Taxation of Ex-Pats pensions etc.

[Mike Lister]

18 minutes ago, Mike Teavee said:

I get the 190K (> 65), 60K(personal allowance for everybody) & 150k (taxed at 0%) but can I ask what the 100K allowance is for? 
 

I get 60K +25K (Health Insurance) +150K = 235K 

 

 

Sorry I missed this!

 

The 100k is something that others pointed me towards, it's a deduction in my case equal to 50% of the pension received (yes, even overseas pensions) or a max of 100k. There is a corresponding deduction for people who work that equals a similar amount.

[oldcpu]

On 12/19/2023 at 11:31 AM, Robin said:

So much specultion.  Until the definitive law is passed  (on jan2 2024?)  we do ot know hiw this will pan out, so I think poinles to spennd t much energy working out ways of avoiding something that might not hppen.

 

I agree that its very difficult at this time to be certain anyone's speculation on this will be accurate.

 

On 12/19/2023 at 11:31 AM, Robin said:

As a precaution, I hve transferred wht spare cash I have saved in oerseas bank, o my Thailbank account. 

 

A number of us are doing that - but as noted there is some speculation involved here as well (that its a safe approach) although my hope also is that bringing some additional funds to Thailand before the end of this calendar year might be a partially mitigating approach if any tax law is implemented in an unsatisfactory manner.

 

On 12/19/2023 at 11:31 AM, Robin said:

My personal opinion FWIW is that this will prove too difficult to enforce, so will be forgotten or drastically modified.

 

My view is that it is not simple to enforce, but also that it is not too too difficult. 

 

Expat friends who have been here for decades, advised me there was a time when an expat (on a long term stay ( > 180 days)) in Thailand, would leave Thailand, they had to obtain some taxation document first, and have that available to show immigration upon departure from Thailand.  According to my friends, it was annoying to enforce, so it was eventually done away with.  So IMHO that aligns with the 'difficult to enforce' assessment.

 

But possibly more likely (and this is pure speculation) is that if there was indeed a determined attempt to tax expats who have been in Thailand > 180 days, then this should be done when they go for their extension of stay.  For any on an extension for long stay visa (such as Type-O or Type-OA) for Thailand, when they go for their 1-year extensions, they could be asked by immigration to show a Thailand tax document (if their passport indicates a stay > 180 days).  That would put the onus back on to immigration to force one to either prove they submitted a tax return, and if not, the expat could be denied an extension.

 

Again - pure speculation - but it might be a way to partially enforce such.

 

My hope is that none of this speculation comes to pass, and clarification to any such taxation exempts expats on long term stays ... especially my hope is to exempt those living off a pension.  Pushing expats to file tax returns (especially considering many may be covered by Double Tax Agreements with no tax to Thailand due) could needlessly massively increase the paperwork for Thailand's revenue service.    Maybe it could cost them as much to enforce this (especially for expats on pensions) as it would for any tax gained.

 

But that is a hope and has as much probability of happening as any of the speculations I noted.  

 

Maybe by next summer (2024) or possibly even as late as spring (2025) we will find out how this all is implemented.

[Hepbub]

I am 77 year old in Thailand with visa extension by marriage (to Thai lady) I get just over £1000 per month from uk state pension, this year I will exceed the tax threshold and will pay tax on my pension. I do not transfer my pension to Thailand, only transfer enough for household bills and some extra spending money, unless have some expensive outlay for repairs to car etc. How will the tax affect someone in my position? Will I have to account for all money I transfer to Thailand, and go through the Thai tax return?

[Mike Lister]

29 minutes ago, Hepbub said:

I am 77 year old in Thailand with visa extension by marriage (to Thai lady) I get just over £1000 per month from uk state pension, this year I will exceed the tax threshold and will pay tax on my pension. I do not transfer my pension to Thailand, only transfer enough for household bills and some extra spending money, unless have some expensive outlay for repairs to car etc. How will the tax affect someone in my position? Will I have to account for all money I transfer to Thailand, and go through the Thai tax return?

As a married over 65 year old, you are entitled to Thai exemptions and deductions of around 500,000 baht per year. You may find yourself needing to file a tax return at some point in the future, just because your income here exceeds the minimum but you will almost certainly not have to pay any tax, not at the levels you mention. 

[Mike Lister]

31 minutes ago, Hepbub said:

I am 77 year old in Thailand with visa extension by marriage (to Thai lady) I get just over £1000 per month from uk state pension, this year I will exceed the tax threshold and will pay tax on my pension. I do not transfer my pension to Thailand, only transfer enough for household bills and some extra spending money, unless have some expensive outlay for repairs to car etc. How will the tax affect someone in my position? Will I have to account for all money I transfer to Thailand, and go through the Thai tax return?

