Payment of income tax under Section 41, paragraph two of the Revenue Code

[Andrew Mind]

I will try to explain in as much detail as possible and somewhat refute what was said in the video from Thai elite visa partner; this story does not take into account FATCA, OECD and CRS automatic and manual data exchange between jurisdictions. I’ll say right away that “loophole” has absolutely nothing to do with it.

 

1. The case when you receive income for remote work for a foreign company and this company pays you directly for an invoice to a Thai bank to your personal account. This is and always has been taxable if you live in Thailand for more than 180 days a year. And you've clearly paid tax before (or not?).

 

2. The case when you receive income for remote work for a foreign company and this company pays you into a foreign bank account into your foreign personal bank account. Next, you transfer this money to yourself into your personal Thai bank account. This is subject to tax and has always been taxed if you live in Thailand more than 180 days a year.

 

3. The case when you receive income for remote work for a foreign company and this company pays you into a foreign bank account into your foreign personal account. Next, you transfer this money to your Thai wife into her personal Thai bank account, as a gift, or to your son or friend or someone else in Thailand. Gift tax begins to apply if you transfer more than 10 million baht to anyone in Thailand during a calendar year, or if you transfer more than 20 million baht to your Thai wife or other close relative. But they will be the ones paying their gift tax. Note that this is a completely different tax, and you cannot gift funds without first paying income tax on them. That is, you can give it as a gift, but then you will still have to pay income tax on the funds brought into Thailand.

 

However, you initially earned this money and it is considered income. Then you delivered this income to Thailand, no matter to whom, yourself or your Thai wife or son or friend. This is and always has been taxable if you live in Thailand for more than 180 days a year.

 

But in cases 2 and 3 there is a problem that the Thais cannot in any way determine whether you are transferring savings or earnings, so no one ever paid taxes and simply transferred money to themselves or relatives.

 

In 2021-22, Thailand connected to the CRS system to automatically receive data on overseas bank accounts. So they will be able to determine this, starting from 2024. It is important. Now they can get this information from your overseas bank. Not all foreign banks/payment systems within CRS operate automatically, some process only manual sent requests from any connected to CRS jurisdictions. The question is whether the Thai tax office will send such a request. There are also separate instruments for the exchange of tax information between countries, not only within the OECD.

 

I'm just warning you in advance, don't think that you can simply transfer the funds you earned from your personal account in a foreign bank to your personal account or the personal account of your Thai wife, son, your friend, or to someone else's account, even if they live in Thailand for less than 180 days in a calendar year and are not tax residents of Thailand. The main thing is that you live in Thailand for more than 180 days in a calendar year and are a tax resident of Thailand and it is you who transfer your income to Thailand, and for whom this is not so important.

 

This is taxable income and with Thailand connected to the CRS system and other tax data exchange tools, they will know about the transfers of your money for a particular calendar year from your overseas bank account. There is a slight exception, if you do not have a Thai bank account or you close your Thai bank account, then the tax office in Thailand simply most likely will not be able or will not initiate a request to the CRS system, since you simply do not have a bank account in Thailand and Thailand banks simple no have information about your foreign bank accounts, that is, it is very problematic to somehow do it manually and compare data with the data of the foreign account from which you sent money transfers to a bank in Thailand to the personal account of the Thai wife, son, friend and so on. But if you have always previously sent money from your foreign bank account to your bank account in Thailand, and from 2024 you will send money from the same account, but to the account of your Thai wife, son, friend then the tax office will quickly identify this method of tax evasion.

 

The last exception is ATM cards. There is a gap here, because you never know what John Doe withdrew money from an ATM in Thailand, and there can be many such John Does, including those who live in Thailand and are tax residents. Yes, technically, Thais can start applying to CRS for all banks from whose cards money was withdrawn, but this is unrealistic at the moment.

 

In any case, as for pensions, you will be able to provide documents from your foreign bank stating that these are pensions, if the tax office has questions for you.

Edited November 25, 2023 by Andrew Mind

[TroubleandGrumpy]

3 hours ago, mikebell said:

How easy is it to take my car?  I accept it will be a righthand drive amongst most lefthanders.

