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

[sirineou]

2 minutes ago, Mike Lister said:

The spirit and intent of the new ruling is to close loopholes and create a level of playing field.

All new policies have unintended consequences. 

IMO the expat remittances taxation  will in the short run have a negative affect in increasing revenue from those sources.  

It is possible that once implemented it would turn out to be a non issue for most expats as they will fall below the taxation threshold when all available excisions are considered and we will all continue our financial situation as we always had, 

But right now we have reduced the amount we transfer each month to that of my SSI pension only and supplement it with savings we have  here. When we go to the states this spring we plant to fly back with the maximum amount allowed without reporting. 

Hopefully by next year we will all know exactly where we stand. 

[UKresonant]

Thailand is by default Remittance Basis, you don't have to claim that status.

 

But do we see any possible Thai RD parallels for 2024 onwards, within this UK Tax Forum Q & A Exchange?  🤐

......

Q_1 . I am a UK resident but non-domciled.  I do not have UK income. I have foreign income which I have not remitted to UK. In such case, do I need to file a tax return? I read somewhere that I don't need to..

A_1. You will need to complete a Self Assessment Tax return (SA100), in order to claim the 'remittance basis'.  You will also need to complte SA109, boxes 28 to 40, to declare the unremitted income. (  🤯 )

 

Q_2 . Separate  question.  If I remit the money to and for use in UK, will I only be taxed for the income or gain arose from that particular tax  year disregarded any income or gain arose in previous tax years which I did not remit any fund to UK?

 

A_2 Any unremitted income from a previous year, that is remitted to the UK in a later year, will be subject to tax in that later year. .....

 

https://community.hmrc.gov.uk/customerforums/sa/4ec30d4c-3b25-ee11-a81c-000d3a8751e3

 

It does not scope the remittance , if non-resident later though, and then resident again scenario. Found a few UK forums with conflicting views maybe yes, maybe no!

 

 

 

 

[Yumthai]

Regarding individual tax enforcement, Thailand is no different than most if not all countries:

- For each single tax year, tax office will evaluate individual tax residence first and foremost. Then, a different set of tax rules will be applied subsequently whether the individual is considered resident or non-resident for tax purposes.

- Non-residents for tax purposes are only taxed on their local(Thai)-sourced income.

- DTAs can be applied, if any, in case of multiple tax residences.

- Tax return is filed for 1 (calendar) year at a time (income from year Y23 is filed in year Y24 and so on).

 

I get your point on Thai PM "intention" to close all tax loopholes however Thai tax residence rules, as it is for now, do not strictly allow it.

 

https://taxsummaries.pwc.com/thailand/individual/significant-developments

PWC:

On 15 September 2023 and 20 November 2023, The Revenue Department issued No. Paw. 161/2566 and Paw. 162/2566 regarding personal income tax (PIT) for a Thai resident who brings assessable income into Thailand from abroad. This order shall come into force for assessable income brought into Thailand from 1 January 2024 onwards.

According to this order:

• A Thai resident means a person residing in Thailand at one or more times for a period equal to 180 days in any tax (calendar) year.
• If a Thai resident earns foreign-sourced income in 2024 and brings it into Thailand in any subsequent year in which they are resident in Thailand, they will be subject to PIT on the income.

It is clearly stated that the new order targets only Thai residents (implied Thai tax residents).

 

https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Tax/Thai-sourced-income-and-residence-rules

Mazars:

If such income is considered foreign sourced income (income derived from work performed outside of  Thailand, business conducted outside of Thailand, or property situated outside of Thailand) it will be taxed in Thailand only if: i. an individual is a Thai tax resident; and ii. such individual brings such income into Thailand in the same calendar year that he receives it.

 

Second condition is now obsolete but the individual still has to be Thai tax resident.

 

Just my 2 cents quoting legal current information.

 

[Mike Lister]

The main reason I opted out of the very long tax thread in January was because several posters were attempting to interpret tax law, even though they weren't lawyers and didn't have formal training in Thai tax law. There is absolutely no reason why posters shouldn't debate those things and apply their own interpretations of the law, that is after all the basis of social networking forums such as this plus it's intellectually stimulating and fun.....have at it I say!

