Interpretation of the new tax rules according to PKF Nuobello

[Startmeup]

In the midst of swirling news and complex updates about tax regulations in Thailand, we recognize the importance of clarity and simplicity. That’s why PKF Nuobello, a global accounting firm, has carefully distilled the latest tax updates raised in Paw 161/2566, Paw 162/2566, and Royal Decree 743 (RD 743) into straightforward, bite-sized points.

1. The 180-Day Rule: Tax Residency in Thailand:
Stay Duration Matters: If you’re in Thailand for more than 180 days in a calendar year, you’re a tax resident. Less than 180 days? You’re not considered a tax resident for that year.

2. Offshore Income & Taxation: Understanding Paw 161/2566.
Income Remitted to Thailand: As a tax resident, given the top marginal rate of income tax in Thailand is 35%, the implications are such that offshore income remitted to Thailand will likely be taxed at 35%.

3. Earnings vs. Savings
Currently, there’s no distinction between these for tax purposes.

4. Recent Update on 20 November 2023 – good news !!
On 20 November 2023, the Revenue Department issued the Department Instrument No. Paw 162/2566 to further clarify that the foreign-sourced income to be subject to tax will not include the foreign-sourced income deriving before 2024 by any individual tax resident.

For other ways to manage your tax position, PKF Nuobello suggests mitigating the tax burden of Paw 161/2566 for foreign-sourced income derived after 1 January 2024 as follows:

Gifts: Certain gifts are exempt from personal income tax under the Thailand Revenue Code. There are specific rules and amounts whereby gifts are not subject to personal income tax For example gifts received by ascendants and descendants, under religious, educational, or public benefit purposes or a moral obligation or gift made in a ceremony or on occasion in accordance with tradition or established customs.

Long-Term Residents Visa Benefits:
Section 5 of RD 743 offers tax exemptions on certain offshore incomes (encompassing employment, business, and property income from abroad) received in a previous year and subsequently brought into Thailand, without a time limit on income derivation. These exemptions apply to the following categories of LTRs:
– Wealthy Pensioners;
– Wealthy global citizens; and
– Professionals working from Thailand.

Invest in Thai Companies:
Tax residents can make investments in cash-generating Thai companies that provide a steady flow of income in Thailand. The investment into the company will not be subject to tax but the annual earnings will be subject to Thai personal income tax when distributed to the Tax Resident. Depending upon a shareholder’s structure, other laws and regulations should be taken into account.

Foreign Credit Card Payments:
If the transaction is paid by a foreign credit card (from a non-Thai bank account), the settlement made outside should not be deemed a fund remittance into the country by Thai Tax Residents.

Need to personalize your tax strategy?
We know, tax talk can be as thrilling as watching paint dry. However managing your tax affairs is crucial, and who better to make it interesting than us? Remember, navigating tax laws doesn’t have to be a solo journey.

 

[The Cyclist]

8 minutes ago, Startmeup said:

Foreign Credit Card Payments:
If the transaction is paid by a foreign credit card (from a non-Thai bank account), the settlement made outside should not be deemed a fund remittance into the country by Thai Tax Residents.

 

ATM transactions leap from an estimated 16 million a day to 16 million an hour 

[Dan O]

11 minutes ago, Startmeup said:

In the midst of swirling news and complex updates about tax regulations in Thailand, we recognize the importance of clarity and simplicity. That’s why PKF Nuobello, a global accounting firm, has carefully distilled the latest tax updates raised in Paw 161/2566, Paw 162/2566, and Royal Decree 743 (RD 743) into straightforward, bite-sized points.

1. The 180-Day Rule: Tax Residency in Thailand:
Stay Duration Matters: If you’re in Thailand for more than 180 days in a calendar year, you’re a tax resident. Less than 180 days? You’re not considered a tax resident for that year.

2. Offshore Income & Taxation: Understanding Paw 161/2566.
Income Remitted to Thailand: As a tax resident, given the top marginal rate of income tax in Thailand is 35%, the implications are such that offshore income remitted to Thailand will likely be taxed at 35%.

3. Earnings vs. Savings
Currently, there’s no distinction between these for tax purposes.

4. Recent Update on 20 November 2023 – good news !!
On 20 November 2023, the Revenue Department issued the Department Instrument No. Paw 162/2566 to further clarify that the foreign-sourced income to be subject to tax will not include the foreign-sourced income deriving before 2024 by any individual tax resident.