Good point - Laos and Cambodia do it on the right.  That is another tick for Malaysia then. 

No it is not 'easy' - but it can be done - never done myself - but once read about doing it somewhere.

I think you need to get a Visa approved/stamped and get Raod Transport documentation done first.

Many years ago I did the border run to Vientienne for another 12 months on my O-A Retirement Visa and was thinking of driving over.

I parked in Nong Khai and took the bus instead 

Maybe talk to an agent who could organise the Visa and Car approval (for a fee).  Worth it if it is something you are going to do every 6 months or so over future years. 

[salween]

2 hours ago, Andrew Mind said:

... There is a slight exception, if you do not have a Thai bank account or you close your Thai bank account, then the tax office in Thailand simply most likely will not be able or will not initiate a request to the CRS system, since you simply do not have a bank account in Thailand and Thailand banks simple no have information about your foreign bank accounts, that is, it is very problematic to somehow do it manually and compare data with the data of the foreign account from which you sent money transfers to a bank in Thailand to the personal account of the Thai wife, son, friend and so on. But if you have always previously sent money from your foreign bank account to your bank account in Thailand, and from 2024 you will send money from the same account, but to the account of your Thai wife, son, friend then the tax office will quickly identify this method of tax evasion.

 

So someone who: i) is not a Thai national, ii) does not have a Thai bank account,  and iii) does not meet the Thai tax-resident threshold of staying in Thailand for more than 180 days, were to wire from abroad a < Bt10 million gift to a Thai national, that gift is unlikely to be subject to this proposed income tax nor any Thai gift tax?

[Andrew Mind]

3 hours ago, salween said:

So someone who: i) is not a Thai national, ii) does not have a Thai bank account,  and iii) does not meet the Thai tax-resident threshold of staying in Thailand for more than 180 days, were to wire from abroad a < Bt10 million gift to a Thai national, that gift is unlikely to be subject to this proposed income tax nor any Thai gift tax?

Yes in this case, for example if you transfer money from foreign bank account to foreign bank account of your close relative or friend(whom is not stay or stay <180 days in Thailand). And then him transfer money as gift or as support funds to your Thai bank account(when you are tax resident(>180 days in Thailand) not more than 10 millions baht calendar year, then you and him do not need to pay any Thailand taxes. Or not then more 20 millions baht if this your close relative, but in this case you need to make some paperwork verified in consular of Thailand (marriage or born certificate, etc) for proof about you close foreign relatives for Thailand bank and for Thai tax office. And someone(close relative or friend) also can be a Thai national and also have own bank account in Thailand and a foreign bank account, but not a tax resident in Thailand (stay <180 days in Thailand).

Also, if your foreign friend or relative(whom is not stay or stay <180 days in Thailand) transfers money to your Thai wife, for example if you do not have an account in a Thai bank, but your Thai wife does. Then in this case up to 10 million baht per calendar year because your foreign friend or relative is not a close relative of your Thai wife, so the gift tax-free limit will be 10 million baht per calendar year.

And someone whom transfer money to your Thailand bank account or your Thai wife bank account or friends bank account in Thailand (close relative or friend) also can be a Thai national and also have own bank account in Thailand and a foreign bank account, but not a tax resident in current calendar year in Thailand (stays <180 days in Thailand). In this case also no need to pay any Thailand taxes nor you nor Thai national.

Edited November 25, 2023 by Andrew Mind
Additional information

[Andrew Mind]

And also... if your foreign close relative or friend will be come in Thailand and open Thai bank account, then leave Thailand(for example him not like Thailand and not want stay at Thailand), then him can transfer money from his foreign bank account to his Thai bank account without any limits, and then him will transfer this money as gift from his Thai bank account to your bank account or to your Thai wife bank account or to your friend Thai bank account (with proof of your and him are close relatives <20 millions of Thai baht) or without proof <10 millions of Thai baht, then nor you nor your foreign close relative or friend do not need to pay any Thailand taxes. Also this is true, if your foreign friend or close relative is a Thai national with bank account in Thailand, but not stayed in Thailand more than 180 days in current calendar year.

