Must Read A SIMPLE GUIDE TO PERSONAL INCOME TAX IN THAILAND

[aussienam]

This is potentially the beginning of the end for many decent elderly expats living here unfortunately.  

So many uncertainties as well, making me personally hold off on any large purchase decisions and my long term stay plans here are now unknown. 

 

Example #1: A person wishing to retire in Thailand is required to deposit 800,000 THB into a Thai Bank.  Will that deposit be taxable?  Therefore meaning it will be taxed at 15% - 20%?  

 

Example #2: A person wishing to retire in Thailand opts for 65k per month income proof to satisfy retirement visa requirement (non-o visa).  Will that be taxable?  Seems so.  That is 780,000 per annum.  Take off first 150,000 baht as tax exempt.  Seems it means 15% tax?  That's 94,500 Baht per year tax after deduction. Or is the tax incremental on each allocated amount 0-150,000 tax free, 150,001-300,000 5% tax, 300,001-500,000 10% tax, 500,001-750,000 15% tax, 750,001-1000,000 baht 20% tax? Regardless, it's still a big chunk.  

 

Example #3:  I sell my property overseas.  I make only a bit of capital gains (profit).  I decide to purchase a condo property in Thailand.  Let's say 5000,000 Baht, of which will vadt majority will come from non-profit proceeds of property sale overseas.  According to the tax scale, I could be liable to up to 30% tax.  Who in their right mind would buy a property if you immediately get a 30% capital loss on the investment due to a hefty tax?  You would have to have to be insane!  Will there be a tax exclusion allowed for property purchases?  Otherwise I envisage a property market downturn.  

 

Example #4: I have decided to purchase a new car in Thailand.  Price at 1000,000 Baht.  Will need to transfer funds from overseas from a savings account.  Most savings untaxed (except for interest earned).  Let's say I am already bringing in 65k a month to live off.  

Suddenly, this extra 1000,000 baht remittance into Thailand for a vehicle purchase will push my overall income into 20-25% tax bracket.  Another huge capital loss on a new vehicle purchase, which devalue enough anyway when you drive it off the car yard.  Who will want to suffer a year of increased overall tax plus a hit on the vehicle purchase, making it exceedingly and ridiculously expensive?  Madness!  Will there be any exemption for one-off purchases of high-ticket purchases?  

Otherwise forget buying anything in Thailand.  

 

Example #5:  In Australia I have self-contributed into my own private Superannuation fund and now drawing a pension.  Private Super funds are not taxed (government pensions seem to be and therefore exempted).  Under the dual tax treaty with Thailand it indicates that Thailand will therefore be able to tax my pension.

My contributions into Super have come from a myriad of investment sources from several years of accumulation - dividends, capital gains, rental income, compensation lumpsum from work injury permanent disability, bank interest, other investment interest.  The contributions have been both concessional (taxed at 15%) as well as non-concessional contributions.  

The money sources deposited into Super were assessed by the Australian taxation office and any tax owing was paid/deducted.  Will I be able to argue my pension funds came from taxed income sources deposited into Super?  Or will I get re-taxed by Thailand when my pension funds come into my Thai bank account? 

 

Example #6: My income sources come from rent, dividends, small pension, share and property fund distributions.  In Australia our tax year ends 30 June.  Thailand tax year ends 31 Dec.  

In Australia we can lodge our tax returns up to cut-off date of 15 May the following year (electronically via an accountant), and this is often done to delay a tax liability.  Regardless, receiving all tax documents to lodge tax return take up to around November each year. 

Effectively, it means income derived from investments is remitted into Thailand as 'pre-taxed' funds.  It is only much later that that income is assessed and taxed. 

 

As the tax years for both Australia and Thailand don't coincide, it means if I lodge a return in Thailand for funds deposited into Thailand, I cannot declare tax has already been paid.  I don't pay PAYG tax either.  ATO stated I did not need to.  

