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

[lordgrinz]

Just now, Mike Lister said:

Seems very unlikely, THB is strengthening because of high season plus USD is down.

Believe me, I've noticed, I sent some last time it hit 37.21 ....but now I wish I sent more.

[Mike Lister]

Just now, lordgrinz said:

Believe me, I've noticed, I sent some last time it hit 37.21 ....but now I wish I sent more.

35 is still very good, historically it is very very good.

[lordgrinz]

Just now, Mike Lister said:

35 is still very good, historically it is very very good.

Historical to me is when I arrived in 2016 at 36 baht, it hovered around 34-36 for a while, then there was the 29 baht which was really bad.

[Mike Lister]

Just now, lordgrinz said:

Historical to me is when I arrived in 2016 at 36 baht, it hovered around 34-36 for a while, then there was the 29 baht which was really bad.

Your time frame is far too short because the covid period was an anomaly, The future is sub 30, it always has been, 38 was a gift from the gods but was a limited offer only.

[lordgrinz]

6 minutes ago, Mike Lister said:

Your time frame is far too short because the covid period was an anomaly, The future is sub 30, it always has been, 38 was a gift from the gods but was a limited offer only.

It probably doesn't matter, we live off my wife's Thai salary already, we are trying to keep from sending money if it's not needed....but I just want to cover anything big, like a new car, or another condo purchase (the wife likes buying multiple condos and renting them).

[Mike Lister]

8 minutes ago, lordgrinz said:

Historical to me is when I arrived in 2016 at 36 baht, it hovered around 34-36 for a while, then there was the 29 baht which was really bad.

This reminds me of year 2000 onwards when the UK Pound was up around 75/80 baht but then trended downwards to under 40. At every step of the way, Brit pensioners here were saying it would go back up, the baht was being manipulated and anything else to reassure themselves. It did go back up slightly because of covid but all the forecasts are and always were, for sub 40 (against the Pound). I was lucky in that I decided to get out of GBP altogether and I went all in on THB some years ago and was very glad that I did.

[Mike Teavee]

35 minutes ago, Sheryl said:

Under the UK-Thailand DTA, UK State Pensions are not exempt from taxation in Thailand and since you pay no tax in UK,  no credit to apply

It depends on how you view Taxes in the UK, I believe State Pension is taxed in the UK but at the 0%/Nil rate band because they are put it onto your "Income Stack" 1st & it falls below the normal Personal Tax Allowance. 

 

As an example, it is possible in the UK to give up your Personal Tax Allowance where this is beneficial for your other income OR people lose their PTA when they earn over  £100,000 (You lose £1 of PTA for every £2 you earn over £100,000 so if you were to earn £125,140 you would have no PTA left & would be taxed 20% on your State Pension).

 

This is an important distinction as by RD guidelines, if you've already been taxed on income covered by the DTA then the lower of the 2 countries rates apply (so in the case where you do have a PTA it would be 0%).

[nottin]

Thought it might be interesting to read some sections of the revenue code.

From the section 42 of the revenue code there are some sources of income which are exempt from income tax calculation.

(10) Income derived from an inheritance.

(23) Income from sale of investment units in a mutual fund.

(24) Income of a mutual fund.

 

Plus, there is no capital gain tax from equity trading in Thailand. So although not mentioned in the code specifically that would be another source exempted.  

 

These are cut and pasted from the code here

https://www.rd.go.th/english/37749.html

[The Cyclist]

17 minutes ago, Mike Teavee said:

t depends on how you view Taxes in the UK,

 

17 minutes ago, Mike Teavee said:

As an example, it is possible in the UK to give up your Personal Tax Allowance where this is beneficial for your other income

 

The poster involved @KannikaP State pension is taxed at 0% because it falls under the £12570 threshold, which strongly suggests that he does not have any other UK income, so why in the name of anything sane would he give up his PTA to have his State Pension taxed at 20% rather than 0%, and possibly then be skelped for Thai Tax as it appears that the State Pension is not covered by a DTA.

 

Some pensions, certainly Government pensions ( no idea about the State Pension ) will always be taxed in the UK, regardless of what you try and do, UK tax only stops when you die.