 

The problem for me however is that the debate can never end because nobody is capable of deriving the definitive answer hence the 6.500 post long thread that went on for six months. These reasons are also why I moved this debate out of the Simple Tax Guide thread in order to keep it easy to read for newcomers. I hope that helps explain why I'm not going to join in the debate, despite having started it.

 

 

[JohnnyBD]

2 hours ago, Mike Lister said:

The spirit and intent of the new ruling is to close loopholes and create a level playing field. All of that seems to be negated if a non-citizen is able to take six months and one day outside the country before opening up the tax free sluice gates! The only reason those funds are not taxable is because the taxpayer wasn't physically in the country year in order to file the tax return and wasn't deemed tax resident, even though the funds were earned when they were. Not only does that not pass the sniff test, it doesn't pass any test other than the strict interpretation of tax residency which in this instance may not be enough.

I agree with you, that the spirit and intent of the law is important, but if someone is not in Thailand for at least 180 days, and that person is required to pay taxes to the US government on their US sourced income regardless of where that person lives, then that meets the sniff test and any other test. That person is not cheating the system, because he is paying taxes on his US income as required by law. Thailand has no moral or legal right to tax that person. Luckily for me, I can stay longer in the US and spend more time with my children & grandchildren, that way I don't have to worry about the Thai tax man and the double taxation problem. At least Thailand will still benefit from me spending my US sourced income in Thailand and by supporting my Thai wife & her family. My conscience is clear on this issue. Good luck to all.

Edited February 29 by JohnnyBD
typos

[Mike Lister]

3 minutes ago, JohnnyBD said:

I agree with you, that the spirit and intent of the law is important, but if someone is not in Thailand for at least 180 days, and that person is required to pay taxes to the US government on their US sourced income regardless of where that perosn lives,  then that meets the sniff test and any other test. That person is not cheating the system, because he is paying taxes on his US income as required by law. Thailand has no moral or legal right to tax that person. Luckily for me, I can stay longer in the US and spend more time with my children & grandchildren, that way I don't have to worry about the Thai tax man and the double taxation problem. At least Thailand will still benefit from me spending my US sourced income in Thailand and by supporting my Thai wife & family. My conscience is clear on this issue. Good luck to all.

To be clear, this topic is not aimed at you or any of your actions. It is an interesting nuance of Thai tax law that we do need to better understand for everyone's benefit.

[JohnnyBD]

2 minutes ago, Mike Lister said:

To be clear, this topic is not aimed at you or any of your actions. It is an interesting nuance of Thai tax law that we do need to better understand for everyone's benefit.

Thank you. I appreciate your reply.

[JimGant]

I have to agree with Mike on this one, but mainly as it impacts Thai citizens/fat cats, rather than we expats. Heretofore, the fat cat could just wait until a later year to bring in his foreign earnings to escape taxation. But that loophole appears to be closed. Certainly the powers-that-be aren't now going to allow fat cats to take extended vacations that negate their tax residency -- to use that year to remit all their overseas income..... But, wait -- maybe there's some interpretation that says, if no tax return is required to be filed for a year in which you weren't a tax resident, then no taxes on remittances received in that tax year. Yeah, doesn't pass the sniff test -- but maybe a deliberate "out" to accommodate the fat cats, who certainly would of had a say in all of this.

 

But, who cares -- no extended vacations on my horizon. Plus, Yanks aren't affected by any of this (yes, I know -- you Old World folks get tired of hearing this).

[UKresonant]

I'm just on the phone just now so haven't looked back for the link to the RD page PDF, noted on the other .... from 2024 Thread. "The Norwegian question" which suggested a Global Filing, but with a remittance taxation, think it was about page 222 on that thread.

 

I keep having to have a look back to see that the Tax return filing is linked to remittances somehow, as distinct from

 

"Tax filing criteria."

 

Totally isolated from;-

 

Taxed on remitted assessable income. (after allowances.

