Personal Income Tax Guide (for foreigners) Thailand

[Mike Lister]

1 minute ago, Klonko said:

DTA: while a DTA may well work in theory, the practical implication is unclear e.g., is certified translation required for foreign account and/or tax statements, and are foreign taxes recognised when paid or only when finally assessed by foreign RD (i.e. reclaim only possible after paying full Thai taxes). 

Unspecified accounting method (FIFO, LIFO, etc.) applied by Thai RD for determining the source of remittances as income or capital.

 

≥  180 days for qualifying as tax resident: There was once a post stating that the Thai RD has calculated fewer days, but I do not remember if this was referring to  a long past event, due to specific practice by a local Thai RD and if the calculation was based on midnight. Is there any source for the applicable calculation method?

 

I expect that many issues will not be officially clarified but subject to local Thai RD practice rendering tax planning rather difficult.

Its premature to start worrying about those things, I cannot see the labor and paper intensive overhead of DTA's being something that regional, let alone local RD offices, will be capable of getting into, even of they wanted to. Not when the potential exists for twenty or more different languages involved and 90 or more different formats, it's simply not going to happen.. 

[aussienam]

The property sale overseas scenario is still an uncertain issue for me.  

I purchased the property 2017. I will sell it in the future with expected capital gains.  

Can it be confirmed that my capital used to purchase my property in 2017, is tax-free if remitted to Thailand after the property sale? 

Australia has a Capital Gains tax.  But has an exemption on investment properties held by Australian tax residents, in that if the property was held for over 12 months, there is a 50% CGT-free component. So only 50% of the capital gains are taxed. I am assuming therefore that the 50% untaxed capital gains is taxable if remitted into Thailand.  

 

I receive rental income that goes straight into my account and ready to transfer to Thailand when I need funds.  That rental income is pre-tax.  Our tax returns in Australia are not lodged until after 1 July each year and can be delayed up to May 15 the following year.  Many tax documents take months to receive anyway. 

This means, remitting income from rent, dividends, savings interest, managed funds, etc, that has not yet been tax assessed in your own country, it can be taxed at the full tax rate in Thailand (not including the part or full tax exemptions that may or may not apply). 

It seems that this income needs to be hoarded away until it has been tax assessed in your country and any taxes owing have been deducted.  In my case this means if I earned income on 1 Jan 2024, I potentially cannot remit that income into Thailand until after May 2025 when my tax deductions are finally processed (likely June/July 2025). So 18-20 months potentially holding my income in Australia from being remitted into Thailand, to avoid being taxed on pre-tax income streams. 

Problem of course as well is that income received is re-invested back into investment pools during the year and coming in and out.  Creating a nightmare landscape of now having to identify sources of funds and whether or not they have or have not been taxed. 

 

Until clarity is made, I would consider remitting any large sum of money into Thailand, to buy a Thai property, car, putting into Savings here, post Jan 2024 as open to a potentially huge tax loss and unless you have money to burn, don't do it. 

 

Eventually the majority of people will not have pre-2024 savings, capital to rely on as tax-free component.  

 

Interestingly, something I have noticed is Facebook postings for Thai properties for sale.  Any mention posted in their comments about the Thai taxes potentially adding significant costs to a property purchase in Thailand, are being deleted. 

I would say property agents here, know about the issues and are getting nervous about the repercussions, wanting to stop consumers from being aware of the taxes. 

 

[Mike Lister]

26 minutes ago, aussienam said:

The property sale overseas scenario is still an uncertain issue for me.  

I purchased the property 2017. I will sell it in the future with expected capital gains.  

Can it be confirmed that my capital used to purchase my property in 2017, is tax-free if remitted to Thailand after the property sale? 

Australia has a Capital Gains tax.  But has an exemption on investment properties held by Australian tax residents, in that if the property was held for over 12 months, there is a 50% CGT-free component. So only 50% of the capital gains are taxed. I am assuming therefore that the 50% untaxed capital gains is taxable if remitted into Thailand.  

 

I receive rental income that goes straight into my account and ready to transfer to Thailand when I need funds.  That rental income is pre-tax.  Our tax returns in Australia are not lodged until after 1 July each year and can be delayed up to May 15 the following year.  Many tax documents take months to receive anyway. 

This means, remitting income from rent, dividends, savings interest, managed funds, etc, that has not yet been tax assessed in your own country, it can be taxed at the full tax rate in Thailand (not including the part or full tax exemptions that may or may not apply). 

It seems that this income needs to be hoarded away until it has been tax assessed in your country and any taxes owing have been deducted.  In my case this means if I earned income on 1 Jan 2024, I potentially cannot remit that income into Thailand until after May 2025 when my tax deductions are finally processed (likely June/July 2025). So 18-20 months potentially holding my income in Australia from being remitted into Thailand, to avoid being taxed on pre-tax income streams. 

Problem of course as well is that income received is re-invested back into investment pools during the year and coming in and out.  Creating a nightmare landscape of now having to identify sources of funds and whether or not they have or have not been taxed. 

 

Until clarity is made, I would consider remitting any large sum of money into Thailand, to buy a Thai property, car, putting into Savings here, post Jan 2024 as open to a potentially huge tax loss and unless you have money to burn, don't do it. 

 

Eventually the majority of people will not have pre-2024 savings, capital to rely on as tax-free component.  

 

Interestingly, something I have noticed is Facebook postings for Thai properties for sale.  Any mention posted in their comments about the Thai taxes potentially adding significant costs to a property purchase in Thailand, are being deleted. 

I would say property agents here, know about the issues and are getting nervous about the repercussions, wanting to stop consumers from being aware of the taxes. 

 

Your post is too long to answer in one go so I'll address parts of it now and the rest later.

