Expat Tax Twists in Thailand: Navigating the New Landscape in 2024

[DrPhibes]

Sorry but jumping in a bit late on this topic.  So, if I gift my non-working thai wife 3,000,000 baht of US work earnings to her separate US bank account yearly in the United States, create a doc that specifies that it is a gift, then wire that money from that separate account to my wife's separate Thai bank account, then she moves a bit of that money into my separate Thai bank account to add to my US Social Security (non-taxable to Thailand by virtue of tax treaty) coming to my separate account, we have no tax obligation to Thailand.

 

Sound about right?

 

Hope all well with everyone.

[UKresonant]

7 minutes ago, DrPhibes said:

Sorry but jumping in a bit late on this topic.  So, if I gift my non-working thai wife 3,000,000 baht of US work earnings to her separate US bank account yearly in the United States, create a doc that specifies that it is a gift, then wire that money from that separate account to my wife's separate Thai bank account, then she moves a bit of that money into my separate Thai bank account to add to my US Social Security (non-taxable to Thailand by virtue of tax treaty) coming to my separate account, we have no tax obligation to Thailand.

 

Sound about right?

 

Hope all well with everyone.

Probably, 

Except for

the bit where she moves it to your Thai account.

Unless the work earnings are from when you are not tax resident in Thailand.

[Mike Lister]

1 hour ago, DrPhibes said:

Sorry but jumping in a bit late on this topic.  So, if I gift my non-working thai wife 3,000,000 baht of US work earnings to her separate US bank account yearly in the United States, create a doc that specifies that it is a gift, then wire that money from that separate account to my wife's separate Thai bank account, then she moves a bit of that money into my separate Thai bank account to add to my US Social Security (non-taxable to Thailand by virtue of tax treaty) coming to my separate account, we have no tax obligation to Thailand.

 

Sound about right?

 

Hope all well with everyone.

As Ukresonant implies, just going through the process of gifting and then giving it back, doesn't meet the spirit of the Gift Tax rule. if it is a Gift it must be gifted and remain gifted.

[charliebadenhop]

Maybe the govt. should start any new initiatives by going after the HUGE % of the Thai population that does not pay taxes, or significantly under-reports!!

 

[tlcwaterfall]

7 hours ago, Mike Lister said:

As Ukresonant implies, just going through the process of gifting and then giving it back, doesn't meet the spirit of the Gift Tax rule. if it is a Gift it must be gifted and remain gifted.

No reason why the person giving the gift cannot use the funds by accessing the account holders (giftee) account. With their permission of course.

[Mike Lister]

34 minutes ago, charliebadenhop said:

Maybe the govt. should start any new initiatives by going after the HUGE % of the Thai population that does not pay taxes, or significantly under-reports!!

 

The Revenue has been expanding the tax net for quite some times, using a variety of different methods, not the least of which is Revenue staff watching the volume of sales at outlets and calculating total sales. As the digital age takes hold, it will be far easier to audit accounts for accuracy. My wife ruins a business and it's almost impossible for her to cook the books, all sales are electronic, all sales are paid for electronically and all purchases are electronic, it's a zero cash operation..

[Mike Lister]

11 minutes ago, tlcwaterfall said:

No reason why the person giving the gift cannot use the funds by accessing the account holders (giftee) account. With their permission of course.

I agree, but some caution should be exercised. The Revenue Departments around the world, know full well that Gift Tax is a loop hole that can be exploited, which is why many of them have imposed additional rules and constraints to prevent tax evasion. In the UK there is a minimum of seven years after the date of the gift, before it becomes not taxable. In the US there is a maximum amount of gifting value. I suspect is wont be too long before the Thai RD implements additional rules, probably after it sees lots of farangs making large generous gifts to spouses and family  I imagine. :))

[Dogmatix]

9 hours ago, DrPhibes said:

Sorry but jumping in a bit late on this topic.  So, if I gift my non-working thai wife 3,000,000 baht of US work earnings to her separate US bank account yearly in the United States, create a doc that specifies that it is a gift, then wire that money from that separate account to my wife's separate Thai bank account, then she moves a bit of that money into my separate Thai bank account to add to my US Social Security (non-taxable to Thailand by virtue of tax treaty) coming to my separate account, we have no tax obligation to Thailand.

 

Sound about right?

 

Hope all well with everyone.

