My take on the new tax modifications

[Mike Lister]

6 minutes ago, Yumthai said:

 

Are you saying that once a spouse has gifted his/her partner, the said partner can't gift his/her spouse anymore?

Is there a waiting period? Should the partner wait for one week/month/year/decade before gifting again? Should they divorce and marry again?

 

All this need way more clarity. There isn't. As for now, the law would have to be amended regarding "gifting back" in order to be enforced.

 

 

After how many iterations of husband to wife and back again gifting, do you think the Revenue might allow before they suspected it was ruse to evade tax and start to investigate and do something? One? Two, Three? Almost certainly by the third time, it would be labelled as tax evasion , simply because that's what it is. So if three times is tax evasion, why not just once!

 

I'm going to allow this subject some more latitude but as I said earlier, discussions about tax evasion are illegal and against forum rules so please take things in a different direction shortly. Thanks.

[spidermike007]

5 hours ago, Yumthai said:

 

As stated by Thai law:

- You have the right to gift (wherever it comes from) your wife up to 20M THB per calendar year tax-free in Thailand (Tax may arise for the gifter from the country where the gift is originated though).

- Your wife has the right to gift (wherever it comes from) you up to 20M THB per calendar year tax-free in Thailand.

- There is no law/rule stating that a gift gifted back to the gifter becomes assessable income and, as such, has to be taxed.

 

There you go. Done deal. One or two hefty transfers a year, to the wife's account. 

 

I assume it has to come from a 3rd party account? Or can it be a foreign husband gifting the sum to the Thai wife? 

[Mike Lister]

9 minutes ago, spidermike007 said:

There you go. Done deal. One or two hefty transfers a year, to the wife's account. 

 

I assume it has to come from a 3rd party account? Or can it be a foreign husband gifting the sum to the Thai wife? 

See the post above, please.

[Sigma6]

31 minutes ago, Mike Lister said:

I'm going to allow this subject some more latitude but as I said earlier, discussions about tax evasion are illegal and against forum rules so please take things in a different direction shortly

If thai law allows for gifting of this amount between spouses with no tax liabilities each tax year, then I don't see where illegality comes into play.  Its legal.

 

 

[Yumthai]

37 minutes ago, Mike Lister said:

After how many iterations of husband to wife and back again gifting, do you think the Revenue might allow before they suspected it was ruse to evade tax and start to investigate and do something? One? Two, Three? Almost certainly by the third time, it would be labelled as tax evasion , simply because that's what it is. So if three times is tax evasion, why not just once!

This is your opinion. Gifting is perfectly legal in Thailand.

[Mike Lister]

8 minutes ago, Yumthai said:

This is your opinion. Gifting is perfectly legal in Thailand.

Indeed it is. But whether or not the backwards and forwards repeatedly routine is, is a different matter. 

 

Let me close this exchange by saying that there is often a tendency for foreigner's in Thailand to regard the country as third world, simply because many of the processes and functions here seem so antiquated by comparison to what they've known back home. It would be a serious mistake to under estimate the capability that exists here in  many seemingly antiquated departments and institutions. Put more bluntly, the Revenue is not stupid! 

[YaDongImproved]

9 hours ago, jerrymahoney said:

Can you find one instance of any reputable Thai-based accountancy or tax law firm that the above 'wherever it comes from' i.e. tax-free gift directly from a foreign source has ever happened since the gift tax went into effect in  FEB 2016?

 

 

https://thailand.acclime.com/guides/gift-tax/

 

https://sherrings.com/gift-tax-law-in-thailand.html#:~:text=an adopted child)-,On the amount of the gift received in excess of,transfer of the immovable property.&text=or a spouse-,On the amount of the gift received in excess of,a personal income tax return.

 

https://taxsummaries.pwc.com/thailand/individual/income-determination

 

Do you want more?
 

[YaDongImproved]

6 hours ago, spidermike007 said:

There you go. Done deal. One or two hefty transfers a year, to the wife's account. 

 

I assume it has to come from a 3rd party account? Or can it be a foreign husband gifting the sum to the Thai wife? 

Must be the spouse, ascendant or descendant. I believe legitimate child and not adopted. Check the links I posted above. It is a well known technique of estate planning to make gifts instead of giving everything at death, to lower taxes.

 

[YaDongImproved]

5 hours ago, Mike Lister said:

Put more bluntly, the Revenue is not stupid! 

 

No, but I was not lazy. A few years ago, I had a client who sold 3D software internationally. His revenue was below the 1.8 million baht threshold required for VAT registration by law. Moreover, since he was selling overseas, he could be exempt from charging VAT.

 

For reasons unknown, the accountant registered for VAT and failed to report a '0' VAT each month. Eventually, the client closed his company and moved abroad with his Thai wife. Six months later, the Revenue Department sent a letter to his wife's family, demanding 400,000 baht in backdated VAT. He asked me to handle the situation. 

 

I printed information from the Revenue Department's website, highlighting that businesses with annual earnings under 1.8 million baht are exempt from VAT. I also printed proof that VAT isn't applicable for clients outside Thailand. Despite this, they insisted on the validity of the VAT registration. I pointed out that the client was now abroad and the company was closed. I gave them my office address and requested a detailed written explanation as to why he should pay these taxes when their website indicated otherwise.