Edited November 25, 2023 by Andrew Mind

[Andrew Mind]

If someone wants a simpler explanation, then essentially in 2024, if the Thai tax office and Thai banks want to check every personal money transfer, then quite by chance everyone here will become each other’s best friends. Not rich remote workers will find their friends on both sides, retired grandfathers will find other retired grandfathers and everyone will send money as gifts to each other or to Thai close relatives or Thai friends.
 

Yes, the scheme will certainly become more complicated, maybe there will be scammers, maybe there will be companies that have a number of trusted persons with personal accounts in different countries and who are not tax residents in Thailand.

 

As for wealthy foreigners, those who need to transfer more than 10 or 20 million Thai baht per year to Thailand, they will simply apply for loans, eternal credits, or debts abroad, and as you know, loans, credits and debts are not taxed(Loans you take out abroad to live in Thailand as a Thai tax resident). This also applies to the tax legislation of Thailand. Just to formalize all this they will need to do a lot of hard paperwork, but rich people will not personally do this work themselves, they will hire lawyers on both sides and they will do everything for them. And they will repay the loans abroad, and in Thailand they will not pay taxes.

 

After all, no one wants empty paperwork. This means that many who are not ready to leave Thailand, for example, for family reasons and pay taxes, will begin to transfer funds to Thailand in this way.

 

And then what will happen in the end? At the most, Thais can tighten the tax legislation in the field of gifts and material assistance, but this will only affect poor people, the collection of taxes from whom will already be very small compared to the budget of Thailand.

 

But no one will collect taxes on loans, credits and debts, because all over the world this is how it works for rich and very rich people and no one will allow it to be changed somehow. And for these people, now and then it turns out to be much cheaper to pay interest on loans and credits.

 

If Thailand wants to change its tax laws in the future so that any money earned abroad will be subject to income tax, and not just money that was transferred to Thai banks from foreign bank accounts, then this will again only hit the poor and people with an average income, but will not in any way affect the rich and very wealthy people who will continue to use loans, eternal credits and debt obligations abroad(I am not 100% sure about this at this time).

 

There is nothing good and nothing funny about this, but this is the reality. There was a conditional tax paradise in Thailand, apparently it will end soon. Otherwise, if poor foreigners don’t make friends and don’t want to pay full taxes, they will live in Thailand for less than 180 days a year.

 

I hope this message will help to people realize that there are a lot of ways to get around the restrictions. Otherwise, the rich will again become richer and the poor will become poorer.

Edited November 25, 2023 by Andrew Mind

[TravelerEastWest]

The gift options may buy you time, but if the intent of the gifts are to evade taxes - quite possibly you may find yourself owing taxes, penalties and interest and maybe jail time...

 

As for loans maybe it will work a maybe not - can you cite case studies or perhaps expert legal advice? Or revenue rulings? Again if the intent is to evade taxes over time these loopholes will be closed.

 

 

[Neeranam]

On 11/23/2023 at 11:02 AM, TroubleandGrumpy said:

What is needed is for the Thai RD to clarifiy what type of Expat's money remitted into Thailand is deemed as 'assesable income'.  

Until then we dont know what is going to be viewed as taxable income, and we are all stil 'watching this space'

They aren't even thinking about expats in this new law.

[Neeranam]

13 hours ago, Andrew Mind said:

This is taxable income and with Thailand connected to the CRS system and other tax data exchange tools, they will know about the transfers of your money for a particular calendar year from your overseas bank account. There is a slight exception, if you do not have a Thai bank account or you close your Thai bank account, then the tax office in Thailand simply most likely will not be able or will not initiate a request to the CRS system, since you simply do not have a bank account in Thailand and Thailand banks simple no have information about your foreign bank accounts, that is, it is very problematic to somehow do it manually and compare data with the data of the foreign account from which you sent money transfers to a bank in Thailand to the personal account of the Thai wife, son, friend and so on. But if you have always previously sent money from your foreign bank account to your bank account in Thailand, and from 2024 you will send money from the same account, but to the account of your Thai wife, son, friend then the tax office will quickly identify this method of tax evasion.