 

Then I calm down again 

Edited February 29 by UKresonant

[UKresonant]

3 hours ago, JimGant said:

I have to agree with Mike on this one, but mainly as it impacts Thai citizens/fat cats, rather than we expats. Heretofore, the fat cat could just wait until a later year to bring in his foreign earnings to escape taxation. But that loophole appears to be closed. Certainly the powers-that-be aren't now going to allow fat cats to take extended vacations that negate their tax residency -- to use that year to remit all their overseas income..... But, wait -- maybe there's some interpretation that says, if no tax return is required to be filed for a year in which you weren't a tax resident, then no taxes on remittances received in that tax year. Yeah, doesn't pass the sniff test -- but maybe a deliberate "out" to accommodate the fat cats, who certainly would of had a say in all of this.

 

But, who cares -- no extended vacations on my horizon. Plus, Yanks aren't affected by any of this (yes, I know -- you Old World folks get tired of hearing this).

By omission it does appear to be the the case though, and as it would likely my full time in Thailand, later, is likely to be between 170days to 270 days in a calendar year. I may tend to keep the 170 day in Th years and remittances in blacked out room, stealth mode....

 

Don't want to be sniffed by RD!

[Mike Lister]

1 minute ago, UKresonant said:

By omission it does appear to be the the case though, and as it would likely my full time in Thailand, later, is likely to be between 170days to 270 days in a calendar year. I may tend to keep the 170 day in Th years and remittances in blacked out room, stealth mode....

 

Don't want to be sniffed by RD!

This issue has some way to run yet, I wouldn't think the worst at this stage as the picture could easily change quite dramatically.

[Danderman123]

12 hours ago, sirineou said:

 

But right now we have reduced the amount we transfer each month to that of my SSI pension only and supplement it with savings we have  here. When we go to the states this spring we plant to fly back with the maximum amount allowed without reporting. 

Hopefully by next year we will all know exactly where we stand. 

Same here. Plus I will spend 187+ days out of Thailand this year.

 

Next year, I will monitor the situation to see how many expats are tagged for not filing 2024 income tax returns. Apart from expats with official jobs who already pay taxes, I don't know anyone who plans to fill out a 2024 tax return.

[Danderman123]

6 hours ago, JimGant said:

 

 

But, who cares -- no extended vacations on my horizon. Plus, Yanks aren't affected by any of this (yes, I know -- you Old World folks get tired of hearing this).

Your implication is that the US - Thailand tax treaty prohibits double taxation, so US nationals in Thailand are already fully taxed.

 

The problem is that retirees are often living off capital gains income, and Thai tax rates for capital gains are generally higher than US tax rates. So, US nationals may indeed owe tax to Thailand, if they file a return.

[JimGant]

1 hour ago, Danderman123 said:

The problem is that retirees are often living off capital gains income, and Thai tax rates for capital gains are generally higher than US tax rates. So, US nationals may indeed owe tax to Thailand, if they file a return

 

Excellent point. If Thai taxes exceed US taxes, then, yes, your total tax bill will equate to the higher of whichever country's tax bill is higher. Here's the language from the DTA:

Quote

Except as otherwise provided in this Convention, each Contracting State may tax gains from the
alienation of property in accordance with the provisions of its domestic law.

 

This is unclear as to which country has "primary" taxation authority. But it doesn't matter when it comes to your total tax bill. If my US cap gain tax is $1000, and my Thai tax is $1200, if I have to pay full fare to the US, but give that $1000 as a credit against the Thai tax bill of $1200 -- then I end up paying the US $1000, and Thailand $200. Total bill: $1200. Reverse that, paying Thailand full fare of $1200, but using $1000 of that as a credit to cancel out my US tax bill -- again, total bill between the two countries is $1200.

 

But, point well taken -- Yanks may now have situations where having to file Thai taxes makes total tax bill between both countries higher than just paying US taxes.