 

Gifting it to her in the US might not pass a sniff test by the RD.  Because the gifting didn't take place in Thailand, they might argue it was a transfer from your wife to herself and therefore assessable for Thai tax.  Personally I would make the gift transfer from one spouse's overseas account to the other spouse's Thai account.  Anyway it is uncharted waters, so your idea may well work but looks higher risk to me.

 

The bit about transferring to your Thai bank account to add to your US Social Security account I don't understand. How can you add to your US Social Security account in Thailand?

[Dogmatix]

7 hours ago, Mike Lister said:

As Ukresonant implies, just going through the process of gifting and then giving it back, doesn't meet the spirit of the Gift Tax rule. if it is a Gift it must be gifted and remain gifted.

 

The Civil & Commercial Code defines a gift as something irrevocable but then goes on to describe grounds under which a gift can be reclaimed.  More importantly the Civil & Commercial Code also makes all assets acquired by either spouse after marriage as common conjugal property.  So once the gift has been received in Thailand by the recipient spouse, it is legally common property. Another way of looking at it would be your spouse already has 5 million in her bank account and you gift her 2 million.  Then the following year she gifts you 2 million. Who can say whether she gifted you the 2 million you gifted her the year before or another 2 million that was already in her bank account (or that it was merely a shuffling around of conjugal common property)?  Gift tax has only been in Thailand for a few years and there are probably very few cases on record about it. As usual the decree was drafted leaving plenty of room for interpretation which has yet to be done.

 

I would expect a tightening up of the gift tax law but properly by reducing the tax exempt amount from 20 to 10 million for spouses and 10 to 5 million for others, rather than by going to the trouble of drafting pages and pages of regulations which is not the way the RD or the politicians work. The RD is extremely sparse compared to tax codes in developed countries.  That is the lazy way of legislating which also leaves open the possibility of interpreting in favour of people with money and influence, in the way we have seen several apparently open and shut cases of tax fraud eventually go in favour of the Shin family on appeal. 

[Mike Lister]

3 minutes ago, Dogmatix said:

 

The Civil & Commercial Code defines a gift as something irrevocable but then goes on to describe grounds under which a gift can be reclaimed.  More importantly the Civil & Commercial Code also makes all assets acquired by either spouse after marriage as common conjugal property.  So once the gift has been received in Thailand by the recipient spouse, it is legally common property. Another way of looking at it would be your spouse already has 5 million in her bank account and you gift her 2 million.  Then the following year she gifts you 2 million. Who can say whether she gifted you the 2 million you gifted her the year before or another 2 million that was already in her bank account (or that it was merely a shuffling around of conjugal common property)?  Gift tax has only been in Thailand for a few years and there are probably very few cases on record about it. As usual the decree was drafted leaving plenty of room for interpretation which has yet to be done.

Those things are useful to understand but this is not an area I would want to get involved in nor recommend an approach. I suspect much of this will depend on custom and tradition rather than strict interpretation of the code and this of course can change without notice. I think if I were to use Gift Tax I would want there to be a clear delineation of funds, accounts and usage.

[CharlesHolzhauer]

On 2/18/2024 at 7:47 AM, gearbox said:

It depends how the DTA is interpreted. From what I read if you are not Australian tax resident your super may be taxable in Thailand.

Yeah, the dividends/distributions of all my investment products are tax-free. This will definitely impact the amount of funds I am planning to remit to Thailand in the short term. Purchasing a condo, buying a car, or making major improvements to my wife's house will have to wait until the RD provides more clarity.

My wife and I visited the RD in our area to obtain a TIN for me (by the way, no residence certificate was required). When inquiring about gift tax, the official in charge advised my wife in Thai language that 'monetary gifts originating from overseas to a wife are tax-free.' However, there is nothing in writing.

The staff at the RD in our area is extremely helpful, friendly, and patient. They even offered assistance in completing tax returns. I wonder if the submitted tax document is considered final or will be reviewed in an other office by another official higher up the ladder.

I also wonder if officers in charge at individual RDs can interpret legal requirements similarly to the officers at IOs. Well, interesting times ahead.

For individuals happily staying in Thailand on an extension based on retirement, remitting THB800K annually and paying a relatively small amount of tax – in my case, THB16.5K – might be the best solution for me personally until things are sorted.

If it turns out that monetary gifts originating from overseas are taxed, then the LTR would be the next best solution.

At my age, I am glad that, at least, inheritances originating from overseas are tax-free until the government decides otherwise.

