Must Read A SIMPLE GUIDE TO PERSONAL INCOME TAX IN THAILAND

[Mike Lister]

1 minute ago, LikeItHot said:

I  "accessed" the tax liability limits from the link in the OP from someone representing themselves as an expert on this topic who countless other members are now using as their source of reliable information.  If the links are inaccurate or outdated in less then 24 hours after posting then this signals that it would be literally impossible to keep up to date with credible information and anything else in the original post can be considered to be dubious at best.

If you have found a link that is out of date or incorrect, somebody needs to tell me and I will change it.

 

I am not an expert, I am merely trying to consolidate information into one place for the benefit of others and to pass on the things learned from several months of debating this subject.

[Sheryl]

4 hours ago, Presnock said:

unless I am mistaken, if one receives US pension and/or SS the govt paying office deducts the tax prior to every check sent out or transferred to a bank account.

Not so.

 

It is up to the payee to decide whether to have tax withheld ..and if so, how much (there is a form for this). Some people chose to have tax withheld from each check, , some do not. Of course, if one does not have anything withheld and ends up owing tax, there can be a  late payment penalty unless one made estimated tax payments during the year.

 

Many people whose sole income is SS end up owing not tax, hence many opt to have no withholding.

 

Some also opt to have no tax withheld for other reasons. For example, until recently I had self-employment income (work done abroad, not in Thailand) so had to make estimated tax payments anyhow, so I opted to have no witholding on either my SS or my (small) government pension.

[jesimps]

Good news for ex-UK Civil Servants like myself. This from the UKGOV website referring to the 1981 UK/Thailand Double Taxation Convention Article 19:

 

"(2)  (a) Any pension paid by the Contracting State or a political subdivision or a local authority thereof to any individual in respect of services of a governmental nature rendered to that State or subdivision or local authority thereof shall be taxable only in that State."  

 

I assume this means that only state pension is assessable here, however with exemptions, that takes me into the zero tax bracket. I should think so too, being that I'm being milked for over 2000 pounds a year UK Tax, getting nothing in return except for a passport and embassy services (don't snigger).

[Sheryl]

13 hours ago, Guavaman said:

Please provide a reference link to a Revenue Department webpage or a legal/tax firm webpage that provides advice that Thai tax residents are not required to file tax returns if the taxpayer self-determines that they "owe no tax".

 

 

 

 

There are many online tax experts saying this in varying ways. Even for people with clealry assessable income (e.g. people employed in Thailand) , they are  nto required to file if it is below the threshold for paying taxes https://taxsummaries.pwc.com/thailand/individual/tax-administration

 

There is not a single place where the RD states that every tax resident  must file a tax  return regardless of whether they have asessable income/owe taxes.

 

By contrast the RD states (English translation)

"You have to file a return on the income that you
received if you meet one of the following conditions:
(1) Your total income exceeded 120,000 baht in the tax year.
(2) You were married and your income combined with that of your spouse exceeded 220,000 baht in the tax year."

https://www.rd.go.th/fileadmin/download/english_form/030265guide91.pdf

 

This is understood to mean assessable income.

 

I addition, penalties under the RD code all refer to failure to declare assessable income or pay taxes, nowhere is there a penalty for failing to file when no tax was due.

 

Anywhere in the world, absence of a law against = not illegal. It is not the case that there must be a law or regulation for everything that is legal to do, it works in the opposite.

 

 

 

[Mike Lister]

6 minutes ago, jesimps said:

Good news for ex-UK Civil Servants like myself. This from the UKGOV website referring to the 1981 UK/Thailand Double Taxation Convention Article 19:

 

"(2)  (a) Any pension paid by the Contracting State or a political subdivision or a local authority thereof to any individual in respect of services of a governmental nature rendered to that State or subdivision or local authority thereof shall be taxable only in that State."  

 

I assume this means that only state pension is assessable here, however with exemptions, that takes me into the zero tax bracket. I should think so too, being that I'm being milked for over 2000 pounds a year UK Tax, getting nothing in return except for a passport and embassy services (don't snigger).

Yes, we already included that in the write up but it's good that you saw it for yourself.

[WhiteHatPhil]

I am from the UK, I have pensions (State and SIPP) that I draw down into Thailand. I live permanently in Thailand (i.e. I do not have any home in the UK).

 

I have read the DTA applicable to the UK (You can find it here: https://www.rd.go.th/english/766.html)

 

According to this DTA (Article 4, Fiscal Domicile) I am a tax resident of Thailand. That is,  my Contracting State is Thailand.