[Danderman123]

1 hour ago, JimGant said:

 

Excellent point. If Thai taxes exceed US taxes, then, yes, your total tax bill will equate to the higher of whichever country's tax bill is higher. Here's the language from the DTA:

 

This is unclear as to which country has "primary" taxation authority. But it doesn't matter when it comes to your total tax bill. If my US cap gain tax is $1000, and my Thai tax is $1200, if I have to pay full fare to the US, but give that $1000 as a credit against the Thai tax bill of $1200 -- then I end up paying the US $1000, and Thailand $200. Total bill: $1200. Reverse that, paying Thailand full fare of $1200, but using $1000 of that as a credit to cancel out my US tax bill -- again, total bill between the two countries is $1200.

 

But, point well taken -- Yanks may now have situations where having to file Thai taxes makes total tax bill between both countries higher than just paying US taxes.

The basic point is that preparing a Thai tax return is going to be a big headache for aged Farangs living in the village. I suspect few will do so, until and unless the Thai government creates some motivation. 

 

And, if the new rules are intended to capture tax revenue from rich Thais, then the RD isn't going to spend a lot of time making tax forms easier for aged Farangs in the village. So, DTA support is probably going to be minimal.

[TigerCat]

If you sold a condo before January 1, 2024, but sold it for less than what you paid for it, I think you don't owe capital gains.

 

But the money (less than you paid for it), is that considered Accessible Income, and you have to file a tax return?  

Edited March 2 by TigerCat

[UKresonant]

If there is no gain so I can't see anything assessable. 

 

(Only reason would to be to match the loss against a gain, don't know if that's even relavant in the Thai tax code)

[Mike Lister]

39 minutes ago, TigerCat said:

If you sold a condo before January 1, 2024, but sold it for less than what you paid for it, I think you don't owe capital gains.

 

But the money (less than you paid for it), is that considered Accessible Income, and you have to file a tax return?  

As the previous poster has accurately said, no gain or income prior to 1 January 2024 is assessible.

[Fujionrye]

On 2/10/2024 at 11:24 AM, Liverpool Lou said:

All Thais with income are obliged to declare it and pay tax if applicable - many are within the exempt bracket.  Income-earning Thais do not have any exemption from filing a tax return.   Who are "the Thais earning a lot of money" who are exempted from tax to whom you refer?

The 30 000 000  who don't file a return?

[Dogmatix]

On 2/29/2024 at 1:18 PM, JimGant said:

I have to agree with Mike on this one, but mainly as it impacts Thai citizens/fat cats, rather than we expats. Heretofore, the fat cat could just wait until a later year to bring in his foreign earnings to escape taxation. But that loophole appears to be closed. Certainly the powers-that-be aren't now going to allow fat cats to take extended vacations that negate their tax residency -- to use that year to remit all their overseas income..... But, wait -- maybe there's some interpretation that says, if no tax return is required to be filed for a year in which you weren't a tax resident, then no taxes on remittances received in that tax year. Yeah, doesn't pass the sniff test -- but maybe a deliberate "out" to accommodate the fat cats, who certainly would of had a say in all of this.

 

But, who cares -- no extended vacations on my horizon. Plus, Yanks aren't affected by any of this (yes, I know -- you Old World folks get tired of hearing this).

 

The tax residency rules are pretty black and white in Thailand 180 days out in a tax year and you're out of the net whether Thai or not.  I recall Thaksin's daughter, who is now in line to be PM, when she was studying in the UK was used as a vehicle to remit a huge family profit on something but it was challenged purely on the grounds that they had slipped up and she was out of the country a couple of days less than 180. 

[UKresonant]

Just now, Dogmatix said:

 

The tax residency rules are pretty black and white in Thailand 180 days out in a tax year and you're out of the net whether Thai or not.  I recall Thaksin's daughter, who is now in line to be PM, when she was studying in the UK was used as a vehicle to remit a huge family profit on something but it was challenged purely on the grounds that they had slipped up and she was out of the country a couple of days less than 180. 

Yeah, picking the  slightly past midnight , rather than the late evening departure flight, can cost one of your 179 days of the non-resident year, then perhaps much more. Could a flight delay cost you a year of Tax theoretically . Unless you plan your last trip of the Tax year for December and stay for New Year. (oh maybe I'm thinking Globally 😊 )

 

 

Edited March 10 by UKresonant