 

They never replied. Welcome to Thailand. Ask a little bit of work and craziness, and they will forget not to lose the face. That was more than 10 years ago. 

[jerrymahoney]

2 hours ago, YaDongImproved said:

https://thailand.acclime.com/guides/gift-tax/

 

https://sherrings.com/gift-tax-law-in-thailand.html#:~:text=an adopted child)-,On the amount of the gift received in excess of,transfer of the immovable property.&text=or a spouse-,On the amount of the gift received in excess of,a personal income tax return.

I am

https://taxsummaries.pwc.com/thailand/individual/income-determination

 

Do you want more?
 

I am familiar with all those examples. Nothing said about tax-free gifts originating ex-Thailand

 

The US IRS does, on the contrary, have separate provisions for foreign originated gifts

Edited January 11 by jerrymahoney

[jerrymahoney]

I will add -- with the caveat this is not my area of interest -- that since FEB 2016 and before the SEP 2023 ruling, if one  had earnings ex-Thailand that he/she wanted to bring to Thailand, they had to wait until the next year. If they wanted to bring the money in during the year earned, it would be taxable.

 

However, as some would suggest above, if they DID want to bring it in during the year earned, all they would have to do would be structure the transfer up to 20 million baht as a gift to a spouse tax-free.

 

But there is no record that I can find or from any above the above listed tax experts that that was ever done.

[Yumthai]

11 hours ago, Mike Lister said:

Let me close this exchange by saying that there is often a tendency for foreigner's in Thailand to regard the country as third world, simply because many of the processes and functions here seem so antiquated by comparison to what they've known back home. It would be a serious mistake to under estimate the capability that exists here in  many seemingly antiquated departments and institutions. Put more bluntly, the Revenue is not stupid! 

 

Au contraire, I don't look down on Thai people I just quote their own law which I think was rightly thought, maybe IMHO not to close an existing tax loophole but to somehow legalize a common and necessary practice.

 

On 1 Feb 2016 gift tax law was put into effect in perfect knowledge of what @jerrymahoney mentioned with reason:

"before the SEP 2023 ruling, if one had earnings ex-Thailand that he/she wanted to bring to Thailand, they had to wait until the next year. If they wanted to bring the money in during the year earned, it would be taxable.

 

However, as some would suggest above, if they DID want to bring it in during the year earned, all they would have to do would be structure the transfer up to 20 million baht as a gift to a spouse tax-free."

 

Therefore, and I quote you appropriately: "It would be a serious mistake to under estimate the capability that exists here in  many seemingly antiquated departments and institutions. Put more bluntly, the Revenue is not stupid!".

 

I'll go beyond: People who think the Revenue Department put, in 2016, a law into effect without deeply knowing what was going on for years in their country and further consequences could be the ones who doubt on their capacities.

 

Different angles, different interpretations, point of views may vary depending on the glasses one wears.

 

Now, with the new Sep 2023 ruling, is the current wording of the gift law makes it a legal tax loophole? Yes, it does (and it was before as per Jerry quote).

 

My opinion: If the purpose of the Thai government is to close all tax loopholes then they will have no choice but to amend the gift tax law (because it's a too strong argument before a court). In the meantime gift rules still apply.

 

[Mike Lister]

 

I think the point is accepted that domestic gift tax rules are potentially useful, we'll leave it to the RD and the lawyers to determine whether repetitive international transfers that are circular are  the same.

 

The question has been asked and answered, now, we will move on please!

[stix40]

Really

So gift say 1 million to the  Mrs 

Is this a one off or yearly ? 

Then live off that for the year 

Using your own bank affairs below the 150.000

Can this work? 

[YaDongImproved]

11 hours ago, jerrymahoney said:

I will add -- with the caveat this is not my area of interest -- that since FEB 2016 and before the SEP 2023 ruling, if one  had earnings ex-Thailand that he/she wanted to bring to Thailand, they had to wait until the next year. If they wanted to bring the money in during the year earned, it would be taxable.

 

However, as some would suggest above, if they DID want to bring it in during the year earned, all they would have to do would be structure the transfer up to 20 million baht as a gift to a spouse tax-free.

 

But there is no record that I can find or from any above the above listed tax experts that that was ever done.

 

They clarified the rule about incomes earned abroad BEFORE 2024. It does not apply.  Franklegaltax is a reputable law firm. Fabian Doppler is director I think, 50% of their clients are German. They do a lot of corporate law.

 

https://franklegaltax.com/important-updates-on-new-tax-regulations-for-foreign-income-in-thailand/

Edited January 12 by YaDongImproved
correction

[jerrymahoney]

1 hour ago, YaDongImproved said:

 

They clarified the rule about incomes earned abroad BEFORE 2024. It does not apply.  Franklegaltax is a reputable law firm. Fabian Doppler is director I think, 50% of their clients are German. They do a lot of corporate law.

 

https://franklegaltax.com/important-updates-on-new-tax-regulations-for-foreign-income-in-thailand/

Oh. So I guess all that means foreign sourced gifts before 2024 were routine.  Thanks.