[Mike Teavee]

8 minutes ago, The Cyclist said:

 

 

The poster involved @KannikaP State pension is taxed at 0% because it falls under the £12570 threshold, which strongly suggests that he does not have any other UK income, so why in the name of anything sane would he give up his PTA to have his State Pension taxed at 20% rather than 0%, and possibly then be skelped for Thai Tax as it appears that the State Pension is not covered by a DTA.

 

Some pensions, certainly Government pensions ( no idea about the State Pension ) will always be taxed in the UK, regardless of what you try and do, UK tax only stops when you die.

 

I didn't suggest he or anybody gave up their PTA, I was responding to Sheryl's statement that UK State Pension is not taxed as I believe it is taxed at the 0% rate (something which you seem to agree with) - I merely used the example of where people give up or lose their PTA as rationale for why I believed this.   

 

As I posted this is an important distinction as RD guidelines recommend that income will be taxed at the most beneficial rate to the taxpayer so if the RD views State Pension as not taxed, they could Tax it, but if they view it as having been taxed at 0% then they wouldn't Tax it. 

 

RD Guidelines: https://www.rd.go.th/english/23520.html NB Point 5... 

5.   What happens if the rate of tax stipulated in the Revenue Code is different from that of an agreement?  

- Apply the rate which is more beneficial to the taxpayer.  

 

 

Edited November 9, 2023 by Mike Teavee

[Sheryl]

51 minutes ago, Mike Teavee said:

It depends on how you view Taxes in the UK, I believe State Pension is taxed in the UK but at the 0%/Nil rate band because they are put it onto your "Income Stack" 1st & it falls below the normal Personal Tax Allowance. 

 

As an example, it is possible in the UK to give up your Personal Tax Allowance where this is beneficial for your other income OR people lose their PTA when they earn over  £100,000 (You lose £1 of PTA for every £2 you earn over £100,000 so if you were to earn £125,140 you would have no PTA left & would be taxed 20% on your State Pension).

 

This is an important distinction as by RD guidelines, if you've already been taxed on income covered by the DTA then the lower of the 2 countries rates apply (so in the case where you do have a PTA it would be 0%).

But in the case referenced he paid no UK tax.

[Mike Teavee]

6 minutes ago, Sheryl said:

But in the case referenced he paid no UK tax.

Sorry, I seem to be struggling to get my point across.... 

 

There is a huge difference between paying no UK Tax because the income wasn't taxable (E.g. interest earned in an ISA) AND paying no UK Tax because the effective rate that applied to that income was 0%. 

 

In the latter case you have been taxed & it could be argued you've paid the tax due (all £0.00p of it) which is where rule 5 of the RD Guidelines come in to play. 

 

 

 

 

 

Edited November 9, 2023 by Mike Teavee

[Sheryl]

26 minutes ago, The Cyclist said:

 

 

The poster involved @KannikaP State pension is taxed at 0% because it falls under the £12570 threshold, which strongly suggests that he does not have any other UK income, so why in the name of anything sane would he give up his PTA to have his State Pension taxed at 20% rather than 0%, and possibly then be skelped for Thai Tax as it appears that the State Pension is not covered by a DTA.

 

Some pensions, certainly Government pensions ( no idea about the State Pension ) will always be taxed in the UK, regardless of what you try and do, UK tax only stops when you die.

I have not read the UK DTA  in detail but pretty much any DTA protects from double taxation so if tax were paid on a state pension to the UK then that amount could be claimed as a credit on Thai tax return. Whether or not this would be advantageous or not (vs taking the PTA, paying no UK tax  and then paying Thai tax without a tax credit) is another matter. 

 

 

[The Cyclist]

Just now, Sheryl said:

have not read the UK DTA  in detail but pretty much any DTA protects from double taxation

 

The only pensions covered by the UK - Thai DTA are what are termed ' Government Pensions ' whether the RD classify the UK State Pension ( Paid by the State / Government ) as coming under the banner of ' Government Pension ' comes under wait and see / further clarification needed.

[samtam]

2 hours ago, beammeup said:

or you can buy condos, houses, cars, and Rolex's in Malaysia, Singapore or Hong Kong. and just not bother with Thailand. OK maybe not cars in Singapore.