On 2/18/2024 at 7:47 AM, gearbox said:

I'm starting withdrawing super sometimes in 2025, to remove any doubts I'm planning to spend 7 months back in Oz.

This is a good plan if you intend to remain a tax resident of Australia.

I, too, had a plan and decided to become a non-resident of Australia for tax purposes some 13 years ago. This worked out very satisfactorily for me until the Thai government decided to tax all income from abroad for tax residents starting in 2024. It's not a deal-breaker for me personally, but expressing joy is a bit challenging. The moral of the story is, no matter how well you plan your retirement, a government official can throw a spanner in the works.

[Mike Lister]

9 minutes ago, CharlesHolzhauer said:

Yeah, the dividends/distributions of all my investment products are tax-free. This will definitely impact the amount of funds I am planning to remit to Thailand in the short term. Purchasing a condo, buying a car, or making major improvements to my wife's house will have to wait until the RD provides more clarity.

My wife and I visited the RD in our area to obtain a TIN for me (by the way, no residence certificate was required). When inquiring about gift tax, the official in charge advised my wife in Thai language that 'monetary gifts originating from overseas to a wife are tax-free.' However, there is nothing in writing.

The staff at the RD in our area is extremely helpful, friendly, and patient. They even offered assistance in completing tax returns. I wonder if the submitted tax document is considered final or will be reviewed in an other office by another official higher up the ladder.

I also wonder if officers in charge at individual RDs can interpret legal requirements similarly to the officers at IOs. Well, interesting times ahead.

For individuals happily staying in Thailand on an extension based on retirement, remitting THB800K annually and paying a relatively small amount of tax – in my case, THB16.5K – might be the best solution for me personally until things are sorted.

If it turns out that monetary gifts originating from overseas are taxed, then the LTR would be the next best solution.

At my age, I am glad that, at least, inheritances originating from overseas are tax-free until the government decides otherwise.

This is a good plan if you intend to remain a tax resident of Australia.

I, too, had a plan and decided to become a non-resident of Australia for tax purposes some 13 years ago. This worked out very satisfactorily for me until the Thai government decided to tax all income from abroad for tax residents starting in 2024. It's not a deal-breaker for me personally, but expressing joy is a bit challenging. The moral of the story is, no matter how well you plan your retirement, a government official can throw a spanner in the works.

There is a hierarchy of RD tax offices, starting with small teassabahn offices, moving up to District offices and then to Regional offices. I deal at District Office level but I have been told in the past that I may get a call from the Regional office, if they had any concerns or issues. Top of the tree is RD offices in Bangkok, to which all the regions report. I would advise against dealing with the RD at the tessabahn level, if possible. 

 

Your comments below further confirm that this is an informal traditional and customary practise rather than anything else, some care is needed in this area.

 

"When inquiring about gift tax, the official in charge advised my wife in Thai language that 'monetary gifts originating from overseas to a wife are tax-free.' However, there is nothing in writing".

[CharlesHolzhauer]

21 minutes ago, Mike Lister said:

I would advise against dealing with the RD at the tessabahn level, if possible. 

Good info, thanks - not too many would have known! The office I am dealing with is, according to Wikipedia, a district office (อำเภอ) - an amphoe aka amphur.

[offset]

Does anybody know if you bring more than 120000baht into the country whether you are required to submit a tax return 

[Mike Lister]

12 minutes ago, offset said:

Does anybody know if you bring more than 120000baht into the country whether you are required to submit a tax return 

If you are tax resident in that year and if you will owe tax that year, yes.

 

Here, read this:

 

 

[Dogmatix]

9 hours ago, CharlesHolzhauer said:

Yeah, the dividends/distributions of all my investment products are tax-free. This will definitely impact the amount of funds I am planning to remit to Thailand in the short term. Purchasing a condo, buying a car, or making major improvements to my wife's house will have to wait until the RD provides more clarity.

My wife and I visited the RD in our area to obtain a TIN for me (by the way, no residence certificate was required). When inquiring about gift tax, the official in charge advised my wife in Thai language that 'monetary gifts originating from overseas to a wife are tax-free.' However, there is nothing in writing.

The staff at the RD in our area is extremely helpful, friendly, and patient. They even offered assistance in completing tax returns. I wonder if the submitted tax document is considered final or will be reviewed in an other office by another official higher up the ladder.

