume of overseas funds held by native Thai's that are being repatriated tax free, my guess is that it's huge.

[TroubleandGrumpy]

17 hours ago, stat said:

Spot on! Try claiming any DTA exemption in TH and you will have a problem is my take on the situation as well.

AND anyone lodging a DTA exemption will probably have to do it in Thai and though a Thai certified accountant/lawyer.  It astounds me how some Expats think the Thai RD is going to be more organised and efficient than the Immigration Police and 'better' or 'easier' to deal with. They just do not realise that Thai RD is not setup to deal with Expats who dont speak Thai - unlike the Immi Police.  Hopefully they are not going to find out the very hard way one day.  One bloke said he would just pay an agent - how someone here can possibly even think that is beyond me. 

 

I see this all the time, most recently when they are 'arguing' with each other about the road rules in Thailand, and quoting paragraphs from the road rules on websites back in their home country.  A mate of mine said it a long time ago - "They are not our brightest and best, and that is the main reason we avoid them."   Me thinks that perhaps many of the very 'active' posters (most argumentative) actually do not live, nor have ever lived, in Thailand - they just visit now and then (chasing the bar girls and parties).

[jerrymahoney]

29 minutes ago, TroubleandGrumpy said:

AND anyone lodging a DTA exemption will probably have to do it in Thai and though a Thai certified accountant/lawyer. 

I have already computed the my current tax obligation without any US-Thai DTA Article 20 items would be about $US 100 per month. And the DTA items if allowed could bring my tax owed to zero.

 

My Thai wife is not a CPA or lawyer. She is the daughter of a Thai RTP cop.

[Danderman123]

14 hours ago, Gknrd said:

I belong to an exclusive club, it is called the F$ck you club..  

What is it?  How do you join?

 

1: You work and save until you pay cash for a home

2: You pay cash for a car in the garage

3: You put money in investments to pay you 6% and generate enough to pay all taxes , utilities, and emergency.

 

Hence, F$ck you Thailand, your taxes, your 800K the works.. Life is good.

When you belong to that club nothing bothers you what so ever..

Assuming Thailand is not going to levy a 15% Capitol gains tax on your investment income.

[Danderman123]

I suspect that a lot of people are going to be transferring big money into Thailand on December 31, 2023, in case the Thai government starts to levy taxes on such transfers in 2024.

 

 

[TroubleandGrumpy]

1 hour ago, jerrymahoney said:

I have already computed the my current tax obligation without any US-Thai DTA Article 20 items would be about $US 100 per month. And the DTA items if allowed could bring my tax owed to zero.

My Thai wife is not a CPA or lawyer. She is the daughter of a Thai RTP cop.

You are lucky on two counts - being under the USA DTA and also having a Thai wife in the 'system'.

 

I have calculated my potential income tax obligations, and without DTA 'exemptions' I could be up for between 124K Baht and 178K Baht during an 'average' year.  If I was to bring in money so we can buy a house - I could be up for well over 1Million Baht.

What I do know about all DTAs, is that the USA very rigorously 'defends' its right to tax its own citizens, anywhere in the world. There is not many countries who will take on the USA and try to tax its citizens. IMO any US Citizen will be left alone by the Thai RD - unless extremely large amounts of money are involved. 

 

However, Australia is as weak as ***** and does not 'protect' it's citizens against paying taxes overseas.  It is very unlikely (snowflake in Hell) that the Aust Tax Office will 'defend' me in any way - I will be on my own.

[Dogmatix]

An article in yesterday's Prachachart Thurakit suggests the RD is starting to walk this back a bit but not giving up on it https://www.prachachat.net/finance/news-1432180?fbclid=IwAR0FtCbDVifNc-atDT8uHGklrCLP5PNOva3VrsaHFX9W_kjEm-bKQBnqEKc .  It sounds like they are planning to exempt all foreign source income earned before 1 January 2024.  It also sounds like they are thinking of moving to a global taxation model involving taxation of foreign source income in the year it arises, regardless of whether it is remitted to Thailand or not.  They seem to have realised that that they need to amend the Revenue Code, which could take a couple of years, and not just let the RD issue a directive to staff that is not binding on taxpayers. However, they could still go for a stop gap solution to try to raise some more tax from income earned in 2024.   