 

Not condos or houses either. Singapore is now one of the most expensive property markets in the world. Ditto Hong Kong, (despite a recent downturn).

 

 

1 hour ago, Mike Lister said:

It will never happen. The housing market here is dependent on foreign buyers, it would crash overnight if everyone knew they had to pay tax on the funds used to purchase the property.

 

Always difficult to get meaningful statistics here, but I think the foreign buyers' percentage of ownership of Thai properties is unlikely to be a major catalyst. TBN here suggests it will account for 15% of the market in the next 2 years. 

 

 

1 hour ago, Enzian said:

Since the condo I'm in is for sale (Bangkok, Nana station), I'm on a month-to-month rental agreement, which is fine with me. Last evening talked with the rental agent (owner is out of country) and she said there is almost no one interested in even looking at this unit, though it is priced at what until a few month ago at least seemed like market. Further, she said the big banks have repos they can't sell, and just finished condo buildings, ones coming on line, even older buildings can't find buyers. The market is dead. That's one agent's observation; anyone else hear anything like this? I wanted to ask her if the tax uncertainly entered in, but her English is not great, and I don't know how to describe such a big "IF" to her; I may try later.

 

"The market is dead" sounds about right to me. It was in a coma during the pandemic, and is still breathing, but barely. Any tax uncertainty or negativity will obviously have some impact (see above), and it will have relapse.

 

 

13 minutes ago, Mike Teavee said:

Sorry, I seem to be struggling to get my point across.... 

 

There is a huge difference between paying no UK Tax because the income wasn't taxable (E.g. interest earned in an ISA) AND paying no UK Tax because the effective rate that applied to that income was 0%. 

 

In the latter case you have been taxed & it could be argued you've paid the tax due (all £0.00p of it) which is where rule 5 of the RD Guidelines come in to play. 

 

 

 

 

 

 

In this case UK State Pension has been "assessed", and it is zero. Whether Thai RD will consider that as the more favourable outcome to the UK expat, and one that should apply, is anybody's guess at the moment.

Edited November 9, 2023 by samtam

[The Cyclist]

30 minutes ago, Mike Teavee said:

didn't suggest he or anybody gave up their PTA, I was responding to Sheryl's statement that UK State Pension is not taxed as I believe it is taxed at the 0% rate (something which you seem to agree with)

 

I neither agree nor disagree with the 0%, i used it because other posters were using it.

 

The State Pension ( in most cases ) falls under the £12570 PTA where tax becomes applicable.  Whether this constitutes being taxed at 0% or ' Tax Free ' would need a tax expert to answer.

[Sheryl]

5 minutes ago, Mike Teavee said:

Sorry, I seem to be struggling to get my point across.... 

 

There is a huge difference between paying no UK Tax because the income wasn't taxable (E.g. interest earned in an ISA) AND paying no UK Tax because the effective rate that applied to that income was 0%. 

 

In the latter case you have been taxed & it could be argued you've paid the tax due (all £0.00p of it) which is where rule 5 of the RD Guidelines come in to play. 

 

 

 

 

 

Yes, I understand what you are saying.  However as I understand from what others have said UK State (but not Government) pensions are taxable in Thailand under the terms of the DTA.

 

Rule 5 seems to refer to a situation where a DTA specifies a specific tax rate which differs from that in the RD code. I don't think the UK DTA specifies a tax rate for State Pensions. Rather it seems to just say taxable in Thailand. 

 

This is very different from the situation for UK Government pensions and US Social Security, both of which are stated in their respective DTAs as taxable only in UK/US and exempt from taxation in Thailand.

 

Certainly would be useful for someone to consult an accountant versed in both Thai tax law and DTAs to be sure. But it looks to me like UK state pensions are subject to tax in Thailand. 

 

 

 

 

[Sheryl]

7 minutes ago, The Cyclist said:

 

The only pensions covered by the UK - Thai DTA are what are termed ' Government Pensions ' whether the RD classify the UK State Pension ( Paid by the State / Government ) as coming under the banner of ' Government Pension ' comes under wait and see / further clarification needed.