 

Now, according to Article 16, 'Dependent personal services', of the DTA, my income (aka my employment) is exercised in the Other Contracting State, which is the UK. Paragraph 1 states that such remuneration may be taxed in the UK. And it most certainly is, of course. Nowhere does it state that I will be taxed in Thailand UNLESS, if I understand paragraph 2 correctly, I live in the UK for up to 183 days in a fiscal year.

I have typed out Article 16 below, with my interpretations on what is meant for Contract State and Other Contracting State as it applies to me.  As far as I can decipher, i am NOT expected to pay tax in Thailand.  However, I WILL be applying for my Taxpayer Identification Number next week, and I will get prepared to submit a Return if necessary.

 

Article 16

 

Dependent personal services

 

1. Subject to the provisions of Articles 19 (Governmental services) and 21 (Teachers), salaries, wages and other similar remuneration derived by a resident of a Contracting State (THAILAND) in respect of an employment (I am including pension here) shall be taxable only in that state unless the employment is exercised in the other Contracting State (UK). If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State (UK).
2. Notwithstanding the provisions of paragraph (1) of this Article, remuneration derived by a resident of a Contracting State (THAILAND) in respect of an employment exercised in the other Contracting State (UK) shall be taxable only in the first-mentioned State (THAILAND) if:
   1. The recipient is present in the other State (UK) for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned; and
   2. The remuneration is paid by, or on behalf of, an employer who is not a resident of the other State (UK); and
   3. The remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State (UK)
3. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft in international traffic may be taxed in the Contracting State (THAILAND) in which the place of effective management of the enterprise is situated

[Mike Lister]

Another para that I've lifted form another thread which I think is worth including. Just so that you know, these new inclusions are open to comment and change based on the best and latest knowledge we can find. The objective here is to produce a document that is as accurate and complete as we can make it.

 

1. Who must file a tax return? The English language translation of the RD rule says that, "You have to file a return on the income that you received if you meet one of the following conditions:

(1) Your total income exceeded 120,000 baht in the tax year.

(2) You were married and your income combined with that of your spouse exceeded 220,000 baht in the tax year."

 

This is understood to mean assessable income.

 

https://www.rd.go.th/fileadmin/download/english_form/030265guide91.pdf

[Mike Lister]

8 minutes ago, WhiteHatPhil said:

I am from the UK, I have pensions (State and SIPP) that I draw down into Thailand. I live permanently in Thailand (i.e. I do not have any home in the UK).

 

I have read the DTA applicable to the UK (You can find it here: https://www.rd.go.th/english/766.html)

 

According to this DTA (Article 4, Fiscal Domicile) I am a tax resident of Thailand. That is,  my Contracting State is Thailand.

 

Now, according to Article 16, 'Dependent personal services', of the DTA, my income (aka my employment) is exercised in the Other Contracting State, which is the UK. Paragraph 1 states that such remuneration may be taxed in the UK. And it most certainly is, of course. Nowhere does it state that I will be taxed in Thailand UNLESS, if I understand paragraph 2 correctly, I live in the UK for up to 183 days in a fiscal year.

I have typed out Article 16 below, with my interpretations on what is meant for Contract State and Other Contracting State as it applies to me.  As far as I can decipher, i am NOT expected to pay tax in Thailand.  However, I WILL be applying for my Taxpayer Identification Number next week, and I will get prepared to submit a Return if necessary.

 

Article 16

 

Dependent personal services

 

1. Subject to the provisions of Articles 19 (Governmental services) and 21 (Teachers), salaries, wages and other similar remuneration derived by a resident of a Contracting State (THAILAND) in respect of an employment (I am including pension here) shall be taxable only in that state unless the employment is exercised in the other Contracting State (UK). If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State (UK).
2. Notwithstanding the provisions of paragraph (1) of this Article, remuneration derived by a resident of a Contracting State (THAILAND) in respect of an employment exercised in the other Contracting State (UK) shall be taxable only in the first-mentioned State (THAILAND) if:
   1. The recipient is present in the other State (UK) for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned; and
   2. The remuneration is paid by, or on behalf of, an employer who is not a resident of the other State (UK); and
   3. The remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State (UK)
3. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft in international traffic may be taxed in the Contracting State (THAILAND) in which the place of effective management of the enterprise is situated

Because your income arises in the UK, the UK has priority taxation rights, Thailand has secondary rights, even though you live here and not the UK. .

[WhiteHatPhil]

11 minutes ago, Mike Lister said:

Because your income arises in the UK, the UK has priority taxation rights, Thailand has secondary rights, even though you live here and not the UK. .