 

If I am therefore taxed on all my incoming funds into Thailand, can I then later on (up to 17 months later due to tax lodgement date differences) apply for a retrospective tax credit?  Or is this a case of "bad luck.  Cannot"?

If I cop a hefty upfront tax bill with potential to claim back a portion later on, it means I will lose on interest I could have earned in Oz. 

 

Will it mean I need to sequester away money to be transferred into Thailand only after it has been tax assessed in Australia?  That will mean around 17 months of waiting to use those funds if that is the case.  

 

Example #7: I have a tax liability in Thailand after being assessed by revenue department.  But I will need to transfer funds in from overseas to pay it.  Will the funds to pay for the tax be taxed??? 

 

Example #8: I receive an inheritance in my home country.  Will my incoming funds into Thailand be taxed?  There is currently no inheritance tax in Australia (the bas***d government probably will change that one day). 

 

Example #9: I win a lottery prize. Not taxed in Australia, is taxed in other countries like USA.  I assume funds into Thailand from prize money will be tax assessed. 

 

**********************

 

I am sure there's plenty of other examples that need clarification. 

 

As it stands, I will not be purchasing any property, vehicles or any other big-ticket items.  2024 I will spend frugally and now reassessing whether Thailand is worth living as a retiree looking for an affordable, low-income friendly destination. Plenty of ladies will miss out on sponsor money, plenty of street level businesses relying on expat communities will probably be collateral damage from less spending.  All up, a conservative year for those wanting to avoid potential hefty tax bills. 

The Hi-So farangs could also see 30-35% tax on their living costs. 

 

[Madgee]

Like the many other threads about this subject, it's going around in circles. 
So many forumites needlessly pooing their pants about this. 
 

Edited January 9 by metisdead
Off topic music video removed.

[TigerandDog]

5 hours ago, GreasyFingers said:

Let us know the advice of the tax agent. My reading of S.18 of the treaty says the pension can only be taxed in the State that provides it.

 

Article 18

Pensions and annuities

1. Subject to the provisions of Article 19, pensions and annuities paid to a resident of one of the Contracting States shall be taxable only in that State.

2. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

that's the confusion with the wording of S18. Does "State" mean the State/Country" where payment is made from OR where payment is received. That's what I'm waiting to hear about. I'm scheduled to receive a phone call from an aussie tax agent on Jan 23 with regards to S18

[JimboB4]

So I was right about this one as well all along. Told ya so once again TVF. 

[Galong]

Saved as a doc on my computer so I can study this.  Thanks a LOT for putting this together!! 🙏🙏

[Mike Lister]

1 hour 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.

I'm back for an hour then out again, in the meantime, I'll try to work my way through some of the 30+ notifications received in past couple of hours!

 

All of the material statements in the guide result from discussions with and by members, not all of them from this thread, many from other threads. I have taken a view on each and when an answer appeared conclusive I have lifted it for inclusion into the document. As we go forward, people such as yourself are free to challenge any statement but will hopefully investigate it themselves first to confirm if it is correct or if an alternative is better suited, rather than merely telling me that something is wrong and leaving it for me to research! The objective here is to compile an accurate and complete guide and this endeavor will require assistance from everyone, I am merely the instigator and one of the drivers. I will be overjoyed if anyone wants to come forward and say, para number X is wrong, this is what should be said and here's the definitive proof and a link, ecstatic. BTW I hold the master of the document and after Y number of changes have been made to it, Moderator CharlieH will update the document in the thread, that's the process.

 

 

Edited January 9 by Mike Lister

[Mike Lister]

2 hours ago, Phulublub said:

 

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

Detection is a different matter from, is it regarded as income, which it is.

[Mike Lister]

2 hours 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

Perhaps I can ask you to let me know, when you find out, in case I miss it?

[JimGant]

12 hours ago, Guavaman said:

It appears that there is no reference in the Thai Tax Code that states that any type of income is non-assessable. If anyone can find such a reference, please inform us.