You are referring to 2 different things. One us what types of income are taxable where (i.e.  exemptions)

 The other is from  protection from double taxation (i.e. tax credits). 

 

[Sheryl]

2 hours ago, lordgrinz said:

 

Ok, so large savings in US banks, if slowly transferred to a Thai bank.....is that taxable? For that matter, is all money being sent to Thailand considered taxable until its not?

Per the recent RD Q&A posting it would depend on whether you were tax resident in Thailand at the time this money was originally earned.

 

If the saving is from income earned before you became tax resident in Thailand then per the RD it is not taxable in Thailand.

 

Now how the RD would know when savings were earned, and what if any substantiation you would need to show to prove this  I have no idea. 

 

 

[The Cyclist]

1 minute ago, Sheryl said:

You are referring to 2 different things.

 

I dont think I was, but to clarify.

 

1. UK Government Pensions - Taxable only in the UK. ( Covered by DTA )

 

2. UK State Pension 

 

* Not covered by DTA

 

* Not taxed in UK as below tax threshold ( But will be when combined with other UK earnings )

 

The point I was making regarding the UK State Pension is what will the RD classify it as

 

1 - A Government Pension as it is paid by the Government.

 

2 - Just a pension, not covered by a DTA and subject to being assessed for Thai taxation.

 

The UK State Pension does not apply to me and I cannot remember what the DTA said ( if anything ) specifically about State Pensions.

[Sheryl]

2 minutes ago, The Cyclist said:

 

I dont think I was, but to clarify.

 

1. UK Government Pensions - Taxable only in the UK. ( Covered by DTA )

 

2. UK State Pension 

 

* Not covered by DTA

 

* Not taxed in UK as below tax threshold ( But will be when combined with other UK earnings )

 

The point I was making regarding the UK State Pension is what will the RD classify it as

 

1 - A Government Pension as it is paid by the Government.

 

2 - Just a pension, not covered by a DTA and subject to being assessed for Thai taxation.

 

The UK State Pension does not apply to me and I cannot remember what the DTA said ( if anything ) specifically about State Pensions.

Again you are referring to what income is exempt.

 

Tax credit  applies when income is not exempt. 

[KannikaP]

35 minutes ago, Sheryl said:

But in the case referenced he paid no UK tax.

Yes, I paid tax on my UK Pension, which is paid into a UK Bank, at 0%, because the annual total is below £12570.

[RupertIII]

1 hour ago, nottin said:

Thought it might be interesting to read some sections of the revenue code.

From the section 42 of the revenue code there are some sources of income which are exempt from income tax calculation.

(10) Income derived from an inheritance.

(23) Income from sale of investment units in a mutual fund.

(24) Income of a mutual fund.

 

Plus, there is no capital gain tax from equity trading in Thailand. So although not mentioned in the code specifically that would be another source exempted.  

 

These are cut and pasted from the code here

https://www.rd.go.th/english/37749.html

From the link you quoted: Mutual fund means a body of persons who participate in a fund that is established and operated by an investment management company for a project under the law governing the control of trading activities that affect public safety and welfare.

It would seem that this would exclude the vast majority of mutual funds. 

Also, I think I read somewhere that it was suggested that only mutual funds in Thailand would fall under this exemption.

[The Cyclist]

3 minutes ago, Sheryl said:

Again you are referring to what income is exempt.

 

Tax credit  applies when income is not exempt. 

 

I haven't mentioned tax credits.

 

I am of the opinion that as things stand today, income remitted after 01 Jan 2024 will mostly likely be

 

* Non taxable in Thailand if already taxed.

 

* Liable to be taxed in Thailand if not taxed already

 

* Subject to DTA's and what clarification comes from the RD.

 

Things like tax credits etc, will have to be dealt with by individuals in conjunction with RD, very few peoples circumstances will be exactly the same, which is why I can see a blanket statement covering expats in the not too distant future.

 

Something along the lines of 

 

" If you are from a Country that has a DTA with Thailand, income already taxed in that Country will mot be assessable for income tax in Thailand "

 

That will then leave individuals to prove that their income is already taxed or covered by a DTA.