 

The whole thing smacks of stupidity and incompetence from politicians and civil servants alike.  If you want to make major changes to the tax regime, it needs careful study beforehand and then proper legislation in parliament, not just let a bureaucrat blurt out a nonsensical unlawful order and threaten everyone.  Huge damage has already been done by that.  At least they are likely to give expats more time to make arrangements to sell up and get out of the country.

 

Here is a rough google translate.

 

Stocks-Finance

The Revenue Department delays "taxing" foreign income before 2024, adhering to the same criteria.

November 9, 2023 - 6:32 a.m.

 

levy taxes

The Revenue Department has called in the capital market department to understand the tax collection methods from people who earn money abroad. which when imported must be subject to tax inspection No matter what year it was imported. Previously, imports over a year would not be taxed. After the announcement was made Many parties are still concerned about the lack of clarity.

 

Permanent Secretary of the Treasury insists that loopholes must be closed.

Mr. Lawan Saengsanit, Permanent Secretary of the Ministry of Finance, said that the Ministry of Finance has confirmed that there will definitely be taxation of income from foreign countries. The law will be amended to allow collection as soon as the money is received. Only, amending the law must pass through Parliament, so it probably won't be done quickly. But insist that you have to do it. Because it meets international criteria

 

“People who have already paid taxes from abroad need not worry. Because you don't have to pay twice. But you must understand that In the past, there have been large companies that have used this channel to manage taxes. We have to close this gap.”

 

              

Investors complain about riding elephants to catch grasshoppers.

Mr. Anurak Bunsawaeng (Jo Luk Isaan), a major investor and former president of the Value Investors Association (Thailand), said that major investors Should be taxed at the personal income tax rate. The highest rate is 35%.

 

Therefore, I believe that no one will definitely accept being taxed. Therefore, you may see large investors 1. Stop investing abroad. 2. Do not take money back to the country and 3. Use gray methods to find various loopholes, which will make the opportunity for the government to collect a lot of revenue from this tax probably not be possible.

 

“It will definitely create a lot of problems. Because it will cause difficulties for investors. Including in practice through brokers Must collect documents for incoming and outgoing money. To separate profits to prove tax payments each year. which creates a lot of difficulties

 

So it is like riding an elephant to catch grasshoppers. This means that taxes cannot be collected. Because the chance that there will be very few people willing to pay But it creates many negative effects. It's not just big investors. but also private funds or a group of magnates who invest money abroad.”

 

Mr. Anurak said I want the government to change its perspective. Because it's not that investors don't want to pay taxes. But if taxes are collected at a reasonable rate or at the level of 10-15%, it is still acceptable.

 

“Tax collection should require people to act honestly. But if you keep it that high I believe that there will definitely be a lot of corruption. Right now, I mostly invest in China, Vietnam, and the United States, and have prepared several defensive plans.”

 

Begin to charge money from 2024.

However, recently there was a report from the Revenue Department that It has been concluded that In the first phase, there will be relief in the case of income generated abroad before 2024, if it is not imported within the same tax year as the year in which the income was generated. It will not have to be checked. Because finding document evidence will be difficult. It is considered to be releasing the ghost.

 

“Income generated before 2024 will use the old rules. That is, if it is not imported in the same tax year. The department will not collect it. As for imports across the year, they are no longer collected according to the original criteria. But income generated abroad from January 1, 2024 onwards, imported at any time will be subject to tax.

 

In the future, Section 41 of the Revenue Code will be amended to immediately calculate tax in the year in which income is earned abroad. Regardless of whether money is brought into the country or not, however, it may take 1-2 years to amend the law.”