 

Hypothetically, the total value of your asset as of 31 December 2023 should be free of Thai tax, according to what has been said thus far, this whole business is alleged to start again new on 1 January 2024. Exactly how you document that value on 31 December 2023, is another story, simply, you can't accurately or easily do that. In theory, if you were to sell your house today and import those funds, the pre December 31 amount would be free of tax but the profit earned since, might be taxable, subject to all the usual caveats. You can see from that example how unworkable that sort of system would be, which is why there will almost certainly be a different set of criteria, other than value as of 21 Dec 2023.

 

It may well be that the Thai RD says that all funds that come from countries with whom they share a DTA, AND where the asset that is being transferred has been through a local tax system eg local capital gains, those profits can be imported to Thailand free of Thai tax. That would make sense and is easily workable but the realty is that at this stage, we simply don't know.  One thing is abundantly clear, the Thai property market needs overseas buyers who would disappear in a flash if their inbound funds, used to buy that condo in Phuket, were taxed.....I don't believe that will happen, not for one second.

 

 

[Neeranam]

On 1/11/2024 at 4:54 PM, Mike Lister said:

20. Inheritance and Gifts between certain family members in Thailand are free of tax, up to a maximum amount and subject to certain conditions.

From my perspective, this is the most important number in your list, but also the shortest. 

Most foreigners will NOT have to pay any tax. 

I have to pay tax as I work for a German company - I believe I can avoid paying tax by gifting my salary to my Thai relatives, including unworking wife/ mother-in-law, children.

If we can gift 20 million a year, then it is Hunky Dory.

[Mike Lister]

2 minutes ago, Neeranam said:

From my perspective, this is the most important number in your list, but also the shortest. 

Most foreigners will NOT have to pay any tax. 

I have to pay tax as I work for a German company - I believe I can avoid paying tax by gifting my salary to my Thai relatives, including unworking wife/ mother-in-law, children.

If we can gift 20 million a year, then it is Hunky Dory.

It's the shortest for two reasons. A) we don't know enough about the Thai RD position as far as international Gifts are concerned, and, B) Gifting is a tax dodge of last resort, there will almost certainly be simpler measures established without needing to resort to this.  Western countries surround Gifting with rules, designed to prevent tax avoidance. In the US there are low maximums, in the UK the gifter must survive the recipient by seven years, the RD is not stupid, they will know how easily this rule can be misapplied.

[Neeranam]

16 minutes ago, Mike Lister said:

It's the shortest for two reasons. A) we don't know enough about the Thai RD position as far as international Gifts are concerned, and, B) Gifting is a tax dodge of last resort, there will almost certainly be simpler measures established without needing to resort to this.  Western countries surround Gifting with rules, designed to prevent tax avoidance. In the US there are low maximums, in the UK the gifter must survive the recipient by seven years, the RD is not stupid, they will know how easily this rule can be misapplied.

My point is that this sounds like the best was to avoid tax, not evade it, so we should find out the Thai RD position on it. I'm not sure if you mean a 'tax dodge' is avoidance or evasion, with one being legal the other not. 

Personally, I don't think the RD will go after foreigners, unless they are bringing in $1 million + yearly. 

 

 

[John Scot]

On 1/11/2024 at 4:54 PM, Mike Lister said:

IMPORTANT - This document is provided on an as-is basis and is not intended to provide legal, financial or tax advice. The authors are not lawyers or tax advisers. You the reader remain wholly responsible for your own financial and tax affairs. No warranty is given for the contents of this document, either express or implied.

 

 

A SIMPLE GUIDE TO PERSONAL INCOME TAX IN THAILAND

16 January, 2024

Version 6, Rev A

Draft work in Progress

 

1. The purpose of this guide is to provide foreigners living in Thailand with the simplest possible overview of Personal Income Tax (PIT) in Thailand. The scope of this document is limited to PIT.  

 

2. You may have heard that new tax laws came into effect on 1 January this year. In fact, that is not true! The old tax rules still exist and remain valid, albeit just one minor change to them was made in November last year. Previously, anyone who earned money overseas and remitted it to Thailand in a different tax year, received that money free of Thai tax. That loop hole in the Revenue Department (RD) tax code has been exploited by wealthy Thai’s and is now closed.  Money earned overseas after 1 January 2024 and remitted to Thailand in any year, is now potentially liable to Thai tax and must be assessed via a tax return, subject to a minimum income threshold . The purpose of the new rule is to reduce tax avoidance and to help detect tax evasion. Unfortunately, it now means that overseas funds transfers by foreigners living in Thailand, also have an increased risk of being taxed.

 

3. This guide is an overview of the core parts of the PIT system. It is not designed to be exhaustive and it doesn’t cover all aspects of PIT, nor is it intended to  override anything produced by the RD, or specialist tax companies such as Sherrings or Mazzars. This guide also does not address all types of income or the rules relevant to people from every country. What this guide will provide is a starting point for readers to manage their own tax affairs and it will also provide most of the answers for those with simple tax affairs, especially the average pensioner. It must be clearly understood that great uncertainty exists at present regarding the rules the RD will adopt governing the taxation of incoming funds and the reporting of them on a tax return. At this stage there are many unanswered questions and  much is not known. As new information is made available, we will try to update this document and keep you appraised of new developments. 

 

4. There are also certain types of visa that fall outside of the RD tax code. The LTR visa for example is one of them, it  received its tax exempt status by royal decree hence visa holders will not to be assessed for Thai tax, in accordance with the rules issued along with that visa and they are specifically excluded from this explanation.

 

5. Terminology and Process: Income that is not remitted to Thailand is Excluded, this has been confirmed by the Thai RD. Overseas Funds Transfers that are remitted to Thailand must be reviewed by YOU the tax payer to determine their nature and the source of funds. Some Transfers may be Exempt under the terms of a Dual Tax Treaty (DTA) (see below) or because of RD rules. For example, the RD has confirmed that income and savings earned before 1 January 2024 are Exempt. Similarly, the DTA between the US and Thailand confirms that US Social Security (SSc) income is Exempt from tax in Thailand. What remains after Exempt funds are deducted, is income that is regarded in this document, and in RD terminology, as Assessable Income that YOU must report on a tax return, subject to a minimum threshold amount. Assessable Income is entered on the tax return and assessed for tax and the appropriate Thai Tax Exclusions, Deductions and Allowances (TEDA) applied. If a positive amount remains, that is considered to be Taxable Income that is subject to tax, in accordance with the Thai Tax Tables.