 

[freeworld]

32 minutes ago, The Cyclist said:

 

The only pensions covered by the UK - Thai DTA are what are termed ' Government Pensions ' whether the RD classify the UK State Pension ( Paid by the State / Government ) as coming under the banner of ' Government Pension ' comes under wait and see / further clarification needed.

The UK government explains it here

 

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75070#non-government-pensions

 

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75070

Edited November 9, 2023 by freeworld

[The Cyclist]

2 minutes ago, freeworld said:

The UK government explains it here

 

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75070#non-government-pensions

 

Ok, thats fine

 

Quote

The State Pension is not regarded as a government pension. It may be considered under the Pensions Article or Other Income Article of a DTA.

 

What matters is how the RD considers it.

[TroubleandGrumpy]

Seems to me that quite a few people are arguing what 'this clause' or 'that clause' means under a DTA.

@Sheryl  Is merely pointing out what the rule states - there is no point arguing about it guys.

Exactly how the Thai RD determines how any applicable DTA clause will/wont apply, is solely up to the Thai RD.

This is not the West where the rules and laws are detailed and people can 'push back' on what they mean in application.

This is one of the many issues that the Thai RD must now address - they never have for personal taxes in the past.

 

We will all have to wait until the Thai RD releases its clarifications and exemptions and determinations, before 'knowing' anything.

Arguing over what a clause/paragraph in a DTA or the Thai RD Guidelines is a waste of time.

IMO best to start preparing and planning and wait - best case scenario, worst case scenario, acceptable scenario.

 

The Thai RD has been 'operating' for decades based upon very few detailed definitive 'guidances'.

A lot of their rules/interpretations have been sorted out in Court - it is a very complex thing writing tax laws/rules.

This change is being made (for obvious reasons) to an 'interpretation' that was ratified in a Court over 30 years ago.

The reason is simple - the Govt needs more money - but they have under-estimated how hard this will be (far too many issues).

 

My plan is simple - and it seems others are of the same thought.

I am bringing forward remittances into Thailand this year (for 2024) and will bring in the absolute minimum in 2024.

Before the end of 2024 it should be clear what the Thai RD is going to do regarding remittances into Thailand by retired/married Expats.

It could also be that the Thai Govt does what Malaysia did, and defers implementation for a few years.

Malaysia did that because it was going to take that long to determine all the rules and clarifications etc. and publish them.

 

If I am going to be 'forced' to lodge a tax return in 2025 and it appears I will be paying income taxes - then we are leaving Thailand.

Unless it is a resonable amount and I get something in return - legal rights, no 90 days, no annual begging to stay, health services, etc.

[freeworld]

23 minutes ago, The Cyclist said:

 

Ok, thats fine

 

 

What matters is how the RD considers it.

Then there is this article in the DTA

 

Article 6
Limitation of Relief
Where under any provision of this Convention income arising in one of the Contracting States is relieved from tax in that Contracting State and, under the law in force in the other Contracting State a person, in respect of the said income, is subject to tax by reference to the amount thereof which is remitted to or received in that other Contracting State and not by reference to the full amount thereof, then the relief to be allowed under this Convention in the first-mentioned Contracting State shall apply only to so much of the income as is remitted to or received in the other Contracting State.

Edited November 9, 2023 by freeworld

[The Cyclist]

8 minutes ago, freeworld said:

Then there is this article in the DTA

 

Article 6
Limitation of Relief
Where under any provision of this Convention income arising in one of the Contracting
States is relieved from tax in that Contracting State and, under the law in force in the
other Contracting State a person, in respect of the said income, is subject to tax by
reference to the amount thereof which is remitted to or received in that other
Contracting State and not by reference to the full amount thereof, then the relief to be
allowed under this Convention in the first-mentioned Contracting State shall apply only
to so much of the income as is remitted to or received in the other Contracting State.

 

Can you give me your interpretation of ' Article 6 ' applying to a UK State Pension ?

[The Cyclist]

14 minutes ago, TroubleandGrumpy said:

Exactly how the Thai RD determines how any applicable DTA clause will/wont apply, is solely up to the Thai RD.

 

I think that is exactly what I said, right here.

 

29 minutes ago, The Cyclist said:

What matters is how the RD considers it.