For other ways to manage your tax position, PKF Nuobello suggests mitigating the tax burden of Paw 161/2566 for foreign-sourced income derived after 1 January 2024 as follows:

Gifts: Certain gifts are exempt from personal income tax under the Thailand Revenue Code. There are specific rules and amounts whereby gifts are not subject to personal income tax For example gifts received by ascendants and descendants, under religious, educational, or public benefit purposes or a moral obligation or gift made in a ceremony or on occasion in accordance with tradition or established customs.

Long-Term Residents Visa Benefits:
Section 5 of RD 743 offers tax exemptions on certain offshore incomes (encompassing employment, business, and property income from abroad) received in a previous year and subsequently brought into Thailand, without a time limit on income derivation. These exemptions apply to the following categories of LTRs:
– Wealthy Pensioners;
– Wealthy global citizens; and
– Professionals working from Thailand.

Invest in Thai Companies:
Tax residents can make investments in cash-generating Thai companies that provide a steady flow of income in Thailand. The investment into the company will not be subject to tax but the annual earnings will be subject to Thai personal income tax when distributed to the Tax Resident. Depending upon a shareholder’s structure, other laws and regulations should be taken into account.

Foreign Credit Card Payments:
If the transaction is paid by a foreign credit card (from a non-Thai bank account), the settlement made outside should not be deemed a fund remittance into the country by Thai Tax Residents.

Need to personalize your tax strategy?
We know, tax talk can be as thrilling as watching paint dry. However managing your tax affairs is crucial, and who better to make it interesting than us? Remember, navigating tax laws doesn’t have to be a solo journey.

 

Too bad they didn't bother mentioning DTA's with some 60 countries that override some\many fears that are floating around needlessly. If you dont bother to research the DTA of your country (if there is one ) then needless speculation is all this is. This seems more an add for a service than information thats worthwhile. these threads are plentiful and none have any final answers yet as they haven't been completely ironed out.

 

 

[topt]

i'm all for straightforward bite sized chunks.......as long as they are not then misleading......

1 hour ago, Startmeup said:

2. Offshore Income & Taxation: Understanding Paw 161/2566.
Income Remitted to Thailand: As a tax resident, given the top marginal rate of income tax in Thailand is 35%, the implications are such that offshore income remitted to Thailand will likely be taxed at 35%.

So nothing about the graduated tax bands and that 35% is the top rate payable on over 4m baht.....not including allowances. (or even 5m for 2023 according to a Mazars link.... https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Payroll/Personal-Income-Tax )

Edited November 28, 2023 by topt

[ukrules]

3 minutes ago, topt said:

or even 5m for 2023 according to a Mazars link

 

Yes, that's quite an ommission, I suspect most people will transfer less than 2 or 3 million a year, perhaps not their customers though - however they will still benefit from every lower rated band before the 35% kicks in.

 

 

[J Branche]

Focus on your tax strategy.

 

Understand that if you have a partner (Each) is allowed the same basic (Single, Married, Health, Life Ins (Thai Comp) deductions.

Your income is Not combined for tax determination. (You start at lower tax bracket when income is more equal)

 

Focus on reducing your foreign income (non retirement, pension, social security)brought into Thailand. (If you are close to the next tax bracket (5%)increase, strategize ways to meet the lower tax bracket amounts.

Review your countries dual tax agreement.

A tax resident is allowed deductions, (single payer, health insurance (Thai Comp), life insurance (Thai Comp), some gifts to (Education)certain people)

Verify with Thai Tax Expert

Discuss if Business deductions (expenses) are allowed for foreign sourced income.

 

If I am a US citizen and I am able to equal the tax rate paid in US or reduce the foreign income to only pay the additional tax rate to 5% the Thai Tax changes become less concerning.

 

From what is Currently being interpreted for Foreign sourced income, a Foreigner, bringing foreign income into Thailand may not be a tax resident until residing for 180 days.  Transferring income by end of 2023 is important.  

 

The Wealthy Thais are paying experts to strategize to reduce their Tax burden.  I believe their will be more answers in the Jan, Feb 2024 to help navigate the tax laws Before the 180 days in Thailand (Tax) Residence is met.

 

[Mike Lister]

Thread number 26 on the same subject, can it be closed please?