Interesting.

I can buy Bitcoin and top up my crypto.com, or Revolut card and buy gold in Thailand. I could also get a WISE card I think.

I can sell my Bitcoin P2P on crypto exchanges, getting Thai baht sent to my Thai bank accounts.

There are so many different ways.  

Are WISE, Revolut, actual banks that the Thais can ask for details?

Edited November 25, 2023 by Neeranam

[TroubleandGrumpy]

12 hours ago, Neeranam said:

They aren't even thinking about expats in this new law.

Yes they are not targetting married or retired Expats.  But as per the law of unintended consequences, Expats will be 'caught' in their income tax net, unless they make exmptions and/or allowances.  That is why they are right now as we speak, 'talking' about all the ramifications and what to do about them.  The PM has directed the Thai RD to review the implications and applications of this change in their approach to income tax collections. I hope they will include us in their conversations, and I also hope they do not say thiongs like - 'we tax farangs, they have money'.  Mate - you know what a debarcle their broccilli law changes resulted in - 2 years later and it is still stuffed. 

 

But I will say this - the more we expats talk and complain - the more chance we have that they will make exemptions and allowances. Socila media silence achieves nothing - all the Thai partners complaining that their Farang is going to leave Thailand is a good thing. Clearly this Thai Govt is reactionary - I say give them something to react too.

[Yumthai]

On 11/25/2023 at 10:44 AM, Andrew Mind said:

you cannot gift funds without first paying income tax on them

 

This is your interpretation or can you provide a legal source?

AFAIK tax liability is on the person who receives the gift not the gifter (Anyway gifter can be totally out of reach from TRD).

[beammeup]

So loans, tax credits etc... is this not the same as a credit card? Can I just use my offshore credit card to remit money?

[jayboy]

2 hours ago, TroubleandGrumpy said:

all the Thai partners complaining that their Farang is going to leave Thailand is a good thing.

Yes, that should change the policymakers' minds.

[Neeranam]

2 hours ago, TroubleandGrumpy said:

But I will say this - the more we expats talk and complain - the more chance we have that they will make exemptions and allowances. Socila media silence achieves nothing - all the Thai partners complaining that their Farang is going to leave Thailand is a good thing. Clearly this Thai Govt is reactionary - I say give them something to react too.

Maybe, but maybe staying quiet is better and remain under the radar. 

Are the many resident foreigners who don't already pay tax on the income they take into Thailand?

 

[TroubleandGrumpy]

7 minutes ago, jayboy said:

Yes, that should change the policymakers' minds.

No - social media complaints and media stories can and do.

[The Cyclist]

2 hours ago, TroubleandGrumpy said:

Yes they are not targetting married or retired Expats.  But as per the law of unintended consequences, Expats will be 'caught' in their income tax net, unless they make exmptions and/or allowances.

 

Did you miss this part of the original announcement ?
 

Quote

Also exempt will be those who have been taxed in a foreign country that has a standing Double Tax Agreement with Thailand.

 

Any chance that you could calm down to a panic.

 

The only people who are going to get caught up in unintended consequences are people who have not been paying the correct taxes that they should have been paying

[TroubleandGrumpy]

7 minutes ago, Neeranam said:

Maybe, but maybe staying quiet is better and remain under the radar. 

Are the many resident foreigners who don't already pay tax on the income they take into Thailand?

Yes - for those in that position they are better off if it all remains quiet and they stay under the radar.

But the majority are not in that situation and we just want certainty.

[Morch]

4 minutes ago, TroubleandGrumpy said:

Yes - for those in that position they are better off if it all remains quiet and they stay under the radar.

But the majority are not in that situation and we just want certainty.

 

Hmmm....maybe the majority wants to stay under the radar, therefore not posting....

[Mike Lister]

16 minutes ago, TroubleandGrumpy said:

Yes - for those in that position they are better off if it all remains quiet and they stay under the radar.