A SIMPLE GUIDE TO PERSONAL INCOME TAX IN THAILAND

8 January, 2024

Version 5, Rev B

 

1. This guide has been compiled in an attempt to provide readers with the simplest possible over view of Personal Income Tax (PIT) in Thailand. The scope of this document is limited to PIT.

 

2. You may have heard that new tax laws came into effect on 1 January this year, in fact, that is not true! The old tax rules still exist and remain valid, albeit just one minor change to them was made in November last year. Previously, anyone who earned money overseas and remitted it to Thailand in a different tax year, received that money free of Thai tax. That loop hole in the Revenue Department (RD) tax code has been extensively exploited by wealthy Thai’s and is now closed, hence, any money earned overseas and remitted to Thailand in any year, is now liable to Thai tax. The purpose of the new rule is to reduce tax avoidance. Unfortunately, it now means that overseas funds transfers by foreigners living in Thailand, also have an increased risk of being taxed.

 

3. This guide is an overview of the core parts of the PIT system. It is not designed to be exhaustive and it doesn’t cover all aspects of PIT, nor is it intended to  override anything produced by the Thai Revenue or specialist tax companies such as Sherrings or Mazzars. This guide also does not address all types of income or the rules relevant to people from every country. What this guide will provide is a starting point for readers to manage their own tax affairs and it will also provide most of the answers for those with simple tax affairs, especially the average pensioner.

 

4. There are also certain types of visa that fall outside of the RD tax code. The LTR visa for example received its tax exempt status by royal decree hence visa holders will not to be assessed for Thai tax and they are specifically excluded from this explanation.

 

5. Terminology: this document uses the word “assessable” often. Assessable in the context of this document means income that is liable to tax and must be included on a Thai tax return. Not all income is assessable, some is excluded from tax assessment by its very nature or because of the terms of a specific tax agreement.

 

6. Dual Tax Agreement/Double Tax Agreement (DTA): is an agreement between two countries that sets out which of the two countries has the right to tax specific types of income and all the associated rules. It’s purpose, in part, is to ensure that the same funds are not taxed twice and provides a means by which tax that is paid twice, can be recovered, how and from where. Note: If the taxpayer income is sourced in one country but the tax  payer is resident in a second country, use of a DTA can result in increased tax being paid, if the second country has a higher rate of tax on the type of income in question, than the other.

 

7. This document is being drafted in January 2024. Tax returns are due between now and 31 March 2024 which cover the period, 1 January 2023 and 31 December 2023. The tax changes affecting foreigners in Thailand came into effect 1 January 2024 which means this years income activity is not reportable until 181 days from the start of the year, for year round residents it will be due 1 January next year, 2025.

 

8. If you stay in Thailand for more than a cumulative 180 days, between 1 January and 31 December each year, you will be considered to be Tax Resident in Thailand during that year, regardless of the type of visa you have. It doesn’t matter that you may be Tax Resident in your home country or elsewhere or that you pay tax in those countries, Thailand will still regard you as Tax Resident. Tax Residency and Immigration status (and the visa you hold) are different things. Tax residency is based solely on the number of days you spend in Thailand and where you are at midnight on each day.

 

9. Because you are Tax Resident, YOU must review your income each year to determine if it is regarded as assessable to tax in Thailand, nobody else will do this for you. If your income does not exceed 120,000 baht per year, you do not need to file a tax return (60,000 baht if your only income is bank interest paid to you by a bank in Thailand). If your income is over 120,000 baht per year, you must file a Thai tax return between 1 January and 31 March.

 

10. Your income in Thailand is defined as any money paid to you inside Thailand, as well as, any money you receive from overseas, both types are potentially assessable income for Tax Residents. There are many types of income that can be classed as assessable, the Thai RD lists some of them and is linked below, however, the list is not exhaustive:

https://sherrings.com/personal-income-tax-in-thailand.html#:~:text=Section%2040%20of%20Thailand's%20Revenue,Pensions%3B%20and

 

11. There are also classes or types of income that the RD does not regard as assessable and these are also linked below:

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

 

12. Income that is derived from  within Thailand is fairly clear, if you work and have a job and you are a Tax Resident, your income is assessable for tax.  Interest that is paid to you on Thai bank accounts is regarded as income, as is income from investments such as stocks and bonds within Thailand.  You should note that if you are generating income by working while staying in Thailand, it is (and has always been) irrelevant where that money is paid and whether you bring the money into the country or keep it offshore. That money arises in Thailand hence it is taxable here.