 

Set "Pichai" to see private offers

Special Professor Kitipong Urapeepattanaphong, director of the Stock Exchange of Thailand (SET) and former chairman of the board of Baker & McKenzie Company Limited, told "Prachachat Turakij" that the collection of such taxes is being developed. Let's discuss in order for the government to postpone enforcement for now

 

Because I believe it's not worth it. It will affect the overall tax picture of Thailand as a whole. It is understood that now Mr. Settha Thavisin, Prime Minister and Minister of Finance, has assigned Mr. Pichai Chunhavajira, Advisor to the Prime Minister. is in charge of this matter

 

“And according to the Revenue Department Order No. 161/2023 that was issued, it is a practice. It cannot be interpreted outside of the law. Therefore, if such taxes are to be collected The tax structure must be restructured. which is a big deal The law must be amended, repealed Section 41, paragraph two, and issued a new law in its place. In the future, taxes will be collected similar to the United States. That is, all income in this world must be taxed. But in general, taxes should not exceed 15%.”

 

The Revenue Department announces income from abroad over the year must be taxed starting 1 Jan. 2024.

Revenue Department discusses new order “Income earned from abroad over the year” is subject to tax.

Is collecting foreign investment tax worth it? Question from "Kitipong Urapeepattanapong" tax law guru

 

 

 

[samtam]

6 minutes ago, Dogmatix said:

An article in yesterday's Prachachart Thurakit suggests the RD is starting to walk this back a bit but not giving up on it https://www.prachachat.net/finance/news-1432180?fbclid=IwAR0FtCbDVifNc-atDT8uHGklrCLP5PNOva3VrsaHFX9W_kjEm-bKQBnqEKc .  It sounds like they are planning to exempt all foreign source income earned before 1 January 2024.  It also sounds like they are thinking of moving to a global taxation model involving taxation of foreign source income in the year it arises, regardless of whether it is remitted to Thailand or not.  They seem to have realised that that they need to amend the Revenue Code, which could take a couple of years, and not just let the RD issue a directive to staff that is not binding on taxpayers. However, they could still go for a stop gap solution to try to raise some more tax from income earned in 2024.   

 

The whole thing smacks of stupidity and incompetence from politicians and civil servants alike.  If you want to make major changes to the tax regime, it needs careful study beforehand and then proper legislation in parliament, not just let a bureaucrat blurt out a nonsensical unlawful order and threaten everyone.  Huge damage has already been done by that.  At least they are likely to give expats more time to make arrangements to sell up and get out of the country.

 

Here is a rough google translate.

 

Stocks-Finance

The Revenue Department delays "taxing" foreign income before 2024, adhering to the same criteria.

November 9, 2023 - 6:32 a.m.

 

levy taxes

The Revenue Department has called in the capital market department to understand the tax collection methods from people who earn money abroad. which when imported must be subject to tax inspection No matter what year it was imported. Previously, imports over a year would not be taxed. After the announcement was made Many parties are still concerned about the lack of clarity.

 

Permanent Secretary of the Treasury insists that loopholes must be closed.

Mr. Lawan Saengsanit, Permanent Secretary of the Ministry of Finance, said that the Ministry of Finance has confirmed that there will definitely be taxation of income from foreign countries. The law will be amended to allow collection as soon as the money is received. Only, amending the law must pass through Parliament, so it probably won't be done quickly. But insist that you have to do it. Because it meets international criteria

 

“People who have already paid taxes from abroad need not worry. Because you don't have to pay twice. But you must understand that In the past, there have been large companies that have used this channel to manage taxes. We have to close this gap.”

 

              

Investors complain about riding elephants to catch grasshoppers.

Mr. Anurak Bunsawaeng (Jo Luk Isaan), a major investor and former president of the Value Investors Association (Thailand), said that major investors Should be taxed at the personal income tax rate. The highest rate is 35%.

 

Therefore, I believe that no one will definitely accept being taxed. Therefore, you may see large investors 1. Stop investing abroad. 2. Do not take money back to the country and 3. Use gray methods to find various loopholes, which will make the opportunity for the government to collect a lot of revenue from this tax probably not be possible.

 

“It will definitely create a lot of problems. Because it will cause difficulties for investors. Including in practice through brokers Must collect documents for incoming and outgoing money. To separate profits to prove tax payments each year. which creates a lot of difficulties

 

So it is like riding an elephant to catch grasshoppers. This means that taxes cannot be collected. Because the chance that there will be very few people willing to pay But it creates many negative effects. It's not just big investors. but also private funds or a group of magnates who invest money abroad.”