 

Not too hard to decipher. If you can't find your particular income as assessable in the Thai tax code, then, by default, it is NOT assessable income. And need not be reported on your Thai tax return.

 

Income mentioned in DTAs as taxable "only in the country of residency," and you're a resident of Thailand, ipso facto, that's assessable income for Thai purposes. Other income, like rents, has a "may be taxed by country of residency," meaning, for US types, the income from your rental in the US is primarily taxed by the US; but Thailand can also tax it secondarily, but has to grant a credit for the US taxes, i.e., the country of primary taxation rights. Currently, there is no line item on Thai tax returns to list credits -- but they say they are working on it. Stay tuned.

[TominHK]

Well done to @Mike Lister for putting this together. 

Prior to this document I was completing my own research to try and establish the tax position of an overseas investment account which invests exclusively in Mutual Funds. Originally I thought that the dividend income and capital growth of these mutual funds would be assessable, however I then found the revenue tax code section 42 of exemptions, which clearly states:
Section 42 The assessable income of the following categories shall be exempt for the purpose of income tax calculation:

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

(24) Income of a mutual fund.

Under the assessable income section it states that mutual funds would be assessable if:

"Dividend, share of profits or any other gain derived from a company or juristic partnership, a mutual fund or a financial institution established under a specific law in Thailand for the purpose of providing a loan in order to promote agriculture, commerce or industry;"

Therefore I believe that overseas investment accounts holding Mutual Funds, not individual stocks or bonds etc, would not exempt. 

Does anyone have reason/confirmation to believe otherwise?
 

Edited January 9 by TominHK
posted too early

[parallelman]

5 hours ago, Mike Lister said:

Great, if you've lived here that long you will easily understand that Thailand doesn't operate those notification systems, especially not for foreigners.

Yes. but that doesn't answer/help the original question about the foreigners who are unaware. Are there any foreigners here in Thailand that have some working communication with the Thai government that could ask for some procedure? When I first came here the local IO arranged a quarterly meeting with long stay foreigners for discussions (it was cancelled after the third meeting) and I'm wondering if there is something similar for this case? Perhaps someone like yourself who has the appropriate knowledge, might be able to make some representation? Like it or not it seems that expats will have to deal with this because it will become part of the routine for living here and the sooner there is some general procedure announced to all the better it will be for all.

[Mike Lister]

2 minutes ago, TominHK said:

Well done to @Mike Lister for putting this together. 

Prior to this document I was completing my own research to try and establish the tax position of an overseas investment account which invests exclusively in Mutual Funds. Originally I thought that the dividend income and capital growth of these mutual funds would be assessable, however I then found the revenue tax code section 42 of exemptions, which clearly states 
Section 42 The assessable income of the following categories shall be exempt for the purpose of income tax calculation:
"Dividend, share of profits or any other gain derived from a company or juristic partnership, a mutual fund or a financial institution established under a specific law in Thailand for the purpose of providing a loan in order to promote agriculture, commerce or industry; the part of dividend or share of profits after deduction of withholding tax under the law governing petroleum income tax.”

I'm pretty sure the implications are that the investment must originate or be based in Thailand rather than overseas since repatriation of funds from such investment's is one of the prime reason the new tax ruling was instigated. That's my take on things at least.

[Mike Lister]

6 minutes ago, parallelman said:

Yes. but that doesn't answer/help the original question about the foreigners who are unaware. Are there any foreigners here in Thailand that have some working communication with the Thai government that could ask for some procedure? When I first came here the local IO arranged a quarterly meeting with long stay foreigners for discussions (it was cancelled after the third meeting) and I'm wondering if there is something similar for this case? Perhaps someone like yourself who has the appropriate knowledge, might be able to make some representation? Like it or not it seems that expats will have to deal with this because it will become part of the routine for living here and the sooner there is some general procedure announced to all the better it will be for all.