[ukrules]

56 minutes ago, Mike Lister said:

Thread number 26 on the same subject, can it be closed please?

No, leave it open.

[topt]

4 hours ago, ukrules said:

No, leave it open.

pray tell why?

[keithsimmonds]

Maybe being classed a Tax resident (retired here)will also make me a Resident when it comes to playing Golf...or visiting "Tourist Attractions"

Edited December 31, 2023 by keithsimmonds

[billd766]

On 11/28/2023 at 3:08 PM, Startmeup said:

In the midst of swirling news and complex updates about tax regulations in Thailand, we recognize the importance of clarity and simplicity. That’s why PKF Nuobello, a global accounting firm, has carefully distilled the latest tax updates raised in Paw 161/2566, Paw 162/2566, and Royal Decree 743 (RD 743) into straightforward, bite-sized points.

1. The 180-Day Rule: Tax Residency in Thailand:
Stay Duration Matters: If you’re in Thailand for more than 180 days in a calendar year, you’re a tax resident. Less than 180 days? You’re not considered a tax resident for that year.

2. Offshore Income & Taxation: Understanding Paw 161/2566.
Income Remitted to Thailand: As a tax resident, given the top marginal rate of income tax in Thailand is 35%, the implications are such that offshore income remitted to Thailand will likely be taxed at 35%.

3. Earnings vs. Savings
Currently, there’s no distinction between these for tax purposes.

4. Recent Update on 20 November 2023 – good news !!
On 20 November 2023, the Revenue Department issued the Department Instrument No. Paw 162/2566 to further clarify that the foreign-sourced income to be subject to tax will not include the foreign-sourced income deriving before 2024 by any individual tax resident.

For other ways to manage your tax position, PKF Nuobello suggests mitigating the tax burden of Paw 161/2566 for foreign-sourced income derived after 1 January 2024 as follows:

Gifts: Certain gifts are exempt from personal income tax under the Thailand Revenue Code. There are specific rules and amounts whereby gifts are not subject to personal income tax For example gifts received by ascendants and descendants, under religious, educational, or public benefit purposes or a moral obligation or gift made in a ceremony or on occasion in accordance with tradition or established customs.

Long-Term Residents Visa Benefits:
Section 5 of RD 743 offers tax exemptions on certain offshore incomes (encompassing employment, business, and property income from abroad) received in a previous year and subsequently brought into Thailand, without a time limit on income derivation. These exemptions apply to the following categories of LTRs:
– Wealthy Pensioners;
– Wealthy global citizens; and
– Professionals working from Thailand.

Invest in Thai Companies:
Tax residents can make investments in cash-generating Thai companies that provide a steady flow of income in Thailand. The investment into the company will not be subject to tax but the annual earnings will be subject to Thai personal income tax when distributed to the Tax Resident. Depending upon a shareholder’s structure, other laws and regulations should be taken into account.

Foreign Credit Card Payments:
If the transaction is paid by a foreign credit card (from a non-Thai bank account), the settlement made outside should not be deemed a fund remittance into the country by Thai Tax Residents.

Need to personalize your tax strategy?
We know, tax talk can be as thrilling as watching paint dry. However managing your tax affairs is crucial, and who better to make it interesting than us? Remember, navigating tax laws doesn’t have to be a solo journey.

 

It looks as though PKF Nuobello, carefully distilled the latest tax updates and completely and, perhaps conveniently, omitted to mention that if you are to pay income tax in Thailand, you are also allowed to claim allowances against that income. Information and perhaps disinformation as well can be found on several existing threads, which my be more accurate than this particular thread.

[Neeranam]

On 11/28/2023 at 3:08 PM, Startmeup said:

In the midst of swirling news and complex updates about tax regulations in Thailand, we recognize the importance of clarity and simplicity. That’s why PKF Nuobello, a global accounting firm, has carefully distilled the latest tax updates

More likely they are wanting business from Expats who don't understand that the new tax rules is targeting Thais.

[Neeranam]

On 12/31/2023 at 12:32 PM, keithsimmonds said:

Maybe being classed a Tax resident (retired here)will also make me a Resident when it comes to playing Golf...or visiting "Tourist Attractions"

Being a resident does get me cheaper golf in some Hua Hin courses. However, not as much as  showing my Thai ID, where I get more discount for being Thai. Paying tax alone has no impact.