 

6. A Dual Tax Agreement/Double Tax Agreement (DTA): is an agreement between two countries that sets out which of the two countries has the right to tax specific types of income and all the associated rules. It’s purpose, in part, is to ensure that the same funds are not taxed twice by two different countries  and provides a means by which tax that is paid twice, can be recovered, how and from where. Note: If the taxpayer income arises in one country but the tax  payer is resident in a second country, use of a DTA can result in increased tax being paid, if the second country has a higher rate of tax on the type of income in question, than the other.  

 

7. This document is being drafted in January 2024. Tax returns are due between now and 31 March 2024, which cover the period, 1 January 2023 until 31 December 2023. The tax changes affecting foreigners in Thailand came into effect 1 January 2024 which means this years income activity is not reportable until at least 181 days from the start of the year. For year round residents, a tax return will be due, beginning 1 January next year, 2025.  

 

8. If you stay in Thailand for more than a cumulative 179 days, between 1 January and 31 December each year, you will be and always were considered to be Tax Resident in Thailand during that year, almost entirely  regardless of the type of visa you have (special tax exempt classes of visa excluded). It doesn’t matter that you may be Tax Resident in your home country or elsewhere or that you pay tax in those countries, Thailand will still regard you as Tax Resident. Tax Residency and Immigration status (and the visa you hold) are different things. Tax residency is based solely on the number of days you spend in Thailand. A day appears to be counted using the entry and exit stamps in your passport, unlike many other countries where it is determined by where you are at midnight. The number of days counter rests to zero, on 1 January each year.

 

9. It should be noted that there always was an obligation on the part of foreigners who were tax resident in Thailand, to report Assessable Income every year, provided they met the minimum income threshold. This law was not actively enforced in the past and many remained unaware of their obligation. Very little has changed today, that obligation remains unchanged albeit the scope of income that must be reported has now increased and tax collection has taken on a higher profile. 

 

10. Because you are Tax Resident, YOU must review your inbound overseas Funds Transfers each year to determine if they represent income assessable to tax in Thailand, nobody else will do this for you. Our current interpretation of the RD rules suggest that if your assessable income does not exceed 120,000 baht per year, you do not need to file a tax return (60,000 baht if your only assessable income is bank interest paid to you by a bank in Thailand). If your assessable income is over 120,000 baht per year, you must file a Thai tax return between 1 January and 31 March. 

 

11. Your income in Thailand is defined as any money paid to you inside Thailand, as well as, potentially, any money you receive from overseas. Both types are potentially assessable income for Thai Tax Residents. There are many types of income that can be classed as assessable, the Thai RD lists some of them and is linked below, however, the list is not exhaustive and does not consider the many different types of overseas income that foreigners may have:

 https://sherrings.com/personal-income-tax-in-thailand.html#:~:text=Section%2040%20of%20Thailand's%20Revenue,Pensions%3B%20and

 

12. Income is understood to mean money that is received from any source. The definition of income that is derived from  within Thailand is fairly clear, if you work and have a job and you are a Tax Resident, the payment you receive is assessable for tax.  Interest that is paid to you on Thai bank accounts is regarded as assessable income, as is income from investments such as stocks and bonds within Thailand. As a general principle, any payment you receive for work that arises within Thailand is regarded as assessable income. You should note that if you are generating income by working while staying in Thailand, it is (and has always been) irrelevant where that money is paid and whether you bring the money into the country or keep it offshore. That money arises in Thailand hence it is taxable here.

 

13. There is no similar corresponding rule to determine whether inbound overseas Funds Transfers are  assessable or not because of the variable factors involved, they have to pass several tests to determine if they are  assessable or not. It is still early days and all the rules are not yet clear and may well change substantially. It has been said that foreign residents who import funds from countries that have a DTA with Thailand, will not be effected. Exactly how that will work leaves many questions unanswered hence this document attempts to look at only the most popular types of income based on what is known at present. This document does not speculate as to what may happen in the future, other than in the segment at the end concerning likely future Immigration rules.

 

14. First and foremost, only income that is remitted to Thailand is assessable in Thailand, funds that remain outside Thailand are not. If we take the simplest type of income and say that you transfer personal savings from overseas to Thailand and those savings  were earned before 1 January 2024, those funds are not taxable. But savings earned after that date potentially are, thus the date when the income is earned is extremely important. A word of caution, you may be asked to provide proof that savings were earned before 1 January 2024 hence it will help if you store statements of each of your accounts showing valuations that are effective as of 31 December 2023.   

 

15. The way in which overseas Funds Transfers are received in Thailand does not change their definition. Bank transfers, cheques, cash or overseas ATM withdrawals can also be income, the last one because overseas funds were imported to pay for goods or services in Thailand.  

 

16. Another common type of income is pensions, which can be complicated, depending on the type of pension and the country that it comes from. The country of origin is important because there are over 60 different types of Dual Tax Agreements, sometimes called Double Taxation Agreements (DTA’s), between Thailand and those 60+ countries and each one may be different. As a general rule, most private or company pensions, from most countries, appear to be assessable here but YOU will need to confirm that yours is or is not. If that is true, private and company pension income IS assessable income in Thailand. RD policy regarding the taxation of overseas pension income received in Thailand in not known, we must wait to see what new rules, if any, are announced. 

 

17. As said at the outset, US Social Security (SSc) payments, a form of pension paid to some older people, can only be taxed by the US under DTA rules and Thailand is forbidden from taxing them. This means those payments are NOT assessable income. 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, Armed Forces and some NHS pensions are not. YOU must research your own country’s DTA to determine if your pension is exempt or not.