But the majority are not in that situation and we just want certainty.

People wanting certainty in their lives, shouldn't live in Thailand

[jayboy]

15 minutes ago, TroubleandGrumpy said:

No - social media complaints and media stories can and do.

I don't think so in this case.It's been a theme for successive Thai governments to upgrade the quality of foreign tourists and residents, specifically discouraging the indigent and encouraging the wealthy.I can assure you that the concerns of some foreign residents fretting about paying a limited amount of income tax will not weigh heavy with Thai decision makers - however many whiny social media posts are made.

[TroubleandGrumpy]

3 minutes ago, The Cyclist said:

Did you miss this part of the original announcement ?
 

Any chance that you could calm down to a panic.

 

The only people who are going to get caught up in unintended consequences are people who have not been paying the correct taxes that they should have been paying

That comment is a generalised opinion - it is not a statement of fact. I know you want that satement to be a fact, but it is not.

Clearly you not understand how DTAs work. You (company) have to claim 'tax credits' on taxes already paid, and/or you have to provide proof that the money received here in Thailand comes from sources already taxed, and/or that the money received here in Thailand is exempt from taxes in Thailand. AND the Thai RD has to accept your 'proof' and the Thai RD has to agree that you are not liable for income taxes.  Unlike what some people think - DTAs are not a 'get out of jail card'. 

 

Here is a link to something that is no longer true from 1 January 2024. 

Do you need to pay income taxes when retiring in Thailand? | Thaiger (thethaiger.com) 

 

This one is more up to date - however what is deemed to be 'taxable income' (eg. is a pension) has not been declared.

Thailand Foreign Source Income Personal Tax - SHERRINGS

 

No one knows until Thai RD providses the details - but it would be wise to plan ahead, and stay across the issue. 

 

 

[Wrwest]

On 11/23/2023 at 9:55 PM, MrMuddle said:

Can someone put this into layman's terms please. Is Thailand expecting foreign retirees  who live here, pay tax on their pensions from their home countries?

My advice … not to worry if you are in the same boat as me. Not indigent (at least in my modest thinking. Retired to a Thailand in large measure to be able to afford a working middle class retirement unavailable to me in the USA. About half from SS (sadly rather low considering my teaching 41 years), a little less than half from long term retirement (no, not a pension as such, just fully vested funds). My thinking is that there will be: 1. court challenges here in Thailand, 2. court cases by those with far greater financial means than I fighting tooth and nail not to be double taxed, 3. several countries with Tax Treaties making sure those international agreements are honored. Sooo, currently? Jai yen, yen … The sky is not falling …

[Guderian]

Just go back home once a year and bring back as much cash as you'll need to last you. Then every month get your wife or GF to change a grand or two at an exchange booth, while keeping a very close eye on her, of course, so she doesn't do a runner with the proceeds. lol

[topt]

5 minutes ago, Guderian said:

Just go back home once a year and bring back as much cash as you'll need to last you. Then every month get your wife or GF to change a grand or two at an exchange booth, while keeping a very close eye on her, of course, so she doesn't do a runner with the proceeds. lol

Unfortunately a visit back home is liable to cost more than the potential tax and you are supposed to declare anything over $15k equivalent if bringing into Thailand.........

[The Cyclist]

24 minutes ago, TroubleandGrumpy said:

That comment is a generalised opinion

 

That comment comes from the original declaration from the Thai RD. So it is hardly a generalised opinion.

 

I have told you and others ( IMO ) income that has been taxed in your home Country is very unlikely  to be subject to Thai tax.

 

The only people ( IMO ) that is going to smacked in the goolies are people who have ( by means legal and by using loopholes ) avoided paying taxes.

 

32 minutes ago, TroubleandGrumpy said:

his one is more up to date - however what is deemed to be 'taxable income' (eg. is a pension) has not been declared.

 

No pensions haven't been mentioned because

 

Quote

A resident of Thailand* who, during the course of a preceding tax year derives assessable income under Section 40**, from a post or office of employment outside Thailand or a business outside Thailand or assets outside Thailand, shall pay tax, 

 

It again focus's on the initial 3 things mentioned in the original RD announcement

 

* Employment

* Business

* Other Assets

 

You do fully understand the meaning of this ?
 