 

Mr. Anurak said I want the government to change its perspective. Because it's not that investors don't want to pay taxes. But if taxes are collected at a reasonable rate or at the level of 10-15%, it is still acceptable.

 

“Tax collection should require people to act honestly. But if you keep it that high I believe that there will definitely be a lot of corruption. Right now, I mostly invest in China, Vietnam, and the United States, and have prepared several defensive plans.”

 

Begin to charge money from 2024.

However, recently there was a report from the Revenue Department that It has been concluded that In the first phase, there will be relief in the case of income generated abroad before 2024, if it is not imported within the same tax year as the year in which the income was generated. It will not have to be checked. Because finding document evidence will be difficult. It is considered to be releasing the ghost.

 

“Income generated before 2024 will use the old rules. That is, if it is not imported in the same tax year. The department will not collect it. As for imports across the year, they are no longer collected according to the original criteria. But income generated abroad from January 1, 2024 onwards, imported at any time will be subject to tax.

 

In the future, Section 41 of the Revenue Code will be amended to immediately calculate tax in the year in which income is earned abroad. Regardless of whether money is brought into the country or not, however, it may take 1-2 years to amend the law.”

 

Set "Pichai" to see private offers

Special Professor Kitipong Urapeepattanaphong, director of the Stock Exchange of Thailand (SET) and former chairman of the board of Baker & McKenzie Company Limited, told "Prachachat Turakij" that the collection of such taxes is being developed. Let's discuss in order for the government to postpone enforcement for now

 

Because I believe it's not worth it. It will affect the overall tax picture of Thailand as a whole. It is understood that now Mr. Settha Thavisin, Prime Minister and Minister of Finance, has assigned Mr. Pichai Chunhavajira, Advisor to the Prime Minister. is in charge of this matter

 

“And according to the Revenue Department Order No. 161/2023 that was issued, it is a practice. It cannot be interpreted outside of the law. Therefore, if such taxes are to be collected The tax structure must be restructured. which is a big deal The law must be amended, repealed Section 41, paragraph two, and issued a new law in its place. In the future, taxes will be collected similar to the United States. That is, all income in this world must be taxed. But in general, taxes should not exceed 15%.”

 

The Revenue Department announces income from abroad over the year must be taxed starting 1 Jan. 2024.

Revenue Department discusses new order “Income earned from abroad over the year” is subject to tax.

Is collecting foreign investment tax worth it? Question from "Kitipong Urapeepattanapong" tax law guru

 

 

 

 

Itsy bitsy spider...

Thanks @Dogmatix. I hope this is the first nail in this coffin of stupidity. If however, Thailand tries to tax all worldwide income, like the USA, that would be an even more silly idea than the one currently being spouted, and unlike the IRS, I think their ability to enforce this is wildly optimistic. The article you reference also seems to emphasise the main target as (wealthy) Thais who invest overseas, and I suspect like previous attempts to alienate this segment of the electorate will end in tears.

Edited November 10, 2023 by samtam

[Sato]

6 minutes ago, TroubleandGrumpy said:

There is not many countries who will take on the USA and try to tax its citizens

If a US citizen is lifing in a European country, then this US citizen will have to pay full tax in this European country.

If the US will then also tax this poor US citizen in addition, bad luck for this US citizen. This would not be of interest of the European country.

[TPDH]

On 11/6/2023 at 7:50 AM, Jeffrey346 said:

I tend to doubt it. That is why the RD is hiring a lawyer for each province.

 

What's your source on this? 

[jerrymahoney]

16 minutes ago, TroubleandGrumpy said:

You are lucky on two counts - being under the USA DTA and also having a Thai wife in the 'system'.

OK. I don't want to sound like the I'm-alright-Jack type. Whether a Yank or not, I set up my finances years back to handle the 65K+ / month extension and that serendipitously dovetails with the DTA Article 20. Finding out that my wife was in-the-system I only found out after agreeing to marry her.

[samtam]

6 minutes ago, samtam said:

 

Itsy bitsy spider...