 

18. The proceeds from the sale of a capital item such as overseas property, where funds are remitted to Thailand, is one popular source of expat funds, the sale of some investment products such as stocks, shares and bonds is another. Those proceeds typically comprise two parts, capital and profit. If the capital and/or was acquired before 1 January 2024, it is free of Thai tax. One way to separate capital and profit may be to have an official valuation or statement that is dated 1 January 2024 since anything earned before that date, is not assessable. Also, if the profit has been the subject of a Capital Gains return in the home country, that also may be free of Thai tax but this cannot be guaranteed at this time, until things are made more clear and are once again subject to the terms of any DTA. YOU will need to review the DTA between Thailand and your home  country to fully understand what particular clauses affect you.  

 

19. It appears as though most property rental income that is remitted to Thailand is considered to be assessable income and is taxable here, unless of course it has been taxed in the home country and/or the DTA prohibits its taxation (which seems unlikely). 

 

20. Inheritance and Gifts between certain family members in Thailand are free of tax, up to a maximum amount and subject to certain conditions.

 

21. YOU are responsible for determining if your assessable income in Thailand exceeds the threshold and means you must file a tax return. That assessable income might comprise a combination of pension payments, investment income, rental income or any of the other types of income listed in the link above. We understand that if you have assessable income of over 120,000 baht per year, you must file a tax return (60,000 baht if your sole source of assessable income is bank interest paid in Thailand). We further understand that you are still required to file a return, as long as your assessable income exceeds the threshold, even though there is no tax to pay. There is no penalty that we can see for failing to file a nill return, at present. 

 

22. Before you can file a tax return in Thailand, you need to acquire a Tax Identification Number or TIN from the RD offices in your area. You will need your passport, a valid and current visa or extension and in many areas, a Certificate of Residency from the Immigration Department.

 

23. 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:

 

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

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

This is understood at present to mean assessable income. 

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

24. Completing a tax return is a simple affair for most people, if you have difficulty, the Revenue Department staff are extremely helpful. Tax returns must be filed between 1 January and 31 March each year, if you file later than that, penalties will apply, if tax was due. 

 

25. Thai tax is layered in bands and is payable based on the amount of taxable income that  falls within each band and are shown and linked below:

 

      a) Taxable Income per year(Baht) Tax rate

      b) 0 – 150,000 Exempt

      c) 150,000 – 300,000 5%

      d) 300,000 – 500,000 10%

      e) 500,000 – 750,000 15%

      f) 750,000 – 1,000,000 20%

      g) 1,000,000 – 2,000,000 25%

      h) 2,000,000 – 4,000,000 ^{(see note 1)} 30%

      i) Over 4,000,000 ^{(see note 1)} 35%

 

(Note 1 - we are uncertain if the top rate of tax band is 4 million or 5 million and are currently seeking clarification)

 

https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Payroll/Personal-Income-Tax

 

26. The Thai tax system contains a series of Tax Exemptions, Deductions and Allowances (TEDA) that will help you reduce your tax bill and they are very generous. It is easily possible for the average expat foreign retiree to reduce their taxable income by 500,000 baht or more each year. For example, a retiree aged 65 years of age, married and living here full  time, supporting a Thai wife who has no income and doesn’t file tax return, is allowed the following: 

 

      a) Personal Allowance for self (PA1) - 60,000

      b) Personal Allowance for wife (PA2) - 60,000

      c) Over age 65 years exemption (OAE) - 190,000

      d) 50% of pension income received, up to 100k (PD) - 100,000

      e) In addition, the first 150,000 of assessable income is zero rated and free of tax (ZR) 

 

Additional deductions and allowances exist for health or life insurance premiums paid in Thailand. A complete list of deductions, allowances and exemptions can be found here

 

https://www.rd.go.th/english/6045.html  or from Sherrings below.

https://sherrings.com/personal-tax-deductions-allowances-thailand.html

 

27. The Thai Revenue  tax filing system is on-line but only available in Thai language at present. The tax forms are however available in English and they can be downloaded from the link below.

https://www.rd.go.th/english/63902.html

 

28. A simple sample completed tax form for a person aged over 65 years is shown below as a guide.

https://aseannow.com/topic/1312534-taxation-of-ex-pats-pensions-etc/page/6/#elControls_18532562_menu

 

29. Tax filing in Thailand is based on the honor system, it relies on you declaring all the correct information every year and there are severe penalties for evading Thai tax. It would be foolish and a gross under estimation of RD capabilities to think  that doing nothing and keeping a low profile means you should ignore Thai taxation. Very few sane people in the US and UK ignore the tax authorities who tend to have a long reach. It cannot be ruled out that at some point, a link may be established between tax filings and visa extensions. A law already exists that requires foreigners to apply for Tax Clearance Certificates before being allowed to depart the country but it is not being enforced currently. These things are possible because similar things have been adopted in several countries in the past, including the US.

 

30. The RD tax return requires taxpayers to report assessable income, the tax rules even list some types of income In Thailand that are not assessable to help in this. In addition, some types of income, from some locations, for some nationalities, are also known to be exempt.

 

31. If a taxpayer is certain that some of their income is Exempt, they may not want to declare it on their Thai tax return. That said, the Thai tax forms are currently being redesigned so we may find there is a place for exempt income to be recorded.  Alternatively they may wish to ask the RD or employ specialist tax advisor's. It should go without saying that some taxpayers may try to suggest that some of their income is not assessable when really they don’t know for sure, or, they know that it is and say it that it isn’t, a sort of, chancing your arm and hoping you wont get found out. In that situation, the RD will not look favorably on such people and penalties are likely.