The closest I can think of is the expat club in your area which usually has its ear to the ground and informal links to different departments etc. There is nothing nationally, neither is there ever likely to be anything because there are over 4 million foreigners in the country and the range of languages involved massive. Foreigners only fairly recently managed to get access to the MOH app for covid and that was after a pandemic!

[parallelman]

3 hours ago, FritsSikkink said:

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

That is ridiculous! You are saying that we should all know every section and subsection of the code...because that is what this topic is about. What was a 'loophole' has now been closed by an additional section. This is why there are lawyers and advocates...if we all knew it we wouldn't need such academics.

[FritsSikkink]

1 minute ago, parallelman said:

That is ridiculous! You are saying that we should all know every section and subsection of the code...because that is what this topic is about. What was a 'loophole' has now been closed by an additional section. This is why there are lawyers and advocates...if we all knew it we wouldn't need such academics.

You might think it is ridiculous but it won't help you in court. If you don't know things it is your responsibility to get somebody to help you.

Edited January 9 by FritsSikkink

[Mike Lister]

2 minutes ago, parallelman said:

That is ridiculous! You are saying that we should all know every section and subsection of the code...because that is what this topic is about. What was a 'loophole' has now been closed by an additional section. This is why there are lawyers and advocates...if we all knew it we wouldn't need such academics.

You are expected to know in Western countries and if you don't you have to buy advice from professionals, here will be no different.

[parallelman]

4 minutes ago, Mike Lister said:

The closest I can think of is the expat club in your area which usually has its ear to the ground and informal links to different departments etc. There is nothing nationally, neither is there ever likely to be anything because there are over 4 million foreigners in the country and the range of languages involved massive. Foreigners only fairly recently managed to get access to the MOH app for covid and that was after a pandemic!

Yes. I understand. I only hope that an 'alert' is served through the banks or immigration so that those unaware of the change won't have to pay a penalty in the future. Thanks for the conversation. Have a nice evening.

[digital]

If you have a pension thats invested into a fund, and not taken any withdrawals yet. And at a future date you choose not to buy an annuity that provides you with an income but instead withdraw all/part of the fund as cash, then in this case the value of the fund at 31 Dec 23 is the capital and would not be taxed in Thailand? Only the gain from 1 Jan 24 to the time its withdrawn should be taxable.

 

Does this sound right, only what you withdraw above the valuation on 31 Dec 23 would be a gain, but if you bought an annuity the monthly payment would be income and therefore taxable?

 

(I have read the guide several times)

Edited January 9 by digital

[parallelman]

8 minutes ago, FritsSikkink said:

You might think it is ridiculous but it won't help you in court. If you don't know things it is your responsibility to get somebody to help you.

Isn't that what I said...lawyer etc. I am not arguing about the law, those on forum like this are forewarned. But as I mentioned earlier there are those who are unaware and it isn't really their fault that there is no formal announcement system to alert them. 

[GreasyFingers]

7 hours ago, Mike Lister said:

Australian old age pension is assessible income in Thailand.

That is interesting. I do not receive the old age pension but a NSW State Super pension that in their word is a "capped defined benefit income stream (CDBIS)" that did not need to be reported to the ATO. Recent changes suggest that it may need to be reported to the ATO but my tax accountant never did. Very interesting times.

 

Keep up the good work.

[FritsSikkink]

8 minutes ago, parallelman said:

Isn't that what I said...lawyer etc. I am not arguing about the law, those on forum like this are forewarned. But as I mentioned earlier there are those who are unaware and it isn't really their fault that there is no formal announcement system to alert them. 

There is a formal announcement system, the Royal Gazette. Not many people read this, but lawyers and news agencies do. 

Like said before, it is everybody's responsibility to get informed. "nobody told me" or "i am old" is not a very good excuse. 

You have been alerted by reading this forum.

[KhunLA]

On 1/8/2024 at 1:41 PM, Lacessit said:

Are the concessions only available to married couples? What happens with single foreigners supporting a GF? What forms of marriage are recognized by the Thai authorities?