I understand that Mike. However it is far from clear, in the DTA at least, that I must ALSO pay tax in Thailand on earnings already taxed in the UK. 

[Mike Lister]

2 minutes ago, WhiteHatPhil said:

I understand that Mike. However it is far from clear, in the DTA at least, that I must ALSO pay tax in Thailand on earnings already taxed in the UK. 

If the DTA doesn't specifically exclude Thailand from taxing that income and/or if the DTA specifically forbids other states from taxing that income (as does the US/Thai DTA in the case of SSc), then Thailand can tax that income.

[10baht]

3 hours ago, KannikaP said:

Where is The Big PX please?

Same place you can wear your shoes on in the house.

[WhiteHatPhil]

4 minutes ago, Mike Lister said:

If the DTA doesn't specifically exclude Thailand from taxing that income and/or if the DTA specifically forbids other states from taxing that income (as does the US/Thai DTA in the case of SSc), then Thailand can tax that income.

If that is correct (and I am FAR from being an expert) then I would be double taxed - which obviates the premise of the DTA, right?

[Mike Lister]

2 minutes ago, WhiteHatPhil said:

If that is correct (and I am FAR from being an expert) then I would be double taxed - which obviates the premise of the DTA, right?

Have you read the document that has been written?

[Bazle]

Firstly, thanks to @Mike Lister for compiling that document (but I wonder if you are regretting it now  ).

 

Secondly, although it is being said that we have almost 12 months to properly understand all of this, I don't agree. There might well be tax planning measures which some people might be able to put in place if those people could be certain of the law.

 

Thirdly, the issue of co-mingled funds must surely raise its ugly head at some point. For example, you have a bank account in your home country into which you pay your pension, rental income, dividends, capital gains, etc. and you bring money from that account to Thailand. What is the nature of the funds remitted?

 

For some people, taking account of the second and third points, it might be advisable immediately to freeze any co-mingled account, and have future monies deposited in brand new (overseas) accounts - possibly with an account for each source of income/gain.

[FritsSikkink]

17 hours ago, parallelman said:

Perhaps I can put a different way. An OAP not a member of this forum (or any other) and previously not filing tax returns, how will that OAP know that the rules have changed? Is it possible that notification will be through immigration or bank although I can find no mention of such a process.

In any country you are expected to know the law, claiming ignorance doesn't clear you from that fact.

[Mike Lister]

2 minutes ago, Bazle said:

Firstly, thanks to @Mike Lister for compiling that document (but I wonder if you are regretting it now  ).

 

Secondly, although it is being said that we have almost 12 months to properly understand all of this, I don't agree. There might well be tax planning measures which some people might be able to put in place if those people could be certain of the law.

 

Thirdly, the issue of co-mingled funds must surely raise its ugly head at some point. For example, you have a bank account in your home country into which you pay your pension, rental income, dividends, capital gains, etc. and you bring money from that account to Thailand. What is the nature of the funds remitted?

 

For some people, taking account of the second and third points, it might be advisable immediately to freeze any co-mingled account, and have future monies deposited in brand new (overseas) accounts - possibly with an account for each source of income/gain.

My only regret is calling this thread and the document anything simple! :))

 

Good advice about unmingling comingled funds and also, obtaining valuations on every account, as close to 1 January 2024 as possible.

[Presnock]

30 minutes ago, WhiteHatPhil said:

If that is correct (and I am FAR from being an expert) then I would be double taxed - which obviates the premise of the DTA, right?

Usually, the purpose of a DTA is to avoid having to pay taxes in both countries on the same income - if you pay in one country and the other also takes out taxes, then I think (don't know for sure but at least the US) the paying country will reimburse you on the amount charged by the resident country.

[Mike Lister]

Just now, Presnock said:

Usually, the purpose of a DTA is to avoid having to pay taxes in both countries on the same income - if you pay in one country and the other also takes out taxes, then I think (don't know for sure but at least the US) the paying country will reimburse you on the amount charged by the resident country.

Partially. The primary purpose of the DTA is to identify which state has taxation rights priority over which funds. Other reasons include avoiding double taxation etc but a DTA is about each state protecting its rights rather than helping taxpayers with double taxation. :)

 

And in most cases I believe that tax credits are issued rather than refunds, at least that is my experience.

[Mike Lister]

Break time I'm afraid ......finally! Back after my appointment.

 

:))

 

The document is taking shape, thanks to contributions from several posters so many thanks for your help. It's a slow and iterative process but in a few days we should have something fairly complete and robust.