 

32. There are several sources of detailed tax information and these web sites are linked below:

https://www.rd.go.th/english/6045.html

https://sherrings.com/personal-income-tax-in-thailand.html

https://www.mazars.co.th/Home/Insights/Doing-Business-in-Thailand/Payroll/Personal-Income-Tax

 

33. UNRESOLVED, CONFLICTING or UNCLEAR  ISSUES

 

 A. The exact nature of the imported income taxation rules between the Thai RD and countries with whom it has DTAs

 

B. The conflicting need to file a tax return where zero tax is due (a nil return).

The need to file a nill return is confirmed in the following link, https://www.rd.go.th/english/37749.html

Chapter 3, Section 40, para 1

 

C. International Gift Tax rules

 

D. Tax status of funds remitted when not tax resident in TH

 

E. Where does the top rate of tax band start, 4 mill or 5 mill?

 

 *** END ***

A couple of points with regards the UK from my perspective

The UK DTA states that income from property may be taxed in the country the property is located in so for those renting out property in the UK there should be no Thai tax liability. "Income from immovable property may be taxed in the Contracting State in which such property is situated."

An official guidance update from the Thai revenue department dated 6 October 2023 ( Revenue Department orders No. P.161/2023) states
"assessable income due to work duties or activities conducted abroad  or because of assets located abroad" would remove any liability for income from the UK State Pension as the State Pension could in no way be described as income from an asset abroad.

[Mike Lister]

21 minutes ago, John Scot said:

A couple of points with regards the UK from my perspective

The UK DTA states that income from property may be taxed in the country the property is located in so for those renting out property in the UK there should be no Thai tax liability. "Income from immovable property may be taxed in the Contracting State in which such property is situated."

An official guidance update from the Thai revenue department dated 6 October 2023 ( Revenue Department orders No. P.161/2023) states
"assessable income due to work duties or activities conducted abroad  or because of assets located abroad" would remove any liability for income from the UK State Pension as the State Pension could in no way be described as income from an asset abroad.

Thanks for posting that. I think that raises as many questions as it potentially answers.

 

Whilst it says that "income from property may be taxed in the country the property is located", it doesn't use the same verbiage as other DTA's I've seen where exclusivity is intended. In those other cases, the word "only" is prominent. I read that to say that the country where the property is located, has precedent....but that's just my interpretation.

 

I'm struggling with the second point to see the link between the second statement and the UK State Pension, brighter people than me may not be however! Perhaps it would be useful to provide a link to the source of the quote so that everyone who is interested, can read it?

[Solrac1]

On 1/11/2024 at 6:36 PM, Mike Lister said:

It sounds as though you transfer savings and sale proceeds that were all accumulated prior to 1 January 2024, in which case, there is no tax to pay in Thailand on those transfers.

I  am in the same situation i have my savings from an apartment i sold 14 years ago in China money is in offshore HSbC Hong Kong and i use that refill my Thai bank account when need it all accumulated prior to 1 January 2024, in which case, there is no tax to pay in Thailand on those transfers. >>Do we need to apply for a tax number and make declarations?  Thanks for  enlighten

[Mike Lister]

1 minute ago, Solrac1 said:

I  am in the same situation i have my savings from an apartment i sold 14 years ago in China money is in offshore HSbC Hong Kong and i use that refill my Thai bank account when need it all accumulated prior to 1 January 2024, in which case, there is no tax to pay in Thailand on those transfers. >>Do we need to apply for a tax number and make declarations?  Thanks for  enlighten

The interpretation we're going with at the moment is the RD rule that anything 0ver 120k per year must be reported on a tax return. There is much debate whether this means income or assessable income or just money that is transferred and then exempted from the return. It will do you no harm to get a Thai Tax ID Number, there is no downside that I can see. If you had income over 120k during calendar 2023, you should file a return before 31 March this year.

[OJAS]

14 hours ago, Mike Lister said:

The interpretation we're going with at the moment is the RD rule that anything 0ver 120k per year must be reported on a tax return. There is much debate whether this means income or assessable income or just money that is transferred and then exempted from the return.

 

If this means that we are going to have to report each and every last satang of each and every transfer from our home country during a particular Thai tax year, regardless of whether or not these transfers are derived from income earned pre-1/1/24 or covered by a DTA, I have to say that would find this a truly horrifying prospect. The obvious question which would then arise is how we could get such income exempted from the return. As I see things, this would almost certainly prove to be a time-consuming and protracted process which the RD would no doubt conduct at extreme leisure, and then only after we had provided them with reams of supporting paperwork (which would probably put to shame the amount of paperwork we provide to our immigration offices each year in support of extension of stay applications). In the meantime the RD would no doubt have gleefully and unhesitatingly provided us with a tax assessment based on the full amount declared in our tax return, and have insisted on 100% payment within whatever tight deadline they prescribe for tax payments.

 

[Mike Lister]

30 minutes ago, OJAS said:

 

If this means that we are going to have to report each and every last satang of each and every transfer from our home country during a particular Thai tax year, regardless of whether or not these transfers are derived from income earned pre-1/1/24 or covered by a DTA, I have to say that would find this a truly horrifying prospect. The obvious question which would then arise is how we could get such income exempted from the return. As I see things, this would almost certainly prove to be a time-consuming and protracted process which the RD would no doubt conduct at extreme leisure, and then only after we had provided them with reams of supporting paperwork (which would probably put to shame the amount of paperwork we provide to our immigration offices each year in support of extension of stay applications). In the meantime the RD would no doubt have gleefully and unhesitatingly provided us with a tax assessment based on the full amount declared in our tax return, and have insisted on 100% payment within whatever tight deadline they prescribe for tax payments.

 

No, I don't think it means that at all.

 

You will need to know each year how much assessible income you've transferred to Thailand and that will determine whether or not you must file a tax return. I doubt that will be too difficult or very different from what you do presently.

 

You are highly unlikely to have to supply supporting documentation with your tax return, you generally don't have to to do that anywhere. Supportive or backup information is only going to be needed, if there is something amiss with the return, the amounts are unusually high or you are called out for an audit, just as you would in any other country. 

 

Don't read too much into what you think might happen and what you think might be required, when the announcements are made, the reality if very likely to be vastly different and much simpler from what you think now.