Thanks @Dogmatix. I hope this is the first nail in this coffin of stupidity. If however, Thailand tries to tax all worldwide income, like the USA, that would be an even more silly idea than the one currently being spouted, and unlike the IRS, I think their ability to enforce this is wildly optimistic. The article you reference also seems to emphasise the main target as (wealthy) Thais who invest overseas, and I suspect like previous attempts to alienate this segment of the electorate will end in tears.

 

I would add, this whole sewer show could easily have been avoided if a bit of simple critical thinking had been applied, (such as the major discussion on display on the 2 fora in AN, and doubtless from wise and savvy tax accountants and lawyers, and investment firms and private bankers). But until there is finality in clarification, they have done a great deal of damage to investment and the financial system of Thailand, and proven once again that risk is a major criterion of any dealings with Thailand.  

[TroubleandGrumpy]

26 minutes ago, Sato said:

If a US citizen is lifing in a European country, then this US citizen will have to pay full tax in this European country.

If the US will then also tax this poor US citizen in addition, bad luck for this US citizen. This would not be of interest of the European country.

Wrong. Only if they are working for a foreign compoany in that country - for which IRS allows exemption.

Google - Why is US the only country that taxes its non-resident citizens?

[Sato]

17 minutes ago, TroubleandGrumpy said:

Wrong. Only if they are working for a foreign compoany in that country - for which IRS allows exemption.

Google - Why is US the only country that taxes its non-resident citizens?

Of course it is correct what I was saying. A US citizen living in Europe is 100% taxable in this country for EVERY income he has. How on earth do you come to the idea he is exampted to pay tax in there ? This is in the sole tax sovereignity of this country where the US citizen is living in and the US Governement has absolutley no rights in the sovereignity of this country.

That the US is taxing the US citizen even he is no longer resident in the US is an absolut shame but is the problem between the US citizen and his US governement. In the case where is no DTA, the poor US guy may have to pay tax twice. Bad luck for him but he has to blame the US Governement for this.

Edited November 10, 2023 by Sato

[retiree]

Thank you Dogmatix for posting this important article:  https://www.prachachat.net/finance/news-1432180 

 

My interpretation would be slightly different.  As expected, the RD is beginning to issue guidance and "safe harbor" rules on tax law enforcement.  To clarify, a safe harbor rule typically establishes simple documentary evidence needed to establish that one is not subject to a regulation. 

 

If the article is accurate, the first safe harbor rule is that money remitted from an account that was:

• funded in 2023 or earlier, and
• has not had additional funds credited in 2024 or subsequent years,

will be assumed to be non-taxable income, regardless of when it is remitted.  Presumably an account statement that shows

• the pre-existing funds from 2023 or earlier, and
• a remittance to Thailand from that account that matches your Thai income

will be accepted as the safe-harbor evidence.  I imagine that it would be advisable for residents to maintain these accounts as-is, and establish new accounts for income and expenditures in 2024 and beyond. 

 

The question of whether Thailand will move to taxing global income of tax residents is non-trivial, and will not be settled by a quick and easy revision of Thai law.  I expect that at first there may be an attempt to apply this to Thai corporations, and Thai overseas investors -- long before there is any consideration of taxing the home-country income of individual tax residents as it is accrued, and regardless of whether it is remitted.

 

Please note that I have no particular expertise in tax or law, besides paying it and obeying them, and any corrections are welcome.  

Edited November 10, 2023 by retiree

[Metapod]

a global taxation like the US would be even worse than what is being proposed.