[Neeranam]

On 11/28/2023 at 3:18 PM, The Cyclist said:

 

ATM transactions leap from an estimated 16 million a day to 16 million an hour 

Indeed, there's no way they can keep track of foreign income coming in here. Also, we can gift 20  million baht a year to wife, kids etc. This tax change is targeting very very wealthy Thais. 

[JimGant]

On 11/28/2023 at 3:08 PM, Startmeup said:

That’s why PKF Nuobello, a global accounting firm, has carefully distilled the latest tax updates raised in Paw 161/2566, Paw 162/2566, and Royal Decree 743 (RD 743) into straightforward, bite-sized points.

 

PKF Nuobello issues two points that says they are staffed by uninformed personnel. User beware.

 

First Point:

Quote

As a tax resident, given the top marginal rate of income tax in Thailand is 35%, the implications are such that offshore income remitted to Thailand will likely be taxed at 35%.

 Good grief. There would never be, nor is there any realistic discussion about, a flat 35% "final tax at source" on remitted income, or in the confusion, all remitted cash flows (see next point). If remitted income is going to go through the Thai tax process, it will be in the orderly laddered tax bracket method -- where, yes, 35% is the top rate -- but under the laddered bracket method, your effective tax rate would never reach 35%.

 

Second point:

Quote

 Earnings vs. Savings
Currently, there’s no distinction between these for tax purposes.

 Of course there is. There's just no way to parse out from a wired cash flow into Thailand what part is income, and what part is savings. The new proposed reg addresses taxing remitted ASSESSABLE INCOME -- not taxing after-tax capital savings cash flows into Thailand. But -- and here's why it's taking so long to sort out -- it's impossible to differentiate income from capital in a cash flow from a foreign bank. Yes, if that cash flow was a direct deposit of your Boeing pension check, then, yes -- prima facie on taxability (subject to DTA, of course). Otherwise, a Wise transfer from my savings account, primarily funded with inheritance monies, is going to be impossible to parse income from savings.

 

Anyway, PKF Nuobello gets a thumbs down, at least from me.

[Everyman]

24 minutes ago, JimGant said:

 

PKF Nuobello issues two points that says they are staffed by uninformed personnel. User beware.

 

First Point:

 Good grief. There would never be, nor is there any realistic discussion about, a flat 35% "final tax at source" on remitted income, or in the confusion, all remitted cash flows (see next point). If remitted income is going to go through the Thai tax process, it will be in the orderly laddered tax bracket method -- where, yes, 35% is the top rate -- but under the laddered bracket method, your effective tax rate would never reach 35%.

 

Second point:

 Of course there is. There's just no way to parse out from a wired cash flow into Thailand what part is income, and what part is savings. The new proposed reg addresses taxing remitted ASSESSABLE INCOME -- not taxing after-tax capital savings cash flows into Thailand. But -- and here's why it's taking so long to sort out -- it's impossible to differentiate income from capital in a cash flow from a foreign bank. Yes, if that cash flow was a direct deposit of your Boeing pension check, then, yes -- prima facie on taxability (subject to DTA, of course). Otherwise, a Wise transfer from my savings account, primarily funded with inheritance monies, is going to be impossible to parse income from savings.

 

Anyway, PKF Nuobello gets a thumbs down, at least from me.

 

Here we are in 2024 and nothing has changed. It was all BS.

[Startmeup]

2 hours ago, Everyman said:

 

Here we are in 2024 and nothing has changed. It was all BS.

It won't go ahead. If it continues to be pushed it will be dragged through the courts for years by rich folk. Im treating it as a nothing burger because qualified Thai tax advisors don't even know whats happening. 

Edited January 2 by Startmeup

[topt]

5 hours ago, Everyman said:

 

Here we are in 2024 and nothing has changed. It was all BS.

What did you expect to see........the changes don't cause anything to happen until tax returns are filed, or not, from 1/01/25...........

For people who may want to make themselves non tax resident they have another 177 days or whatever.

 

You weren't really expecting any more clarity before 1/01/24 were you....... 

[Everyman]

16 hours ago, topt said:

What did you expect to see........the changes don't cause anything to happen until tax returns are filed, or not, from 1/01/25...........

For people who may want to make themselves non tax resident they have another 177 days or whatever.

 

You weren't really expecting any more clarity before 1/01/24 were you....... 

 

I expect nothing to happen except that the revenue department might go after a small handful of Thai taxpayers.