 

 

Edited January 18 by Mike Lister
spelling

[JimGant]

16 hours ago, Mike Lister said:

Whilst it says that "income from property may be taxed in the country the property is located", it doesn't use the same verbiage as other DTA's I've seen where exclusivity is intended. In those other cases, the word "only" is prominent.

 

The US-Thai DTA uses the same language, i.e., "may be taxed" without the "ONLY" qualifier. And, the US DTA has a technical explanation that probably would apply to the UK-Thai DTA:

Quote

.... may be taxed in the Contracting State in which the property is situated....

This Article does not grant an exclusive taxing right to the situs State; the situs State is merely given the primary right to tax.

 

And, the primary taxing country gets to keep all the taxes collected, while the secondary taxing country (in this case, Thailand) has to give a credit for those taxes paid in the situs country.

 

From a practical standpoint, I'd do a back of the matchbook evaluation of what, if any, taxes I'd owe Thailand, after factoring in the credit. And if none, I wouldn't even bother to include this rental income on any Thai tax return I filed, particularly since they haven't gotten around to providing a place on their tax returns to show credits. No evasion here, of course -- just a practical solution.

[Mike Lister]

3 minutes ago, JimGant said:

 

The US-Thai DTA uses the same language, i.e., "may be taxed" without the "ONLY" qualifier. And, the US DTA has a technical explanation that probably would apply to the UK-Thai DTA:

 

And, the primary taxing country gets to keep all the taxes collected, while the secondary taxing country (in this case, Thailand) has to give a credit for those taxes paid in the situs country.

 

From a practical standpoint, I'd do a back of the matchbook evaluation of what, if any, taxes I'd owe Thailand, after factoring in the credit. And if none, I wouldn't even bother to include this rental income on any Thai tax return I filed, particularly since they haven't gotten around to providing a place on their tax returns to show credits. No evasion here, of course -- just a practical solution.

Yes, I agree with most of that, I think we all need to be a aware of that primary and secondary scenario versus exclusivity, as in the case of SSc. 

[tomkenet]

20 hours ago, Mike Lister said:

Hypothetically, the total value of your asset as of 31 December 2023 should be free of Thai tax, according to what has been said thus far, this whole business is alleged to start again new on 1 January 2024.

Surprising, but of course positive if latent, unrealized capital gains by 31.12.23 are tax exempt when realized later, and only the gains from 1.1.24 are assessable.

I believe this is to good to be true 

 

 

 

Edited January 18 by tomkenet

[The Cyclist]

25 minutes ago, tomkenet said:

I believe this is to good to be true 

 

Which generally turns out to be the case.

 

Do not be surprised if you see

 

* A whole new Section ( eventually ) being added to the Revenue Code.

 

* Rather than the reported amendment to the tax filing form, a seperate form is produced covering International transfers to Thailand / income remitted to Thailand, or whatever name they give it.

[RocketDog]

@MikeLister, thanks so much for your efforts.

I read your entire post and followed some of the Links.

I became confused when reading links from Sherring Tax Consultants. (https://sherrings.com/foreign-source-income-personal-tax-thailand.html)

to wit:

Departmental Instruction No.
Por.162
On 20 November 2023, after Instruction No.
Por.161/2566 was accused of being unfair, the Revenue Department issued Instruction No. Por.162/2566, which:
1. Informs the Revenue Department's Officers that the principle (meaning) of the Section 41 paragraph two law shall now not be applied for foreign source income
that's derived or earned prior to 01 Jan 2024, and
2. Instructs the Revenue Department's Officers that, from 01 Jan 2024, they shall apply the principle (meaning) of the Section 41 paragraph two law, as follows:
•    For a resident of Thailand who derives or earns, whilst being a resident of Thailand, foreign source assessable income from 01 Jan 2024 onward,
•    Such foreign source assessable income is subject to tax when it is brought into Thailand from 01 Jan 2024 onward.

 

 

This seems to imply, that while all you stated it confirmed, income transferred into Thailand before Jan 2024 is not assessable. So while we may be required to file a return based on 2023 all funds brought in in 2023 will not be assessable.

 

In my case this is germane. I was assuming that I would be filing a return before Apr1 2024, and would have to  find my bank documents and sum all the transfers into my account (always using Wise). I understand that my SSA income from America would not be counted, but I transferred quite a bit last year (all from savings of previous years and SSA) in chunks whenever the exchange rate was favorable. So if all those transfers above my SSA income are assessable, it makes a considerable difference for the 2024 filing for Tax Year 2023.

If that is the case I will of course suffer taxation on all bank transfers during 2024, so must be more circumspect about how much I bring in. I feel lucky that over the last 4 years I have playing the exchange rates and bringing in some good chunks to build up my accounts here and to buy a house for cash. That jig is up for sure now though.

 

I suspect several folks here are in the same boat so your consideration to this nuance would be appreciated.

 

I apologize if you did cover this and I just didn't understand it.

[Mike Lister]

3 hours ago, tomkenet said:

Surprising, but of course positive if latent, unrealized capital gains by 31.12.23 are tax exempt when realized later, and only the gains from 1.1.24 are assessable.

I believe this is to good to be true 

 

 

 

 

It was unfortunate that you only quoted one small part of what was said because what was said next changed the context completely.

 

"Hypothetically, the total value of your asset as of 31 December 2023 should be free of Thai tax, according to what has been said thus far, this whole business is alleged to start again new on 1 January 2024".

 

This was followed by:

 

"You can see from that example how unworkable that sort of system would be, which is why there will almost certainly be a different set of criteria, other than value as of 21 Dec 2023".

 

To which you replied:

 

 

"Surprising, but of course positive if latent, unrealized capital gains by 31.12.23 are tax exempt when realized later, and only the gains from 1.1.24 are assessable.

I believe this is to good to be true" 

 

 

 

[topt]

21 hours ago, Mike Lister said:

If you had income over 120k during calendar 2023, you should file a return before 31 March this year.