I also wonder if officers in charge at individual RDs can interpret legal requirements similarly to the officers at IOs.

Gifts to a spouse are exempt up to 20 million a year and it is in writing in the form of a Royal Decree amending the Revenue Code. It is also in writing that gifts from spouse to spouse remitted from overseas are also exempted up to 20 million a year in case study published by the RD which I posted a little earlier in this thread.

 

There is definitely some review after you file your tax return.  In my case they always write to me a few weeks later asking for documents.  These are to do with allowances claimed and income. There are also inspectors who audit personal and company tax returns at random several years later.  You an be called in for an audit or they can just show up at your registered address, assuming you actually live there, although this is not very common.  I have never been called for a personal tax audit in many years of filing PIT returns but was called for a company tax audit because the inspector had spotted small VAT payment not made 4 years earlier in error and decided to go through everything with a tooth comb over two separate half days of grilling. Having said that she was not unreasonable or unpleasant and had a lovely young female assistant who was super polite and helpful. 

[CharlesHolzhauer]

8 hours ago, Dogmatix said:

Gifts to a spouse are exempt up to 20 million a year and it is in writing in the form of a Royal Decree amending the Revenue Code. It is also in writing that gifts from spouse to spouse remitted from overseas are also exempted up to 20 million a year in case study published by the RD which I posted a little earlier in this thread.

I appreciate your contribution and personal views regarding the gift tax issue in both this and previous posts;

It reads and sounds reassuring, providing a sense of confidence and comfort. Apart from the 'Gift Tax Case' you provided in another thread, would you be able to lay your hands on the Royal Decree amending the Revenue Code, which includes gifts originating from abroad?

Gifting relatively large sums of money on an annual or bi-annual basis without a specific worded document from RD is wide open for different interpretations; It could come back to haunt either the Gifter or Giftee, depending on the official in charge assessing the gift.

[happydreamer]

On 2/17/2024 at 8:24 PM, Kalasin Jo said:

Do you mean the tax bands apply to much lower levels of income? 

Yes.  Back home I'd need to be pulling in over a half mil to be taxed at the same rate

[ukrules]

3 hours ago, happydreamer said:

Yes.  Back home I'd need to be pulling in over a half mil to be taxed at the same rate

Half a million in what?

[mania]

On 2/9/2024 at 7:04 PM, Mike Lister said:

Income earned before 1 January 2024 is not taxable here.

I think this will be the most interesting thing to see...as to how that is sorted/proven

 

In simplistic terms I would guess for Thailand both government & banks it will be easiest to tax all incoming transfers period.

 

Then leave it to the tax payer to file a claim for a refund yearly with proof provided.

 

Otherwise I can imagine more banks balking at trying to sort this out

[DrPhibes]

On 2/18/2024 at 6:40 PM, Dogmatix said:

 

Gifting it to her in the US might not pass a sniff test by the RD.  Because the gifting didn't take place in Thailand, they might argue it was a transfer from your wife to herself and therefore assessable for Thai tax.  Personally I would make the gift transfer from one spouse's overseas account to the other spouse's Thai account.  Anyway it is uncharted waters, so your idea may well work but looks higher risk to me.

 

The bit about transferring to your Thai bank account to add to your US Social Security account I don't understand. How can you add to your US Social Security account in Thailand?

It's the amount I receive from SS each month direct deposited to my Bangkok bank account.

[Mike Lister]

33 minutes ago, mania said:

I think this will be the most interesting thing to see...as to how that is sorted/proven

 

In simplistic terms I would guess for Thailand both government & banks it will be easiest to tax all incoming transfers period.

 

Then leave it to the tax payer to file a claim for a refund yearly with proof provided.

 

Otherwise I can imagine more banks balking at trying to sort this out

This is not a banks issue to sort out, it's a tax payer problem! Banks don't have to prove anything, the taxpayer does,

 

There is simply no way that inbound transfers will be taxed at source, it will not happen because there are too many unknown variable such as was the recipient even tax resident that year and  whether the funds assessable or exempt by treaty.

 

The tax payer needs to know whether the income was earned before 1 January 2024 and be able to prove it if asked. A statement dated 1 January 2024 will go a long way to proving that case.

[Mike Lister]

I've removed a post and a nonsense video. The post was nothing short of scaremongering and the video is a lawyer trying to scare people and drum up business.