 

The way I read it, if one is married, over 65. with a pension income of 600,000 baht, they get exemptions of 560,000 baht. Guys in defacto relationships get nothing.

Yes, that's how I read & calculated it, if having to pay tax.  Finally something good about being a Yank.  I even get 30K more deducted for adopted kid (1 more yr), and don't forget 40k for VAT (shopping tax)

 

If we bring in 800k, spend 800k, we should be paying 56k VAT/shopping tax.

 

That took me to 630k of deductions and  10% tax rate upt to 500k, if not a Yank.

 

I think anyone not already here is going to strongly consider elsewhere to retire, especially if under 65 yrs old.   I would not have come here, as not way would pay 20 or 25% tax tor privilege to live in TH.

Edited January 9 by KhunLA

[parallelman]

5 minutes ago, FritsSikkink said:

There is a formal announcement system, the Royal Gazette. Not many people read this, but lawyers and news agencies do. 

Like said before, it is everybody's responsibility to get informed. "nobody told me" or "i am old" is not a very good excuse. 

You have been alerted by reading this forum.

Well, that's not really so. I was alerted last year elsewhere and my comments have been solely concerned about those whose circumstances are different from mine. I do not agree that it is everybody's responsibility. If those in charge change the rules then it is their responsibility to make it clear to those affected by the rules. But as Mike Lister reminded, Thailand doesn't do things that way.

[FritsSikkink]

2 minutes ago, parallelman said:

Well, that's not really so. I was alerted last year elsewhere and my comments have been solely concerned about those whose circumstances are different from mine. I do not agree that it is everybody's responsibility. If those in charge change the rules then it is their responsibility to make it clear to those affected by the rules. But as Mike Lister reminded, Thailand doesn't do things that way.

No, Mike Lister said the same as me, it works like that in Western countries too.

That you don't agree has no value for the law.

Edited January 9 by FritsSikkink

[TroubleandGrumpy]

On 1/8/2024 at 7:18 AM, CharlieH said:

If your income is over 120,000 baht per year, you must file a Thai tax return between 1 January and 31 March.

Technicality BUT it should read - "taxable income over 120K". Having income over 120K does not mean you have to lodge a tax return.  120K income is not 120K taxable income - if you have exemptions, allowances, offsets, and other deductions. 

[jesimps]

4 hours ago, Phulublub said:

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

That's certainly the case with myself, who man and boy served 11 years in the British Army and don't receive a pension for it, whereas for my 31 years with the Brit Civil Service, I do.

[BigStar]

On 1/8/2024 at 3:21 PM, koolkarl said:

There are other countries you can move to who won't tax you to death and give you nothing in return.

 

Yes, but I like living in Thailand. It's given me a lot over the years. Who's being taxed to death?

[TroubleandGrumpy]

On 1/8/2024 at 7:18 AM, CharlieH said:

Australian old age pension is assessible income in Thailand.

Can you provide any link/advice as to how this is true Charlie?

Has the Thai RD provided a ruling in this matter?  

Maybe answered already - I have not read all the pages yet - will do soon as possible

[jesimps]

3 hours ago, Madgee said:

Like the many other threads about this subject, it's going around in circles. 
So many forumites needlessly pooing their pants about this. 
 

Yes, but people have to have the full picture because the return which is due to be submitted in 2025 will be based on this year's transactions. Until I know the full details, I won't be bringing in any large amounts. The new car will have to be put on the back burner yet again.

[Mike Lister]

16 minutes ago, TroubleandGrumpy said:

Can you provide any link/advice as to how this is true Charlie?

Has the Thai RD provided a ruling in this matter?  

Maybe answered already - I have not read all the pages yet - will do soon as possible

I wrote the document, I included that statement because another poster confirmed it to us in one of the many tax threads and the consensus was that it was true. If you wish to disagree, please provide a link to support your claim.