Based on this (and your preceding sentences) nearly every foreign Thailand tax resident should have been filling in tax returns for however many years they have been resident as, I would imagine, that very few would bring in less than 120k baht in most years. Basically my understanding is that the change made to the directive re. past/following years income etc has not made any difference to that.......?  

 

Yet at a conservative guess probably at least 95% of those who were not utilising that loophole have never filed and of those probably 99% have never had any issues. 

Would that be a fair assumption?

 

To be clear I am not suggesting you are not supposed to file but a lot of posters on here have been getting away with it for years and now all of a sudden they are thinking it is all going to change because of one rule change...........

 

Obviously until the Thai RD come out with some guidelines all one can do is speculate but I would suggest that anyone who goes and requests a Thai TIN no. is potentially shining a light on themselves.

[The Cyclist]

8 minutes ago, topt said:

Obviously until the Thai RD come out with some guidelines all one can do is speculate but I would suggest that anyone who goes and requests a Thai TIN no. is potentially shining a light on themselves.

 

Bingo

 

Assessable income - File a tax return.

 

No assessable income - No need to file a tax return.

 

Until told otherwise, why put yourself on the radar.

 

And we really need the Thai RD to have a lightbulb moment and issue guidelines.

 

There is a reason that the  International Tax Consultancies have been rather silent since 20 Nov 

[Mike Lister]

1 hour ago, topt said:

Based on this (and your preceding sentences) nearly every foreign Thailand tax resident should have been filling in tax returns for however many years they have been resident as, I would imagine, that very few would bring in less than 120k baht in most years. Basically my understanding is that the change made to the directive re. past/following years income etc has not made any difference to that.......?  

 

Yet at a conservative guess probably at least 95% of those who were not utilising that loophole have never filed and of those probably 99% have never had any issues. 

Would that be a fair assumption?

 

To be clear I am not suggesting you are not supposed to file but a lot of posters on here have been getting away with it for years and now all of a sudden they are thinking it is all going to change because of one rule change...........

 

Obviously until the Thai RD come out with some guidelines all one can do is speculate but I would suggest that anyone who goes and requests a Thai TIN no. is potentially shining a light on themselves.

I agree completely, for the first 17 years that I lived here, I rarely filed a complete annual return, except to reclaim tax withheld on savings. I think there are several parts to the problem: one is that many people don't know they are supposed to file, that includes a majority of foreigners I suspect; another part is that over 50% of workers earn money in the grey economy and don't want to file, even if they knew they are supposed to. 

 

But as Thailand becomes more joined up, the banks begin to see more precisely who is getting money from where because everything is rapidly becoming electronic and computerized. It's therefore simple for the RD to request those details and to flag something via Immigration and the visa system, there is nothing comparable for locals.

 

Those are some of the challenges the RD faces in trying to increase the tax net. Foreigners' however are at a disadvantage in this regard because they can be made to file, locals rarely can. I suppose everyone has to make their own decisions on this and to file or not. But I think that many foreigners have already shone the light on themselves when they reclaimed tax paid on savings interest, that required them to obtain a TIN which they were only happy to do. We can't have it both ways.

 

Lastly, I hope you and everyone else fully understands that we cannot and will not suggest to anyone that they shouldn't file a tax return because doing so would be illegal. Whether or not a person files, is an individual and personal decision. 

 

[Mike Lister]

2 hours ago, RocketDog said:

@MikeLister, thanks so much for your efforts.

I read your entire post and followed some of the Links.

I became confused when reading links from Sherring Tax Consultants. (https://sherrings.com/foreign-source-income-personal-tax-thailand.html)

to wit:

Departmental Instruction No.
Por.162
On 20 November 2023, after Instruction No.
Por.161/2566 was accused of being unfair, the Revenue Department issued Instruction No. Por.162/2566, which:
1. Informs the Revenue Department's Officers that the principle (meaning) of the Section 41 paragraph two law shall now not be applied for foreign source income
that's derived or earned prior to 01 Jan 2024, and
2. Instructs the Revenue Department's Officers that, from 01 Jan 2024, they shall apply the principle (meaning) of the Section 41 paragraph two law, as follows:
•    For a resident of Thailand who derives or earns, whilst being a resident of Thailand, foreign source assessable income from 01 Jan 2024 onward,
•    Such foreign source assessable income is subject to tax when it is brought into Thailand from 01 Jan 2024 onward.

 

 

This seems to imply, that while all you stated it confirmed, income transferred into Thailand before Jan 2024 is not assessable. So while we may be required to file a return based on 2023 all funds brought in in 2023 will not be assessable.

 

In my case this is germane. I was assuming that I would be filing a return before Apr1 2024, and would have to  find my bank documents and sum all the transfers into my account (always using Wise). I understand that my SSA income from America would not be counted, but I transferred quite a bit last year (all from savings of previous years and SSA) in chunks whenever the exchange rate was favorable. So if all those transfers above my SSA income are assessable, it makes a considerable difference for the 2024 filing for Tax Year 2023.

If that is the case I will of course suffer taxation on all bank transfers during 2024, so must be more circumspect about how much I bring in. I feel lucky that over the last 4 years I have playing the exchange rates and bringing in some good chunks to build up my accounts here and to buy a house for cash. That jig is up for sure now though.

 

I suspect several folks here are in the same boat so your consideration to this nuance would be appreciated.

 

I apologize if you did cover this and I just didn't understand it.

This years tax filings covers the calendar year 2023 when the tax rules were the same as they were in past years. I imagine that if a person hasn't filed in previous years, they probably wont want to file this year either, unless they brought over income that was earned in 2023 which they fully know to be taxable. There again, there will be those who will file this year, simply because they have now found out that they should have been filing all along. In that respect, the announcement alone is likely to increase the tax net, without anything further being announce. aka the fear factor.