 

The term, "taxed at source", in the context of funds remitted to Thailand, refers to funds being taxed once they arrive in the taxpayers account in Thailand. It is clearly impossible for the Thai RD to deduct tax from funds whilst they are still overseas since that is outside of their legal jurisdiction!

 

I'm OK with videos about tax but they need to come from a reliable and balanced source, preferably associated with the major international tax consultancies or similar. Videos touting for tax work or from famous YouTube names, probably wont pass the sniff tests.

 

[happydreamer]

6 hours ago, ukrules said:

Half a million in what?

Usd

[JimGant]

On 2/19/2024 at 9:05 PM, Dogmatix said:

Gifts to a spouse are exempt up to 20 million a year and it is in writing in the form of a Royal Decree amending the Revenue Code. It is also in writing that gifts from spouse to spouse remitted from overseas are also exempted up to 20 million a year in case study published by the RD which I posted a little earlier in this thread.

 

Let's not confuse income tax with gift tax. A gift tax is a 5% tax on gift amounts exceeding 20M/10M, depending on recipient. But, gifts are all from "after tax" monies, so there's no escaping income tax by calling a remitted amount of money a "gift." If a remitted amount qualifies as assessable income, this assessable amount is not affected by whether or not it is characterized as a "gift." Nice try, however.

[JimGant]

6 hours ago, Mike Lister said:

The term, "taxed at source", in the context of funds remitted to Thailand, refers to funds being taxed once they arrive in the taxpayers account in Thailand.

 

Actually, "taxed at source" is literal, and means taxes withheld by the payer to the payee. Perhaps a better descriptor would be "taxed at entry point." But whatever it's called, there certainly will not be any income taxation on a fungible lump of monies arriving in Thailand. Common sense prevails here.

[JimGant]

On 2/19/2024 at 12:34 AM, DrPhibes said:

So, if I gift my non-working thai wife 3,000,000 baht of US work earnings to her separate US bank account yearly in the United States, create a doc that specifies that it is a gift, then wire that money from that separate account to my wife's separate Thai bank account, then she moves a bit of that money into my separate Thai bank account to add to my US Social Security (non-taxable to Thailand by virtue of tax treaty) coming to my separate account, we have no tax obligation to Thailand.

 

Your US gift to your wife has no US gift tax obligation. And, it is understood that such monies are after-tax monies (or soon will be, once you pay any taxes in arrears). And, with the prevailing understanding that Thailand holds any income taxed by the home country as tax exempt by Thailand -- then, whether or not this money is sent by you direct to Thailand, or by your wife from her account where you deposited her gift -- there's no assessable income involved. But, as stated ad nauseum, this is all part of the self-assessment of the monies you remit to Thailand, plus the requirement to keep good, defensible records.

 

So, having said all that, there's no need to filter money through a wife's account in the guise of a gift. Yes, if you do, she can easily transfer some of that from her Thai acct. to your Social Security bank account. Or, you could just send that money direct to your Social Security bank account in Thailand, secure in the knowledge that this is not assessable income for Thai tax purposes.

[Klonko]

28 minutes ago, JimGant said:

 

Let's not confuse income tax with gift tax. A gift tax is a 5% tax on gift amounts exceeding 20M/10M, depending on recipient. But, gifts are all from "after tax" monies, so there's no escaping income tax by calling a remitted amount of money a "gift." If a remitted amount qualifies as assessable income, this assessable amount is not affected by whether or not it is characterized as a "gift." Nice try, however.

Correct if I remit money from my foreign account to my Thai account and pass the money on as gift. If I transfer money from my foreign account to the beneficiary 's Thai account as gift, it does not constitute assessable income in Thailand, at least as long as the beneficiary does not return the money to me and does not use the money on my behalf.

[JimGant]

2 minutes ago, Klonko said:

If I transfer money from my foreign account to the beneficiary 's Thai account as gift, it does not constitute assessable income in Thailand, at least as long as the beneficiary does not return the money to me and does not use the money on my behalf.

 

Wrong. That you characterize the remittance as a "gift" doesn't affect the Thai taxation assessability of that remittance. A remittance to buy a condo, to buy fish sauce, or to be a gift to your lover -- no affect on the assessability of that remittance for income tax purposes.

[JimGant]

7 minutes ago, Klonko said:

If I transfer money from my foreign account to the beneficiary 's Thai account as gift, it does not constitute assessable income in Thailand

 Uh, that loophole certainly doesn't pass the sniff test.