 

thailand had a good system already and its one of the reasons why thailand has a lot of wealthy expats and foreign investment. all of the wealthy expats are gone if they are going to be taxed on worldwide income (me included)

[Seppius]

If they want to raise tax revenue, allow 7/11 and supermarkets to sell alcohol between 2pm and 5pm, as major retailers pay tax

[TroubleandGrumpy]

40 minutes ago, Dogmatix said:

An article in yesterday's Prachachart Thurakit suggests the RD is starting to walk this back a bit but not giving up on it https://www.prachachat.net/finance/news-1432180?fbclid=IwAR0FtCbDVifNc-atDT8uHGklrCLP5PNOva3VrsaHFX9W_kjEm-bKQBnqEKc .  It sounds like they are planning to exempt all foreign source income earned before 1 January 2024.  It also sounds like they are thinking of moving to a global taxation model involving taxation of foreign source income in the year it arises, regardless of whether it is remitted to Thailand or not.  They seem to have realised that that they need to amend the Revenue Code, which could take a couple of years, and not just let the RD issue a directive to staff that is not binding on taxpayers. However, they could still go for a stop gap solution to try to raise some more tax from income earned in 2024.   

 

The whole thing smacks of stupidity and incompetence from politicians and civil servants alike.  If you want to make major changes to the tax regime, it needs careful study beforehand and then proper legislation in parliament, not just let a bureaucrat blurt out a nonsensical unlawful order and threaten everyone.  Huge damage has already been done by that.  At least they are likely to give expats more time to make arrangements to sell up and get out of the country.

 

Here is a rough google translate.

 

Stocks-Finance

The Revenue Department delays "taxing" foreign income before 2024, adhering to the same criteria.

November 9, 2023 - 6:32 a.m.

 

levy taxes

The Revenue Department has called in the capital market department to understand the tax collection methods from people who earn money abroad. which when imported must be subject to tax inspection No matter what year it was imported. Previously, imports over a year would not be taxed. After the announcement was made Many parties are still concerned about the lack of clarity.

 

Permanent Secretary of the Treasury insists that loopholes must be closed.

Mr. Lawan Saengsanit, Permanent Secretary of the Ministry of Finance, said that the Ministry of Finance has confirmed that there will definitely be taxation of income from foreign countries. The law will be amended to allow collection as soon as the money is received. Only, amending the law must pass through Parliament, so it probably won't be done quickly. But insist that you have to do it. Because it meets international criteria

 

“People who have already paid taxes from abroad need not worry. Because you don't have to pay twice. But you must understand that In the past, there have been large companies that have used this channel to manage taxes. We have to close this gap.”

 

              

Investors complain about riding elephants to catch grasshoppers.

Mr. Anurak Bunsawaeng (Jo Luk Isaan), a major investor and former president of the Value Investors Association (Thailand), said that major investors Should be taxed at the personal income tax rate. The highest rate is 35%.

 

Therefore, I believe that no one will definitely accept being taxed. Therefore, you may see large investors 1. Stop investing abroad. 2. Do not take money back to the country and 3. Use gray methods to find various loopholes, which will make the opportunity for the government to collect a lot of revenue from this tax probably not be possible.

 

“It will definitely create a lot of problems. Because it will cause difficulties for investors. Including in practice through brokers Must collect documents for incoming and outgoing money. To separate profits to prove tax payments each year. which creates a lot of difficulties

 

So it is like riding an elephant to catch grasshoppers. This means that taxes cannot be collected. Because the chance that there will be very few people willing to pay But it creates many negative effects. It's not just big investors. but also private funds or a group of magnates who invest money abroad.”

 

Mr. Anurak said I want the government to change its perspective. Because it's not that investors don't want to pay taxes. But if taxes are collected at a reasonable rate or at the level of 10-15%, it is still acceptable.

 

“Tax collection should require people to act honestly. But if you keep it that high I believe that there will definitely be a lot of corruption. Right now, I mostly invest in China, Vietnam, and the United States, and have prepared several defensive plans.”

 

Begin to charge money from 2024.

However, recently there was a report from the Revenue Department that It has been concluded that In the first phase, there will be relief in the case of income generated abroad before 2024, if it is not imported within the same tax year as the year in which the income was generated. It will not have to be checked. Because finding document evidence will be difficult. It is considered to be releasing the ghost.

 

“Income generated before 2024 will use the old rules. That is, if it is not imported in the same tax year. The department will not collect it. As for imports across the year, they are no longer collected according to the original criteria. But income generated abroad from January 1, 2024 onwards, imported at any time will be subject to tax.

 

In the future, Section 41 of the Revenue Code will be amended to immediately calculate tax in the year in which income is earned abroad. Regardless of whether money is brought into the country or not, however, it may take 1-2 years to amend the law.”