 

Tax filings due in 2025 are based on 2024 financial activity. These will likely see an increase in people preparing tax returns and that will start once we reach 180 days in the current calendar year. By that time the new rules should be available but it's possible they will be delayed until later since the return is not required until 1 January 2025 at the earliest. 

 

So yes, two different years, two different sets of rules, raised awareness may make the difference to what people do.

[UKresonant]

On 1/17/2024 at 4:10 PM, John Scot said:

An official guidance update from the Thai revenue department dated 6 October 2023 ( Revenue Department orders No. P.161/2023) states
"assessable income due to work duties or activities conducted abroad  or because of assets located abroad" would remove any liability for income from the UK State Pension as the State Pension could in no way be described as income from an asset abroad.

Sorry but that is not sparking a eureka feeling, any more context?

 

 

There was someone posting years ago speculating that if there were an equivalent Thai State pension exempt from Thai Tax, the UK  State pension could be considered under article 24 of the UK DTA "(1) The nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected." Whilst trying to explain why pensioners were not bothered for tax on their pensions remitted.

 

Would be good if they had an article on state pension but it is just absent (compared with other DTAs) to clarify is or is not, Maybe the negotiators were over in Thailand partying at the time, and that bit was part of the morning agenda....   

[Mike Lister]

A number of links have been posted but the one below is probably the most important of all.

 

It's the English language version of Thai Revenue Law and contains everything you need to know, including the RD Code. It also show updates, as and when they are released. It also contains links to all the Dual Tax Agreements as well as chapter and verse on Tax Clearance Certificates (TCC), a section that continues to be actively updated! 

 

Note: the link contains the official translation but in case of dispute, the Thai language version takes precedent.

 

https://www.rd.go.th/english/37698.html

[Mike Lister]

For anyone who wants to read the document linked above, the following section (40) is a useful reference point:

 

Section 40 Assessable income is income of the following categories including any amount of tax paid by the payer of income or by any other person on behalf of a taxpayer.

(1) Income derived from employment, whether in the form of salary, wage, per diem, bonus, bounty, gratuity, pension, house rent allowance, monetary value of rent-free residence provided by an employer, payment of debt liability of an employee made by an employer, or any money, property or benefit derived from employment.⁴

 

^{This is NOT the full extent of the definition which extends to 8 para's!}

 

And Section 42 para 12 reads, in part:

 

Section 42 The assessable income of the following categories shall be exempt for the purpose of income tax calculation: (12) Special pension,

 

Sadly there is no definition of what a special pension constitutes! But maybe that's an incentive for more people to read the link!

Edited January 19 by Mike Lister
add para 42

[Mike Lister]

23 hours ago, OJAS said:

 

If this means that we are going to have to report each and every last satang of each and every transfer from our home country during a particular Thai tax year, regardless of whether or not these transfers are derived from income earned pre-1/1/24 or covered by a DTA, I have to say that would find this a truly horrifying prospect. The obvious question which would then arise is how we could get such income exempted from the return. As I see things, this would almost certainly prove to be a time-consuming and protracted process which the RD would no doubt conduct at extreme leisure, and then only after we had provided them with reams of supporting paperwork (which would probably put to shame the amount of paperwork we provide to our immigration offices each year in support of extension of stay applications). In the meantime the RD would no doubt have gleefully and unhesitatingly provided us with a tax assessment based on the full amount declared in our tax return, and have insisted on 100% payment within whatever tight deadline they prescribe for tax payments.

 

You asked earlier about exchange rates and converting values to THB, the RD Code says the following from Chapter 1:

 

Section 9 Unless stated otherwise, if it is necessary to convert foreign currency into Thai currency in order to comply with this Title, it shall be converted using the exchange rate which the Ministry of Finance announces from time to time. ¹

¹N.MF.Re: Rates of Exchange of Foreign Currencies Against Thai Currency under Section 9 of the Revenue Code.

Section 9 Bis Unless stated otherwise, if it is necessary to evaluate assets or other benefits into money, the price or value receivable on the date that the asset or benefits is received shall be used.

 

https://www.rd.go.th/english/37699.html#section9

[OJAS]

15 hours ago, Mike Lister said:

But I think that many foreigners have already shone the light on themselves when they reclaimed tax paid on savings interest, that required them to obtain a TIN which they were only happy to do.

 

I suspect that others, though, may have unwittingly had the light shone on them as a result of demands imposed on them by home country banks in the context of Common Reporting Standards (under pain of having their accounts with these banks closed) for specific evidence of their Thai tax residency in the form of a suitable reference number (i.e. a TIN).

Edited January 19 by OJAS

[Mike Lister]

1 minute ago, OJAS said:

 

I suspect that others, though, may have unwittingly had the light shone on them as a result of demands imposed on them by home country banks in the context of Common Reporting Standards (under pain of having their accounts with these banks closed) for specific evidence of their Thai tax residency in the form of reference numbers.

Exactly that, it's like corralling horses (or sheep).

[OJAS]

15 hours ago, Mike Lister said:

Foreigners' however are at a disadvantage in this regard because they can be made to file, locals rarely can.

 

Yes, we could well, I think, be the low-hanging fruit here in the RD's eyes. And, given the dual pricing tradition in LOS, could we seriously discount the possibility of being clobbered for tax at "special" foreigner rates which were, say, double the corresponding ones paid by locals? 

[Mike Lister]

Just now, OJAS said:

 

Yes, we could well, I think, be the low-hanging fruit here in the RD's eyes. And, given the dual pricing tradition in LOS, could we seriously discount the possibility of being clobbered for tax at "special" foreigner rates which were, say, double the corresponding ones paid by locals? 

Absolutely not, in my opinion. There are over 4 million foreigners in Thailand, 300k of them Westerns, a dual rate tax system would label the country as a pariah  and mean that no foreigners would ever work here and it would seriously harm inbound FDI. The country relies on foreign workers and in many industries, foreign expertise, Japanese management and technical experts are in an abundance here.