 

13. It is not possible to give the same blanket rule to everyone to determine whether income is assessable or not because of the variable factors involved. Overseas income has to pass several tests to determine if it is assessable to Thai tax or not. It is still early days and all the rules are not yet clear. It has been said that tax residents who import funds from countries that have a DTA with Thailand, will not be effected. Exactly how that will work leaves many questions unanswered hence this document attempts to look at only the most popular types of income based on what is known at present. This document does not speculate as to what may happen in the future, other than in the segment at the end concerning likely future Immigration rules.

 

14. If we take the simplest type of income and say that you transfer personal savings from overseas to Thailand and those savings  were earned before 1 January 2024, those funds are not assessable. But savings earned after that date are, hence the date when the income is earned is extremely important. A word of caution, you may be asked to provide proof that savings were earned before 1 January 2024.  

 

15. Another common type of income is pensions, which can be complicated, depending on the type of pension and the country that it comes from. The country of origin is important because there are over 60 different types of Dual Tax Agreements, sometimes called Double Taxation Agreements (DTA’s), between Thailand and those 60+ countries and each one is different. As a general rule, most private or company pensions from most countries appear to be assessable here but YOU will need to confirm that yours is or is not. If that is true, private and company pension income IS assessable income in Thailand.

 

16. US Social Security payments, a form of pension paid to some older people, can only be taxed by the US under DTA rules and Thailand is forbidden from taxing them, this means those payments are NOT assessable income. UK State pension on the other hand is not covered by a DTA so it is assessable income in Thailand whilst UK Government or Civil Service pensions are not!

 

17. The proceeds from the sale of a capital item such as overseas property, where funds are remitted to Thailand, is one popular source of funds, the sale of some investment products such as stocks, shares and bonds is another. Those proceeds typically comprise two parts, capital and profit. If the capital was acquired before 1 January 2024, it is free of Thai tax. One way to separate capital and profit may bee to have an official valuation or statement that is dated 1 January 2024 since anything earned before that date, is not assessable. Also, if the profit has been the subject of a Capital Gains return in the home country, that also may be free of Thai tax but this cannot be guaranteed at this time, until things are made more clear and are once again subject to the terms of any DTA. YOU will need to review the DTA between Thailand and your home  country to fully understand what particular clauses affect you.

 

18. It appears as though most property rental income that is remitted to Thailand is considered to be assessable income and is taxable here, unless of course it has been taxed in the home country and/or the DTA prohibits its taxation (which seems unlikely).

 

19. YOU are responsible for determining if your assessable income in Thailand exceeds the threshold and means you must file a tax return. That assessable income might comprise, pension payments, investment income, rental income or any of the other types of income listed in the link above. If you have assessable income of over 120,000 baht per year, you must file a tax return (60,000 baht if your sole source of assessable income is bank interest paid in Thailand).

 

20. Before you can file a tax return in Thailand, you need to acquire a Tax Identification Number or TIN from the RD offices in your area. You will need your passport, a valid and current visa or extension and in many areas, a Certificate of Residency from the Immigration Department.

 

21. Completing a tax return is a simple affair for most people, if you have difficulty, the Revenue Department staff are extremely helpful. Tax returns must be filed between 1 January and 30 March each year, if you file later than that, penalties will apply.

 

22. Thai tax is layered in bands and is payable based on the amount of assessable income that  falls within each band and are shown and linked below:

 

Taxable Income per year(Baht) Tax rate

0 – 150,000 Exempt

150,000 – 300,000 5%

300,000 – 500,000 10%

500,000 – 750,000 15%

750,000 – 1,000,000 20%

1,000,000 – 2,000,000 25%

2,000,000 – 4,000,000 30%

Over 4,000,000 35%

https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Payroll/Personal-Income-Tax

 

23. The Thai tax system contains a series of Allowances, Deductions and Exemptions that will help you reduce your tax bill and they are very generous. It is easily possible for the average expat foreign retiree to reduce their taxable income by 500,000 baht or more each year. For example, a retiree aged 65 years of age, married and living here full  time, supporting a Thai wife who has no income and doesn’t file tax return, is allowed the following:

 

a. Personal Allowance for self - 60,000

b. Personal Allowance for wife - 60,000

c. Over age 65 years exemption - 190,000

d. 50% of pension income received, up to 100k - 100,000

e. In addition, the first 150,000 of assessable income is zero rated and free of tax

 

24. Additional deductions and allowances exist for health or life insurance premiums paid in Thailand. A complete list of deductions, allowances and exemptions can be found here

https://www.rd.go.th/english/6045.html  or from Sherrings below.