 

Set "Pichai" to see private offers

Special Professor Kitipong Urapeepattanaphong, director of the Stock Exchange of Thailand (SET) and former chairman of the board of Baker & McKenzie Company Limited, told "Prachachat Turakij" that the collection of such taxes is being developed. Let's discuss in order for the government to postpone enforcement for now

 

Because I believe it's not worth it. It will affect the overall tax picture of Thailand as a whole. It is understood that now Mr. Settha Thavisin, Prime Minister and Minister of Finance, has assigned Mr. Pichai Chunhavajira, Advisor to the Prime Minister. is in charge of this matter

 

“And according to the Revenue Department Order No. 161/2023 that was issued, it is a practice. It cannot be interpreted outside of the law. Therefore, if such taxes are to be collected The tax structure must be restructured. which is a big deal The law must be amended, repealed Section 41, paragraph two, and issued a new law in its place. In the future, taxes will be collected similar to the United States. That is, all income in this world must be taxed. But in general, taxes should not exceed 15%.”

 

The Revenue Department announces income from abroad over the year must be taxed starting 1 Jan. 2024.

Revenue Department discusses new order “Income earned from abroad over the year” is subject to tax.

Is collecting foreign investment tax worth it? Question from "Kitipong Urapeepattanapong" tax law guru

What this whole episode shows the Expats who did not know - perhaps more clearly than ever before - is that senior Officials in every Thai Government Department (and many Private Companies) have absolutely no idea how their organisation operates. I am reminded of how companies like Daimler and BMW and Siemens and Bayer actually teach their future Execs how the business operates - before they take on positions of authority. That does not happen in Thailand - going from the basement to the top floor is not an outcome - people pay for promotions and appointments here - or they are someone's relative.  Most senior management in Thailand do not have a clue. 

 

That is why the Thai RD can release a change of 'procedures' to address a known tax avoidance method, whilst having absolutely no idea how that change could be implemented or the possible ramifications downstream.   Clueless and Ignorant.  Dont blame the people who actually work in the Thai RD - like in every organisation here in Thailand, it is NOT an option to point out to the Boss that they are wrong.

 

 

[TroubleandGrumpy]

24 minutes ago, Sato said:

Of course it is correct what I was saying. A US citizen living in Europe is 100% taxable in this country for EVERY income he has. How on earth do you come to the idea he is exampted to pay tax in there ? This is in the sole tax sovereignity of this country where the US citizen is living in and the US Governement has absolutley no rights in the sovereignity of this country.

That the US is taxing the US citizen even he is no longer resident in the US is an absolut shame but is the problem between the US citizen and his US governement. In the case where is no DTA, the poor US guy may have to pay tax twice. Bad luck for him but he has to blame the US Governement for this.

You have absolutely no idea what you are talking about.

I suggest you stop digging that hole - it is only getting bigger.

[TroubleandGrumpy]

16 minutes ago, Metapod said:

a global taxation like the US would be even worse than what is being proposed.

 

thailand had a good system already and its one of the reasons why thailand has a lot of wealthy expats and foreign investment. all of the wealthy expats are gone if they are going to be taxed on worldwide income (me included)

Yes indeed - I too will be 'gone'.

Whilst not 'wealthy' as such by western standards - I am well off and financially secure.

But I am certainly wealthy here and it is one reason we are living here.

That is what must surely one day make the Thai Govt think twice (I know not a natural thing). 

If they start taxing 'financially successful' Expats, all that will be left here are the Pensioners and 'strugglers'.

All their 'high value' Expats - those that buy new cars and houses - will be gone.

If/when places like Cambodia and Vietname improve (they are going that way), they will also leave too (and visit here).

[The Cyclist]

I suggest some people read this

 

https://mahanakornpartners.com/the-revenue-department-closes-loopholes-tightening-tax-collection-on-foreign-income/

 

Here are the pertinent parts

 

Quote

However, if an income earner has already paid taxesin their country of income origin, provided there is a Double Tax Agreement in place between Thailand and that country, the income earner can utilize the taxes paid in the country of origin as a tax credit, 

 

Why is Thailand doing ths

 

Quote

align with Thailand’s objectives as a member of international tax forums and its commitment to multilateral agreements. 