Edited January 9 by Mike Lister

[Phulublub]

5 hours ago, bluemoon58 said:

Mike, I receive a UK Armed Forces Pension. I presume this would be classed as a UK Government Pension? Am I correct?

Worth checking to make sure....email sent to Equiniti.  If we all do this one of us might get a reply!

 

PH

[Presnock]

6 minutes ago, Mike Lister said:

Partially. The primary purpose of the DTA is to identify which state has taxation rights priority over which funds. Other reasons include avoiding double taxation etc but a DTA is about each state protecting its rights rather than helping taxpayers with double taxation. :)

 

And in most cases I believe that tax credits are issued rather than refunds, at least that is my experience.

when I asked a tax agency about this new tax, they didn't mention exemptions according to the DTA but told me that if my pension was double taxed, then I could get my monies credited for current year or lower taxes on that amount charged by the tax resident country.  I then began looking at the DTA and other notes passed in this forum.  even seeing all the different documents etc, until I see the RD put out guidance for ALL ex-pats then I will for the most part just read and forget as I have been noted to jump to conclusion without being properly informed.  I hate that probably more than those that read it.  Actually I get a lot of laughs out of this forum as I thought most would be more like me than so far different from me.  Maybe because I am an old fart that has lived around the world, spent several years at war where folks were trying to kill me and therefore am not really bothered by much as I can't do anything about it anyway.  Take care enjoy life here as it might become once again.

 

[bluemoon58]

2 minutes ago, Phulublub said:

Worth checking to make sure....email sent to Equiniti.  If we all do this one of us might get a reply!

 

PH

Let me know how you get on mister. 

[WhiteHatPhil]

55 minutes ago, Mike Lister said:

Have you read the document that has been written?

Yes

[Phulublub]

4 hours ago, Mike Lister said:

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 and NHS pensions are not!

Mike

 

Only reference I can find to pensions in the UK Thailand DTA is as follows:

 

Article 19.......(2) (a) Any pension paid by the Contracting State or a political subdivision or a local authority thereof to any individual in respect of services of a governmental nature rendered to that State or subdivision or local authority thereof shall be taxable only in that State.

 

Is this the source of your statement above? If so, would seem to include Local Authority employee pensions - which may (not sure) include such as police, fire service, teachers...I think they, like Armed Forces, are not technically "Civil Servants"

 

PH

Edited January 9 by Phulublub

[MistyBlue]

4 hours ago, Mike Lister said:

Yet another new para for the next release of the document, designed to raise awareness and cut down on some of the questions.

 

1. The way in which the income is received in Thailand does not change its definition. Bank transfers, cheques, cash, overseas ATM and credit card transactions can also be income, the last two because overseas funds were imported to pay for goods or services in Thailand.

Credit card transactions are credit remittances, not income remittances.

There may well be further clarification on credit remittances at some point in the future but to state that credit card transactions can also be income should be clarified before inclusion in your document.

[Phulublub]

4 hours ago, Mike Lister said:

Yet another new para for the next release of the document, designed to raise awareness and cut down on some of the questions.

 

1. The way in which the income is received in Thailand does not change its definition. Bank transfers, cheques, cash, overseas ATM and credit card transactions can also be income, the last two because overseas funds were imported to pay for goods or services in Thailand.

 

As far as credit card spending, how would they know?  AFAIAA there is no link between issuing bank and taxman for any such.  Or am I missing something?

 

PH

[MistyBlue]

5 hours ago, Mike Lister said:

UK Government or Civil Service and NHS pensions are not!

This is misleading as it depends on how the NHS pension is paid.  Here is a link on what qualifies as a government pension or not:  https://www.gov.uk/hmrc-internal-manuals/international-manual/intm343040 

[Phulublub]

11 minutes ago, MistyBlue said:

This is misleading as it depends on how the NHS pension is paid.  Here is a link on what qualifies as a government pension or not:  https://www.gov.uk/hmrc-internal-manuals/international-manual/intm343040 

Very useful link for UK members.

 

PH

[MistyBlue]

@CharlieH I recognise the OP is trying to be helpful and it is excellent for discussion, but there are many questionable statements and claims made in this 'guide'.  I recommend a disclaimer is added at the beginning to state that it is the work of a board member for discussion purposes only and members should not rely on it for their affairs.

[CharlieH]

34 minutes ago, MistyBlue said:

@CharlieH I recognise the OP is trying to be helpful and it is excellent for discussion, but there are many questionable statements and claims made in this 'guide'.  I recommend a disclaimer is added at the beginning to state that it is the work of a board member for discussion purposes only and members should not rely on it for their affairs.

Forum rule 39.