https://sherrings.com/personal-tax-deductions-allowances-thailand.html

 

25. The Thai Revenue  tax filing system is online but is only available in Thai language at present. The tax forms are however available in English and they can be downloaded from the link below. CAUTION, the forms are updated every year and the 2023/24 forms for full year PIT are NOT yet available:

https://www.rd.go.th/english/63902.html

 

26. A simple sample completed tax form for a person aged over 65 years is shown below as a guide.

27. https://aseannow.com/topic/1312534-taxation-of-ex-pats-pensions-etc/?do=findComment&comment=18532562

 

28. Tax filing in Thailand is based on the honour system, it relies on you declaring all the right information every year and there are severe penalties for evading Thai tax. It would be foolish and a gross under estimation of RD capabilities to think  that doing nothing and keeping a low profile means you should ignore Thai taxation. Very few sane people in the US and UK ignore the tax authorities who tend to have a long reach. It cannot be ruled out that at some point, a link may be established between tax filings and visa extensions. A law already exists that requires foreigners to apply for Tax Clearance Certificates before being allowed to depart the country but it is not being enforced currently. These things are possible because similar things have been adopted in several countries in the past, including the US.

 

29. The RD tax return requires taxpayers to report assessable income, the tax rules even list some types of income that are not assessable to help in this. In addition, some types of income, from some locations, for some nationalities, are also known to be not assessable.

 

30. If a taxpayer is certain that some of their income is not assessable, they may not want to declare it on their Thai tax return.  Alternatively they may wish to ask the RD or employ specialist tax advisor's. It should go without saying that some taxpayers may try to suggest that some of their income is not assessable when really they don’t know for sure, or, they know that it is and say it that it isn’t, a sort of, chancing your arm and hoping you wont get found out. In that situation, the RD will not look favourably on such people and penalties are likely.

 

31. There are several sources of detailed tax information and these web sites are linked below:

https://www.rd.go.th/english/6045.html

https://sherrings.com/personal-income-tax-in-thailand.html

https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Payroll/Personal-Income-Tax

 

*** END ***

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Hepbub]

Thanks for the info, I had read that but am still confused, as I don't have regular bank transfers, and in many cases just draw from ATM with uk bank card how does anyone know what tax I will pay?

[Mike Lister]

1 hour ago, Hepbub said:

Thanks for the info, I had read that but am still confused, as I don't have regular bank transfers, and in many cases just draw from ATM with uk bank card how does anyone know what tax I will pay?

ATM with drawls from overseas accounts in Thailand are income under Thai tax rules, whether or not you are tax resident however is unclear.

[kiwikeith]

On 12/4/2023 at 3:24 PM, Geir Rasch said:

I have 100k deduction on pension, 60k personal deduction, 190k age-deduction plus deduction for wife and health insurance. I do not pay in to any pension plan in Thailand or overseas. I have no morgage in Thailand which would give deduction on payd interest up to 100k.

 

Here is part of the New Zealand double tax agreement  regarding pensions, just downloaded it will help NZ expats

double tax agreement NZ pensions.pdf see page 23

[kiwikeith]

1 hour ago, kiwikeith said:

 

Here is part of the New Zealand double tax agreement  regarding pensions, just downloaded it will help NZ expats

double tax agreement NZ pensions.pdf see page 23

 

1 hour ago, kiwikeith said:

 

Here is part of the New Zealand double tax agreement  regarding pensions, just downloaded it will help NZ expats

double tax agreement NZ pensions.pdf see page 23

Heres the link to  the British and Ireland agreement  https://www.rd.go.th/fileadmin/download/nation/english_e.pdf article 19 see pages 25,26,27,28

[Mike Lister]

4 minutes ago, kiwikeith said:

 

Heres the link to  the British and Ireland agreement  https://www.rd.go.th/fileadmin/download/nation/english_e.pdf article 19 see pages 25,26,27,28

Thank you for both of those things, that's extremely helpful.

[jayboy]

10 hours ago, Mike Lister said:

ATM with drawls from overseas accounts in Thailand are income under Thai tax rules

 

Not if the account is funded prior to 1.1.24.

 

However even if the account was funded through current year income (ie assessable for Thai tax purposes), I don't think any entirely sane person would include it in their Thai tax return.

[Mike Lister]

1 minute ago, jayboy said:

 

Not if the account is funded prior to 1.1.24.