Quote

Also exempt will be those who have been taxed in a foreign country that has a standing Double Tax Agreement with Thailand.

 

Stuff that has already been taxed  will be exempt for those that come from a Country that has a DTA with Thailand.

[TroubleandGrumpy]

2 hours ago, Mike Lister said:

People wanting certainty in their lives, shouldn't live in Thailand

Fair enough overall - but not when it comes to income taxes.  As Capone and many others have found out the hard way, they are as serious as not wearing a helmet when riding a motorbike. You can ignore them all you want, but the 'penalty' when 'caught out' can be very bad for both - not worth the risk IMO.  But yes the is never certainty here - and it is up to you whether you care or not.

[TroubleandGrumpy]

2 hours ago, jayboy said:

I don't think so in this case.It's been a theme for successive Thai governments to upgrade the quality of foreign tourists and residents, specifically discouraging the indigent and encouraging the wealthy.I can assure you that the concerns of some foreign residents fretting about paying a limited amount of income tax will not weigh heavy with Thai decision makers - however many whiny social media posts are made.

Yes that is true - but there are also thousands of Thai wives/partners also expressing their opinions.

[TroubleandGrumpy]

1 hour ago, The Cyclist said:

That comment comes from the original declaration from the Thai RD. So it is hardly a generalised opinion.

 

I have told you and others ( IMO ) income that has been taxed in your home Country is very unlikely  to be subject to Thai tax.

 

The only people ( IMO ) that is going to smacked in the goolies are people who have ( by means legal and by using loopholes ) avoided paying taxes.

 

No pensions haven't been mentioned because

 

It again focus's on the initial 3 things mentioned in the original RD announcement

* Employment

* Business

* Other Assets

 

You do fully understand the meaning of this ?

 

Stuff that has already been taxed  will be exempt for those that come from a Country that has a DTA with Thailand.

 

Plus re-read that part above in my post which clearly states under the Thai RD latest directive, " 2. ALL rulings, regulations, orders, response to consultations or practices that are contrary to or inconsistent with this Instruction are cancelled: and 3. This instruction shall apply to foreign sourced income brought into Thailand from 1st January 2024 onwards."  What that means is that all bets are off and everything starts again from scratch. However, the Thai RD initial directive in September and all since then, including the one above provided on 20 November 2023, are likely to be challenged in the Courts. 

 

Mate - let me finish with this - I hope you are right - but you might be wrong - I will plan accordingly.

 

[The Cyclist]

13 minutes ago, TroubleandGrumpy said:

2. ALL rulings, regulations, orders, response to consultations or practices that are contrary to or inconsistent with this Instruction are cancelled: and 3. This instruction shall apply to foreign sourced income brought into Thailand from 1st January 2024 onwards.

 

Do you think that the above could possibly pertain to the loopholes that they are currently trying to close. And is nothing whatsoever to do with income remitted to Thailand from 01 Jan 2024 that has already been taxed in the source Country ?
 

This is not an exercise in trying to catch people who have already paid tax. It is an exercise to catch people who are not paying tax.

[JackGats]

On 11/23/2023 at 9:06 PM, Mike Lister said:

"In the future".....that people can see such things is truly amazing, presumably an AI system will calculate such tax!   

 

Ah Mr Farang, we assess you owe us X Baht tax this year because you have a rental property/investment account in the UK that will have earned Y income, okay? 

 

If anyone believes that will come to pass, I own a bridge that's for sale in San Francisco.

 

 

 

 

Our home countries (UK, DE, FR, you name them) are perfectly able, if they so want, to collect every last tax penny on money we hold in any country in the World, so why would Thailand be per se unable to do so? To bank on the Thai bungling because they've been known to bungle in other fields is of little help. Would you feel comfortable using hard drugs in Thailand just because Thai police is much less efficient than US or UK police at catching the occasional hard drug user?