 

The only Doomers & Gloomers that need to be concerned are the Doomers & Gloomers that have been flying below the radar and not paying the appropriate taxes.

[Sato]

9 minutes ago, TroubleandGrumpy said:

You have absolutely no idea what you are talking about.

I suggest you stop digging that hole - it is only getting bigger.

no arguments and then has to be personally insulted. What pathetic behavior.

[Dogmatix]

2 minutes ago, retiree said:

Thank you Dogmatix for posting this useful article.  https://www.prachachat.net/finance/news-1432180 

 

My interpretation would be slightly different.  As expected, the RD is beginning to issue guidance and "safe harbor" rules on tax law enforcement.  To clarify, a safe harbor rule typically establishes simple documentary evidence needed to establish that one is not subject to a regulation. 

 

If the article is accurate, the first safe harbor rule is that money remitted from an account that was:

• funded in 2023 or earlier, and
• has not had additional funds credited in 2024 or subsequent years,

will be assumed to be non-taxable income, regardless of when it is remitted.  Presumably an account statement that shows

• the pre-existing funds from 2023 or earlier, and
• a remittance to Thailand from that account that matches your Thai income

will be accepted as evidence.  I imagine that it would be advisable for residents to maintain these accounts as-is, and establish new accounts for income and expenditures in 2024 and beyond. 

 

The question of whether Thailand will move to taxing global income of tax residents is non-trivial, and will not be settled by a quick and easy revision of Thai law.  I expect that there may be an attempt to apply this to Thai corporations, and Thai overseas investors, long before there is any consideration of taxing the home-country income of individual tax residents as it is accrued, and regardless of whether it is remitted.

 

Please note that I have no particular expertise in tax or law, besides paying it and obeying them. 

 

The article quotes from varying sources and is suggestive of a work still in progress but also that they have come around to the view that taxing income that arose prior to 1 Jan 2024 may be more trouble than it is worth.   Two things spring to mind. 

 

1. If they really intend to make 1 Jan 2024 a start date for something, they will need a Royal Decree.  Order P. 161/2566 will need to be rescinded and the lawyers will have pointed out to them it wasn't legally binding on taxpayers anyway.  A Royal Decree will need cabinet approval and there may be some differences of opinion in the coalition parties which could change things. Talking about 1 Jan 2024 with any luck will just turn out to be a face saver for the DG of the RD, who seems to have acted like a bit of a nincompoop anyway (albeit no doubt with a nod from finance minister Srettha who was about to hop on the plane to NY at the time) as it would probably be tough to get out a Royal Decree by then and Thailand very rarely makes any law retroactive. 

 

2. Amending the Revenue Code in parliament to introduce global taxation would actually be a more logical step than trying to tax foreign source income on a remittance basis.  My guess is that's where we are ultimately headed, either during the term of this government or an MFP government, if they manage to gain power. But it would be a major undertaking and would easily take two years to draft and go through all 3 readings in parliament.  They might want to reform other aspects of the law as well. . There are many legit arguments against global taxation or a remittance, as raised by Prof Kittipong, former chairman of Baker McKenzie. In addition there are many corrupt politicians and bureaucrats with wealth offshore who might oppose global taxation or remittance tax.  

 

From the macro perspective Thailand has fallen into the middle income trap and has no way to crawl out to become a high income country like Singapore because there is far too much  incompetence and corruption in government. Without those two handmaidens Thailand could strive to be a regional finance centre with a liberal tax regime like Singapore, as suggested by Prof Kittipong.  But that would require enlightened governance and a commitment to improving public education and doing whatever it takes to make Thailand competitive in this post sweated labour phase and thus fulfill it long term sustainable growth potential which is far higher than the 2-3% GDP growth which is now the best it can do. With faster growth the tax take would increase without raising taxes.  As it is, Thais have started to expect a developed country welfare state without first becoming a developed economy. That means raising taxes across the board, including VAT.