 

However even if the account was funded through current year income (ie assessable for Thai tax purposes), I don't think any entirely sane person would include it in their Thai tax return.

agreed

[EVENKEEL]

My opinion this is a dog and pony show as usual. Untwist your panties, take a deep breath, have a beer or whatever. These people are after the big money, not the skint foreigners. Can you imagine the turmoil if you bring in your home country tax return for these folks to peruse. Even I don't understand all of it which is why I hire a tax professional.

 

For this to work the Embassies of all nations needs to be a part of this to help with paperwork.

[jacob29]

On 1/9/2024 at 8:45 AM, jayboy said:

However even if the account was funded through current year income (ie assessable for Thai tax purposes), I don't think any entirely sane person would include it in their Thai tax return.

It depends on your risk tolerance. If you're hit with an audit, and you're asked how you fund your living expenses - that's when things may get awkward for people who officially have indicated 0 taxable income.

 

Enforcement doesn't happen at scale (in any country), it's the audits you need to concern yourself with. Not sure how in depth Thai audits are, but I know in other countries you don't want to mess around.

[jacob29]

On 1/9/2024 at 8:51 AM, EVENKEEL said:

For this to work the Embassies of all nations needs to be a part of this to help with paperwork.

Other countries seem to manage just fine, Thailand is not attempting anything new or radical here.

 

It's hard to find details on exactly how other countries that tax worldwide income go about enforcement, so I don't know how it works. As noted in the my previous post, presumably little to nothing is checked until someone gets audited.

[jayboy]

6 hours ago, jacob29 said:

It depends on your risk tolerance. If you're hit with an audit, and you're asked how you fund your living expenses - that's when things may get awkward for people who officially have indicated 0 taxable income.

 

 

Once again common sense is needed.We are talking in the main about retired expatriates on average to low incomes.It is almost inconceivable that the Thai RD will be hitting this category with audits.So we start from that base.Even in the hypothetical case of an audit there would be no repercussions from the occasional use of a foreign credit card - not least because it would not necessarily show up in any audit trail.

 

If all resident retirees were compelled to submit income tax returns, the matter might be worth reviewing again - but even then the risk in my view is negligible.

 

On this forum there are a great many people who are understandably concerned.There's are a lot of information which should in most instances reassure them - and we will have to see how the next year pans out.

[MPoll]

On 1/8/2024 at 8:23 PM, Mike Lister said:

A SIMPLE GUIDE TO PERSONAL INCOME TAX IN THAILAND

8 January, 2024

Version 5, Rev B

 

4. There are also certain types of visa that fall outside of the RD tax code. The LTR visa for example received its tax exempt status by royal decree hence visa holders will not to be assessed for Thai tax and they are specifically excluded from this explanation.

 

 

Thanks for this guide. I emailed Sherrings to double check on your point #4. They confirmed that LTR visa holders, except the Highly Skilled Professional category, are exempt from paying taxes on money transferred into Thailand and also said we do not have to file a tax return.

 

Yeah!

[jacob29]

7 hours ago, jayboy said:

Once again common sense is needed.We are talking in the main about retired expatriates on average to low incomes.

 

If you're on a low income, your tax liability will be negligible (along with your audit risk), so it's hard to see why you would be bothered either way. Even if you're audited, and get hit with penalties (e.g. 100% fine), they likely won't be significant.

 

Someone with high income on the other hand. I believe they're the people who are primarily concerned. 

 

Agree occasional use of ATM withdrawal being missed, that could be framed as a genuine oversight, is a non issue. I expect a lot of people will rather take your comment to mean funding most to all your expenses with ATM withdrawals is a very low risk venture, and I'm not so sure that will be the case.

[jayboy]

1 hour ago, jacob29 said:

Someone with high income on the other hand. I believe they're the people who are primarily concerned. 

 

High income types (lets use the LTR definition of $ 80,000 per year though I think that's on the low side) are very few in the expatriate retired category.Those that are usually aren't residents for more than half the year and in any case are sophisticated people who have decent tax advice. I doubt whether they are particularly concerned because unlike typical pensioners, can easily structure their remittance from pre-2024 wealth and hence non-taxable.

1 hour ago, jacob29 said:

I expect a lot of people will rather take your comment to mean funding most to all your expenses with ATM withdrawals

 

Then they assume wrong.I was thinking primarily of the use of foreign credit cards for Thailand related goods and services - hotels, flights and the like.For the rather sad thought of some pensioners using ATMs to fund Thailand expenses, I doubt whether most of these will be filing tax returns at all.By definition they will be at the lower end of the income scale.It is anyway at this stage just nonsense to suggest using ATMs will carry any kind of risk.This is a tourist economy, remember?

[Maestro]

This taxation subject is already discussed elsewhere and is out of plase in the visa forum.